In today’s world, stretching out your dollar is more important than ever. Luckily, there are numerous ways to get the most bang for your buck and get rewarded for spending money. The way I have afforded to travel and live my best life is by playing the credit card game, as I like to call it, otherwise known as credit card churning. Most people are aware of the existence of reward credit cards, but using them in systematic way to get maximum benefits is an art that can easily be mastered by knowing a few simple rules and tricks.
I’ve spend over a decade using the approach taught to me by credit card gurus like the Points Guy and Monkey Miles. It’s time I pass on their knowledge, along with a few tips of my own that I’ve learned over the years of having over 20 different cards (and counting) so that you can jump right into the deep end of the credit card game and get traveling!
Table of Contents
Building Credit
To start, one must have a decent credit score. It’s a catch 22 for sure, but once you grow your credit score to 700+ you will qualify for the most rewarding credit cards out there. If you are just starting out on your credit journey, I suggest applying for store credit cards in-store to start building credit, like I did the minute I turned 18 years old.
Store credit cards usually require little to no credit history and approval odds are very high when you apply in-store. The APR is usually high and the benefits are limited outside of exclusive coupons and lack luster day of sign up bonuses like 20% off, but they will allow you to grow your credit score to where it needs to be to qualify for more lucrative reward credit cards down the line. It’s also easy to keep them open and use them once a year or so just to keep your overall credit limit high (more on that later!).
Choosing A Reward Credit Card
The next step to credit card churning is find out what kind of benefits you need the most. Are you someone who likes to dine out often or are you someone who likes to travel with a particular airline or do you want general cash back on all of your spending? With travel credit cards, airline credit cards, cash back credit cards, grocery reward credit card, and more to choose from, most people will benefit from having multiple cards to cover all your needs in life.
I myself usually have 2-3 main cards that cover different needs, like one that gives me points on my rent, another that gives me 3% cash back on dining out, and a third that gives me luxury travel benefits. I also keep a few of my original store cards open too to keep my credit limit inflated (still not there yet, but I promise we’re getting there!).
Perks Really Add Up
Some credit cards offer particular benefits that can be very attractive and add even more value to the card in addition to points/miles/cash back. These benefits range from $300 travel credit, waived Global Entry application fees, Doordash credits, Lyft credits, airport lounge passes, to free check luggage, etc. The more of these additional benefits you can take advantage of, the more value you obtain from the credit card.
This is even more crucial once you start playing around with the luxury travel cards such as Chase Sapphire Reserve, Venture X by Capital One, and American Express Platinum whose annual fees range from $350 to $675! Don’t be turned off by the hefty annual fees though. If you leverage the sign up bonus, reward points, and other benefits correctly, you will still end up with hundreds, if not thousands of dollars in rewards, making it so worth it.
When to Sign Up
The most important aspect of the credit card game is timing. The bulk of your points will come from the initial sign up bonus when credit card churning. These bonuses range from a hundred to over a thousand dollars worth of points or miles after spending a certain amount of money in a set amount of time, usually 3 months. These sign up bonuses are usually once in a lifetime or once every 24-48 months, so it’s crucial to pick the right card for your needs at the time.
Timing With Major Purchase
The best time to open a card with a generous sign up bonus, is right before a large purchase such as an appliance or airline ticket or car repair, so that there is no pressure of unnecessary spending to earn the bonus. I personally find myself opening a new credit card around the holidays since there is so much spending that will happen either way, so might as well get rewarded for it. This is also when I’ve noticed credit card companies start to sweeten the pot with higher than average sign up bonuses.
I’ve even let a few annual subscriptions like my Amazon Prime lapse for a few weeks and do without while waiting to time it with a new credit card sign up bonus. My favorite hack to the credit card game is to start as many annual memberships/subscriptions as I can during the first three months of a card, rather than pay monthly, in order to take care of the spending requirements without much effort.
Referral Links
Yes, sign up bonuses change throughout the year. There are also different sign up bonus amounts with referral links or personal offers that are often higher than the generally advertised sign up bonus. This is why you always need to do your research before applying. You could easily get 20k more points with a personal offer or by waiting a month or two for a better public offer.
