CREDIT CARD CHURNING FOR SIGNUP BONUSES
It always amazes us how many smart, educated people ignore what is possibly the greatest ‘free-lunch’ of modern times.
We’re talking about the lucrative perks associated with credit cards.
Get yourself the right cards and there’s no reason why you can’t fly thousands of miles per year, stay in extravagant hotels and access airport lounges – all for free. It’s simply a matter of playing the credit card game.
Today we look at the basics – how to actually play the credit card game. We cover the best ways to quickly acquire points and also how to spend them.
Credit Card Churning – the fastest way to get reward points
There are an ever increasing number of methods to rack up travel reward points, ranging from the traditional – flights, hotel stays, credit card spending, to the unusual – enrollment bonuses with home utility providers, bonus miles for test driving cars at dealerships; a hair-loss restoration clinic even offered a limited-time bonus of 20000 airline miles just for signing up for a consultation.
New methods come and go, but one thing has remained constant: The fastest and most efficient route to gaining as many airline or hotel points as possible is credit card signup bonuses.
Signup bonuses for airline branded credit cards are extremely generous, particularly in the US market. A signup bonus from one single card can often provide an applicant with 50,000 airline miles or more, enough for two domestic roundtrip flights in the US or one roundtrip flight to Europe.
Bonuses for hotel branded credit cards are just as impressive. One credit card can bring as many as 3 nights in a 4/5 star luxury hotel, or even a week in a medium range brand.
For flights or hotels, the value is remarkable. Depending on the time of year, the value of these rewards can easily total over $1000. Remember, this is all just from signing up for a single credit card.
Many of these cards will have minimum spending requirements. For example – you may have to spend $1000 in the first 3 months of card ownership. Don’t let these requirements put you off though – with some planning in relation to your future spending, you’ll most likely be able to make the requirements easily.
The process is extremely simple. You apply for the credit card and open a rewards account with the corresponding airline / hotel. For example, if you’re applying for the a card that provides a stack of American Airlines Aadvantage points, make sure you open an Aadvantage account with American Airlines. Then when the credit card arrives, simply meet the minimum spending requirements on the card, and then kick back and wait for the rewards points to hit your account. You’ll be booking free flights before you know it.
Now imagine… What if you were do this over and over again, racking up hundreds of THOUSANDS of airline and hotel miles (and thousands of dollars in value), in the process? Can you do that?
Absolutely. You can. And you should. Like a song on repeat, credit card signup bonuses are a benefit that can be replayed over and over again. This is known as credit card churning, and it is by far our strongest recommendation for any traveler aiming to quickly rack up dozens of free flights and free nights.
|Room With a View? Two free nights at the Hyatt Madives can be yours absolutely free,
just by signing up for the Hyatt Visa
Credit card churning and avoiding annual fees
Put simply, credit card churning is the greatest path toward free travel you’re currently missing out on. If you’re a frequent traveler, chances are you’ve read the occasional story about a person who managed to score half a million airline miles in a short space of time and traveled the world for free, etc.
Those stories are true. What’s more – those stories don’t need to be rare, or even newsworthy – certainly not if you’re a savvy traveler. In fact, anyone with a decent credit score can do it.
As explained above, the process is extremely straight forward.
There’s just one KEY RULE to remember: avoid the card annual fees.
Credit cards with valuable signup bonuses often have annual fees that are waived in the first year. After 12 months, unless the card is canceled, the user is charged the fee. Not having to pay an annual fee in the first year is the foundation of card churning.
It’s easy to avoid these annual fees. You simply cancel the card before the 12 month period is up. Put a note in your calendar for the 11th month mark and then call the card provider and explain that you would like to cancel the card.
Remember to cancel your cards before the annual fee kicks in and your net cost for the fantastic travel perks you’ll receive will be a grand total of zero. The issuing bank for the credit card will collect nothing in return for granting you the signup bonus. A lot of banks will prey on the fact that many card users will either forget or be too shy to cancel their card at the 11th month mark. As a RLB reader – we trust you won’t be in this camp.
