So Justin at RootOfGood.com and I are sitting out by his lake and he rolls a big spliff of high-grade credit card churning and hands it over and says, “Take just one hit, Dude…I guarantee it’ll blow your mind.” And I do, and it does.
Churning–the art/science of gaming travel/cash incentives from opening new credit cards/bank accounts–blows my mind because at this very moment I’m booking a month-long family trip to Ireland for this summer. Three weeks in Dublin and one in County Donegal, and I expect the airfare and lodging to cost us a total out-of-pocket of $1K or less. That’s for me, my wife, and my daughter, and the only reason it’s even costing $1K is because I just started churning at the beginning of last summer. And the total OOP might end up at zero by the time it’s over.
I’m about to explain how exactly I did this, but you should first note that I’m a complete newbie at churning. Veteran churners will roll their eyes and shake their heads at my enthusiasm and the simplicity of my game. Which is fine: if it wasn’t for Justin and the rest of you vets sharing your knowledge with the likes of me, well, my wife and kid and I wouldn’t be getting on that plane. So I owe you one…but you’ll have to come to Eire to collect it.
My first hit of churning required me to acknowlege the caveats,1 including:
You MUST be meticulous in managing your finances. You’ll have multiple credit cards open, each with different dollar and points/miles balances. You might also have multiple bank accounts, too, if you’re trying for bank signup bonuses. One oversight/mistake can cost you much of the benefit of your activity–or even sink you into debt.
You MUST pay off your credit cards in full each month. Credit cards offer these incentives because they expect people to carry high-interest debt. It’s a loss-leader system. Again, don’t fall for it.
You MUST have a clear plan for using your points/miles. Don’t scattergun credit card bonuses just because they’re available–you’ll wind up with a bunch of points/miles spread all over everywhere that can’t be consolidated for anything useful.
You MUST put in at least a couple of hours a week of effort managing your activity. While the hourly “pay” can be very high, churning requires careful time management.
You MUST have a good credit rating. Otherwise credit card companies won’t approve your applications.
You MUST have a way to meet the minimum spending requirements. Most incentives require a spending number in the vicinity of $4K in three months. If you can’t meet this minimum spend, you won’t collect the incentives. It’s clearly foolish to open four $4K-spend credit cards in the same day if you only expect to put $1K a month on one card.
OK, and with that out of the way, here’s what I did.
Opened a Chase Ink Business Reserve card in the name of EarlyRetirementDude.com. Incentive: 50K Chase Ultimate Rewards points, good for (at least) 75K in travel, enough almost one free Atlanta > Dublin economy class ticket. Met the minimum spend. I plan to use the points and cancel the card before the annual fee hits.
Opened a Chase Sapphire Preferred card in my name. Incentive: 50K Ultimate Reserve points good for (at least) another 75K in travel, enough almost enough for a second Atlanta > Dublin economy class ticket. Met the minimum spend. I plan to use the points and cancel the card before the annual fee hits.
Opened an American Express Delta Skymiles card in my name. Incentive: 60K Delta Skymiles, good for roughly three roundtrip tickets to NYC. Met the minimum spend. Not strictly necessary to open this account, but the offer was targeted to me and the incentive was too good to pass up. I plan to use the miles but keep the card because while it carries an annual fee, Amex also grants a companion pass on each anniversary of opening the card. It also confers early boarding privileges on Delta Flights, as well as a $100 in-flight purchase reimbursement.
Opened a Chase Sapphire Reserve and a Chase Sapphire Preferred card in my wife’s name. Met the minimum spend on the CSR and now finishing up the CSP. Both incentives together are worth at least $1.5K in travel; enough to finish paying for the first Ireland trip two tickets and all of the third.
Now: the CSR is a special case. It carries a $450 annual fee, but with that comes 1) $300 in travel reimbursement, which I’ve double-dipped across calendar years for a total of $600, 2) membership in premium airport lounges all over the world, 3) reimbursement for TSA Pre membership so my wife can skip long gate entry lines, and 4) no blackout dates. Used the aforementioned $600 travel reimbursement towards a Dublin Airbnb.
Opened three checking accounts that collectively carry cash bonuses of $1,050. I had to meet different requirements for each: a minimum deposit and/or 1) at least one paycheck deposit from my wife’s hobby job, 2) at least one ACH transfer (google it) of a minimum amount, 3) a certain number of debit transactions–easily met by buying one bunch of bananas a time–and/or 4) a minimum duration of keeping the account open.
To that last point: in all three of these accounts to collect the bonus I have to park the money there for six months. But think of collecting bonuses by spreading money across multiple checking accounts as a way to earn much better than money market interest on your emergency fund. If you need to dip into that money, you simply forfeit the bonus. Where’s it written that your emergency fund has to be in one single account?
Anyway…what was the effect of all this activity on my credit rating? It actually went up from a 795 to 800. Not much, but perhaps counterintuitive.
You may rightfully ask, “Dude, are you spending more than you otherwise would’ve?”
A law I laid down before taking the first hit of churning was that we’d only continue doing what we normally do; i.e., paying bills and buying stuff according to our budget using an incentive card (which for years was Citi Double Cash, which carries a 2% cash kickback.) All we’d do is keep switching cards to, well, kick up the kickback.
And that’s exactly what we’ve done.
Furthermore, if it looks like we’re up against a deadline and still haven’t met a spending requirement, I can “manufacture spending” in a couple of ways. For instance, my daughter just started InvisAlign. Doc offered three-year 0% financing on the $4,500. I took it. Duh. So now if I need a few hundred final bucks of spending, I can call up his office and say, “Hey, put $421 on our CovfefeCard,”2 and the thing is done.
And that’s how my churning in large part is paying for our month-long trip to Ireland. At minimum we scored free airfare plus a $1,650 accommodation subsidy–and perhaps we’ll score more in the five months between now and our departure. All this from two or three hours of effort a week. I think of it as a hobby; a damned profitable one.
So Justin was right: that spliff blew my mind. Trouble is, I’m now hooked. The churning monkey, you might say, is on my back.
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