For example the Southwest Airlines credit card usually has a 50k or 60k point sign up bonus. Two years ago around late November, they had their biggest offer ever 50k after spending $2,000 in 3 months and an additional 50k points after spending $12,000 in 12 months. That bonus not only gave me $1,400 in travel with Southwest, but also awarded me the boost I needed to snag their Companion Pass which lets a person of my choosing fly free with me Every. Single. Time. For. Two. Entire. Years! Hence, timing is a *major* factor in getting maximum benefits from your credit cards.
Referral links are also a huge asset in the credit card churning world once you have the credit card. You can get a significant amount of points for reffering friends and family.
Annual Fee
The biggest caveat is that reward credit cards usually have an annual fee. There used to be a time when most annual fee credit cards waived the first year’s fee, but that’s quickly grown to be a thing of the past. In rare cases, it is worth paying an annual fee past the first year if the benefits for your circumstances outweigh the fee, but I usually recommend canceling the card after 12 months and opening a new card.
Waiving Annual Fees
Even credit cards with annual fees sometimes will waive them for another year or so if you call in and try to cancel or ask nicely if there is anything that can be done to waive the fee. Sometimes they will depending on the credit card company and time and the representative you get on the phone. You can even Google other people’s scripts or success rates with getting annual fees waived, though I noticed in recent years it has become much more difficult and rare, unfortunately. But it’s always worth a shot!
Things to Be Careful About
Now credit card churning may sound like the best thing since sliced bread, but there are a few things to keep in mind—
Closing Credit Cards
Never cancel a card before the 11 month mark because that will negatively affect your credit score making it more difficult to qualify for other credit cards. Even if you don’t use it, keep it open for at least 11 months. Throw it in your desk drawer and never look at it again if you don’t want to, just don’t close it too prematurely.
Credit Utilization
If there is no annual fee and you find the cash back/points/miles reward system beneficial for your needs, then I recommend keeping the card open for as long as possible to build and maintain credit history and keep your overall credit utilization low by having multiple credit lines. The thing with the credit score system in the United States, is that it’s a dumb system at its core.
The more credit you have, more likely you are to get approved for even more credit. And when you do have credit, the credit score system will punish you by dropping your score if you use more the 30% of it. It’s okay to have a large purchase and max out a card temporarily, but always aim to keep your credit utilization under 30%. This is why I recommended earlier to just keep your store cards and any credit cards without an annual fee open, even if you use them only once a year. It will benefit you in the long run.
Treat Credit Cards Like Debit Cards
The MOST IMPORTANT key to successful credit card churning is to treat your cards as cash. If you use your reward cards as actual credit cards that you keep a large balance on, it will eat away at most of the benefits. Since the APR tends to be significantly higher to compensate for the rewards, these credit cards should never be used for “credit” purposes. The exception is if the card also offers 0% APR for a set amount of time, which some do. Savor One by Capital One not only has amazing dining and grocery benefits, but also offers 0% APR for 15 months too, for example.
If you find yourself needing a credit card for the purpose of “credit” then add a low APR credit card in the mix for purchases that you don’t plan on paying off right away, and use your reward card only for purchases you can pay off each month. Trust me, you do not want to be paying 26% when there are cards with much lowers APR or even promotional 0% APR.
Don’t Open Too Many Cards At Once
Keep in mind, never to open too many credit cards in a short amount of time. Not only is it best to work on obtaining one sign up bonus at a time by putting everything you can on a single card until you qualify, but also by opening too many cards in a short period your application for certain credit cards will be rejected, even if you have an excellent credit score. Chase is one such bank who has a strict 5/24 rule, meaning you cannot have more than 5 credit cards opened within the past 24 months.
It’s important to plan which cards you want to open for this very reason. I stay open minded to which cards I might open depending on the release of new cards from banks and limited time sign up bonus offers, but in general I do keep a plan that extends for several years of which cards I want to open and when for that very reason.
There are more in-depth topics on reward credit card, loyalty programs, and frequent flyer miles that I will touch on it future articles, but this is a good start for someone new to credit card churning. Reward credit cards have allowed me to travel as much as I do over the years, and are a topic I am very passionate about. I love helping others make travel and life more affordable and hope you find this guide and my website useful in achieving your financial and travel goals!