If for some reason you do really want to keep the card, try to get your annual fee waived before you cancel the card outright. While there are no hard and fast rules, many banks (Citi) will gladly waive annual fees for cardholders with a good credit score and decent record of on-time payments. Other banks (Chase) are known to be more strict.
As always, if you don’t like the response you receive, you can hang up and call again. A different representative may give you an entirely different response. Customer service with credit cards and travel rewards is much like a game of roulette – filled with random chance and inconsistency. There’s no harm in taking a few spins.
Churning is all about avoiding the annual fee and moving on to the next best thing. Unless a credit card provides a high annual bonus (ie a free hotel night or large number of airline miles), we do not advise ever paying an annual fee for a credit card as it simply negates the value of the bonus you’d otherwise be getting for free.
Money out: Zero. Travel rewards: (aka “Money”) in: Thousands. The most impressive travel budget you’ll ever see.
There are so many cards on the market that there are always new, exciting offers in which to partake.
|Bound for Asia? The Conrad Hilton Koh Samui in Thailand awaits.
Yours for two free nights with the Citi Hilton Visa.
As you begin the search for cards to start your collection, here are a few RLB tips to help with your search:
Do your research – A quick google search for cards with huge signup bonuses should reveal a handful of cards that will allow you to rack up points quickly.
Follow the correct promotions – The most important rule of all. When you identify a card that suits your travel needs, it pays to do a little homework to ensure you always maximize your signup bonus. There are often many offers available for the same exact credit card. Keep your eyes open online and in your email. The best offers often arrive under the radar. You don’t want to enroll for a card with a 30,000 mile signup bonus only to stumble upon an offer for the same card a few days later for 50,000 miles.
Check the mail – Hard to believe, but many of the best promotions still arrive in the good old-fashioned mail. These offers, in hard copy, can often not be found anywhere online. Instead, they’re mailed directly to a prospective customer with a targeted offer that’s usually above the going market rate.
Watch your spending – In theory, there’s no limit to the amount of credit cards you can apply for or hold all at once. For instance, it’s not uncommon for veterans of the credit card game to hold 14 active cards per year. However as noted, many of these cards carry minimum spending requirements over a 3-4 month period. Don’t bite off more than you can chew. Stay within your means and don’t force yourself to spend money you otherwise wouldn’t spend in a short amount of time just to hit your signup bonus. Three to four cards to start is probably plenty to familiarize yourself with the process.
Know your partnerships/alliances – Just because you don’t use a particular brand doesn’t mean you can’t benefit from its rewards program. British Airways is an important example of this in the US market. Suppose someone travels frequently around the US but never flies to the UK. They would still benefit greatly from the Chase British Airways Visa, but if they’re not knowledgeable on the subject of travel rewards, their first reaction would probably be, “Why do I need a British Airways Visa? I never fly BA.” Big mistake. Like most rewards programs, BA Avios are redeemable on partner airlines, often at extremely generous rates. In the US for example, Avios are redeemable on American Airlines or US Airways at hugely discounted rates. A single signup bonus for the British Airways Visa can be used for up to 5 short-haul domestic flights (under 650 miles one way), or 3 middle distance flights (under 1150 miles one way). Not all airline reward programs offer such bargains of course, but with a few miles with varying airlines/alliances and a little creativity, you can piece together a journey almost anywhere.
Credit card signup bonuses are, and have always been, the fastest way to hit a home run for travel rewards. With more and more banks offering cards, this does not seem likely to change anytime soon. If you’re a frequent traveler and not taking advantage, at least to some degree, you’re missing out on free travel, plain and simple.
To help those looking to get into the credit card game for the first time, our next piece will feature our top picks for the best travel rewards cards on the market today.
In the meantime, start your travel planning!