Churn, Baby, Churn: Credit Card Rewards

First off, a disclaimer. Credit cards are potentially very dangerous to your financial well being. Credit card debt is one of the easiest debts to get into, and it’s one of the hardest debts to get out of. The credit card companies know full well what they’re offering, which is why they’re willing to offer such outrageous incentives to sign up with them. So if anything I end up describing in this entry seems appealing to you, I’d first recommend you take a good long look at your finances. Have you ever held a continuing balance on a credit card from month to month? Have you ever paid late fees on a credit card? Do you struggle to stay on top of paperwork? Do you  have iffy credit already? Are you planning on taking a loan out to buy a car or house in the next year or two? If you answered “yes” to any of those, I don’t think this is for you.

But the other day, I had yet another friend recommend I look into taking advantage of credit card reward offers. It’s called “churning”. Signing up with a series of credit cards, meeting their minimum spend requirements for the first few months, and then reaping the miles and points you can get for jumping through that hoop. I’ve had multiple people tell me in the past that this was something I should be investigating. This time, I sat my friend down and asked her for the details. How much had she really saved? What had it *really* done for her?

Free flights to Orlando. Free hotel stays in downtown New York. Free flights to Paris and South Africa. All in a few years of doing it. All of it firsthand, she did it herself.

That was enough to tip me from “mildly interested” to “going to seriously investigate this.”

She recommended I start with a free online course that gives a good overview of the process: travelmiles101. I signed up for the course later that day, and I went through it in five days. At the same time, I googled the concept extensively, reading up on the pros and cons.

I signed up for my first new credit card last week. The Chase Ink Business Preferred card. It comes with an 80,000 point bonus if I spend $5,000 on it in the first 3 months. $1,666/month. I took the time to look at my credit card statements for the past year. It’s always been well above that. I pay with almost everything by credit. I always pay the balance off in full each month. Getting to $5,000 over the holiday season?

Easy peasy.

Two things have always held me back. First off, I was under the impression getting a bunch of credit cards would kill my credit score. My research into the matter finally persuaded me otherwise. (Beyond that, what was I keeping a great score for? My last car I paid for in cash, and I have no plans on moving or refinancing any time soon.) Second, all the talk of “miles” and “points” made me want to go cross-eyed. I was convinced it was a gimmick, and I didn’t feel like investigating further.

Except when I looked at the Chase card, those 80,000 points were the same kind of points I’ve been accumulating on my regular credit card all these years. And I know from experience those can be turned into cash. 80,000 would turn into $800 of cash, though everything I was reading now told me trading in for cash was the worst exchange you could make, value-wise. (Great. Exactly what I’d been doing for 5+ years.)

If someone told me, “I’ll pay you $800 to open this credit card and use it for 3 months to buy stuff you were going to buy anyway,” I’d think they were trying to scam me. But the credit card companies are willing to put out those benefits because they know full well people will screw up. They’ll put on a bunch of purchases to get the “free” $800, and then they won’t pay them off on time. All the companies have to do is sit back and profit.

This first card is an experiment. I’m dipping my toes into this. If all goes as I believe it will, there will be more cards after this. Denisa has a business. We can sign her up for the same card, and that will be another 80,000 points. Other cards have bonuses of 50,000 points. There are whole spreadsheets devoted to which cards to sign up for when.

I’ve never met a spreadsheet I didn’t like.

Anyway. We’ll see how it plays out. I’ll let you know. But if I can score free vacations for doing things I’m already doing, then I don’t see a good reason to not do that. Anyone else out there already doing this? Had experience? Feel free to chime in. I’m all ears. Or eyes, I suppose the phrase should be in this case . . .

11 Comments

  • By Rachael Bailey, November 2, 2017 @ 1:16 pm

    I’ll be interested to hear your thoughts on this in another couple of months. There was a guy in our last ward who did this exhaustively—he would buy money orders using one card to pay off the next card. He had a couple hundred cards and their family was constantly vacationing to pretty exotic locales. I’m personally not comfortable with it on that scale, but I’d love to know if there’s a more low-key way to play the system safely.

  • By Bryce Moore, November 2, 2017 @ 1:33 pm

    Yeah–that seems far more than I would be comfortable with. I’m really just looking (at the moment) at getting new cards at the same rate I spend money, so that I’m always taking advantage of a new card offer for the next few years. Using that method (assuming I’m still comfortable with it), I estimate I’ll have about 500,000 points saved up in a year or two. It costs roughly 25,000 to get a round trip to Europe, if you swing it right. “20 free flights to Europe” certainly sounds appealing.

    The worst case (assuming I don’t spend beyond my means, which I’m fully confident I will avoid, since I’ve been spending with credit cards for about 15 years) would be a free $5,000. Nothing to sniff at, even then.

    But we shall see.

  • By Kim, November 2, 2017 @ 2:21 pm

    Beware of money orders! At our company it counts as a cash advance. High fees and high interest. Just FYI.

  • By Kim, November 2, 2017 @ 2:41 pm

    Have you anyway signed up for the card? I have a referral link is be happy to pass along?! This is how my husband and I went to Hawaii for our 15th anniversary earlier this year.

  • By Kim, November 2, 2017 @ 2:43 pm

    Oh my gosh! Autocorrect to the rescue. Let me translate. Have you already signed up for the card? I have a referral link I’d be happy to pass along if you haven’t. Also, I’m pretty sure you have a business also, Bryce. This blog and writing books counts, my friend!

  • By Kim, November 2, 2017 @ 2:44 pm

    Ok. I’m an idiot. Read first, post second. Sorry. I’m trying to do two things at once.

  • By Bryce Moore, November 2, 2017 @ 4:29 pm

    🙂 No worries, Kim. And yes–I have signed up for the card. And I have no intention of going anywhere near money orders. I really just want to put the spending I’m already doing to work as effectively as possible.

  • By Kim, November 2, 2017 @ 4:33 pm

    I think the money order comment is a different Kim!

  • By Bryce Moore, November 2, 2017 @ 4:38 pm

    Oh! Too many Kims! Sorry. Each Kim please pretend I made a separate response to each of you. 🙂

  • By Kim (again!!), November 2, 2017 @ 4:56 pm

    It’s a good name! I’m sorry to post so many times, but this is a big hobby of mine. Don’t forget to have Denisa use your referral link when she signs up for the card. You’ll get 20,000 points (up to 100,000 points/year). I don’t think they do a great job advertising this and 20,000 points is no joke.

  • By Bryce Moore, November 2, 2017 @ 4:58 pm

    Excellent! I’ll definitely do that, and now I feel bad that I didn’t use someone else’s referral link when I did this in the first place.

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