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The secret to international travel while paying off student loans

Kate Dore

October 4, 2019

It's natural to daydream about travel during the workweek. Somehow, exotic, deserted beaches always creep into your mind as you are tackling the most tedious parts of your job. The struggle is even worse as you scroll through online photos of your friends' latest adventures.

You may wonder if international travel is realistic while paying off student loans. Juggling both may not be easy, but some folks rely on travel hacking to stay on track. If you're curious, we have covered the basics of what you need to know.  

What is travel hacking?

Before packing your bags, it may be helpful to know the basics. Travel hacking is collecting points and miles to cover your next getaway. Some folks do it through loyalty programs with their favorite bank, airline, or hotel chain. Others rely on rewards credit cards — and their giant bonuses — to do it fast. Think about it like this: if you're already spending the money, why not earn travel rewards for it?

Don’t overspend to earn rewards bonuses

Travel hacking is an addictive hobby that often feels like an exclusive club. Once you get a taste for free flights, deeply discounted hotels, or free airport lounge access, it’s all too easy to overspend. There is no greater buzzkill than spending too much on your rewards card — only to get stuck paying off high-interest debt months later. 

Some of the most popular travel credit cards come with big rewards bonuses. To qualify, you need to spend a certain amount of money within a short window of time. These bonuses can be lucrative — worth hundreds of dollars in free travel — if you pay off the balance on time every month.

Last-minute splurges are always tempting when thousands of rewards dollars are on the line. Before applying for a travel credit card, take a few months to track every dollar. By fully understanding your monthly expenses — including student loan payments — it will be easier to avoid trouble. It’s not worth adding to your debt for a rewards bonus.

Keep your credit score intact

As you wade into the world of travel hacking, it's important to protect your credit score. You may rely on it to buy a home, a new car, or to refinance your student loans. As an added bonus, it may be easier to qualify for the best travel rewards cards too.

Here is how your credit score is actually calculated:

  • 35% - History of on time payments
  • 30% - Credit utilization - balance(s) compared to your total limit
  • 15% - Length of credit history
  • 10% - Credit inquiries - how often you apply for credit
  • 10% - Credit mix - different types of credit

As you can see, staying on time with every single payment is the single most important move. To avoid missed payments, set up auto pay or reminders for every single credit card. Credit utilization is the second most important category. According to Experian, folks with the best credit scores keep their utilization below 10%. You can keep your length of credit history intact by keeping your oldest card(s) open and active. 

Stay organized with your rewards

Once you start travel hacking, it can be difficult to stay on top of all the rules and deadlines. To stay organized, keep a spreadsheet with each card. You may want to include these details:

  • What is the deadline to earn a bonus?
  • What is the credit card’s annual fee and when will you be charged?
  • How many points do you have and when will they expire?

Without a spreadsheet, it may be difficult to keep track of each program. In a worst case scenario, you could lose rewards or spend more than you planned for annual fees. If you decide to cancel one of your cards, make sure it's not your oldest one. Also, you may lose access to your rewards, so plan your trips accordingly. 

Don’t ignore your other financial goals

Even when you rack up thousands of rewards points, your trips won't ever be completely free. Airlines tack on fees, you may plan some sightseeing, and you may want to explore the local restaurant scene. Your “cheap” trip may balloon out of control faster than you expected.

There are plenty of ways to have a great vacation without breaking the bank. By saving the money in advance and sticking to a budget, you will be less likely to overspend. It will be a lot easier to enjoy your vacation when you know you aren’t derailing your student loan payoff.

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