Ross McLendon

Various and sundry ramblings.

12 minute read

Disclaimer - this post contains referral links that confer a benefit to me when they’re used

A penny saved is only a penny earned if you would have spent it in the first place, otherwise it’s just a penny not spent. - Me

Travel on a Budget

Since 2019, my family hasn’t spent much on travel. That’s not to say that we haven’t traveled. We’ve actually traveled quite a bit - several trips to Texas to see grandparents, a weekend adventure with an old college buddy of mine going down technical slot canyons and hiking in the Utah backcountry, and a family trip to Arizona and Utah over a week back in October 2021 to see Zion, Bryce Canyon, and Grand Canyon National Parks, in addition to a few more local trips around New England.

It used to be any time that we planned a trip with air travel, it was going to be at least $1000 - and probably more like $2000 - for tickets. That’s just life as a family of 6. But back in 2019, my buddy who I go with on yearly-ish outdoor adventures opened my eyes to the world of credit card churning. Since then, for all these trips we’ve taken (four full family trips by air plus a handful of individual trips), we’ve spent more like $1000 on airfare in total - for all the trips combined. And if I was really diligent about things, I’m pretty confident I could have gotten that number even lower.

What is Credit Card Churning

So what is credit card churning? In short, it’s the practice of regularly signing up for new credit cards to get their sign-up bonuses. It’s a great way to get airline miles and hotel points that go far beyond the 1-2% that many cards offer per dollar spent. It takes a bit of work, but it can definitely be worthwhile.

Is Credit Card Churning for You?

I have several questions I think someone should be able to answer “yes” to before I’d suggest they consider credit card churning:

  1. Do you have a budget? Effective churning depends on knowing whether the dollars you plan to spend will be enough to satisfy the minimum spend requirements to get sign-up bonuses, and also whether the benefits a card offers are applicable to things you’d pay for anyways. If you don’t have a budget, it’ll be hard to know whether either are the case. If that’s you, get your financial house in order first. I use and highly recommend the zero-based budgeting tool You Need a Budget (that’s a referral link that will get you and me both a free extra month of YNAB if you sign up for a year-long subscription).
  2. Do you pay your full statement balance on every credit card every month? If you carry debt on credit cards, churning is 100% NOT for you. You should instead work on managing your cash flow to pay off and close your credit cards. Never churn with money you don’t already have. Saving on travel this way will not get you out of credit card debt.
  3. Do you currently spend money on travel expenses like airfare and hotels? Credit card rewards only really have value for you if they’re redeemable for cash or something that you’d be spending cash on anyways, like plane tickets you’d buy one way or another (although, I will say that having the points might mean you do more traveling than you might have done otherwise, which has its own value).
  4. Do you have anything in your near-term finanaical future where dings on your credit score would be an issue? Overall, credit card churning has made my credit score go up as my utilization ratio has dropped, but each card you open will probably result in a hard credit pull which goes onto your credit report, dings you a few points, and could raise some red flags with lenders if you’re in the process of getting a mortgage or doing a refinance - in which case you may want to wait to get into this until that’s squared away.

Is It Worth It?

There are four major factors to consider in deciding whether a signup bonus is worthwhile-

  1. What is the bonus’s value to me? Something that gives me a $1000 store credit at Accordians-R-Us isn’t worth much to me personally. Something that gives me points I can use to get a variety of airline tickets that I’d otherwise spend $1000 for is valuable to me, to the tune of about $1000, because a few times a year I take my family on airplanes whether or not I have airline points. Sometimes it can be hard to know the exact value of credit card points or airline miles. To help with this, several sites offer helpful point valuation guides, but in many cases it’s important to know specifics as most credit card points can be redeemed in various ways that yield vastly different values. You need to have a good idea of how you’ll redeem your points to determine their value to you. Don’t just go with your gut on this - run some numbers and check on actual flight or hotel night costs with points vs. dollars to get a concrete idea of what an offer’s value really is.
  2. Can I meet the minimum spend requirement? Most signup bonuses entail a minimimum spend requirement (MSR). This is some amount you have to spend on the card within a certain amount of time to get the bonus (for example, spend $3000 on the card within 3 months of opening it). Normally, MSRs are the limiting factor determining how much you can churn. Have a plan for how you’ll meet them. Here are some possibilities:
    • Everyday expenses - These are things like groceries, gas, and dining out that you’d normally use a credit card for. If you budget, you have a good idea of how much these will be.
    • Planned large expenditures - You’ve been saving up for a new TV, or you know it’s time for that new set of tires. A word of caution here - don’t let MSRs be the reason that you make a big purchase. Instead, let the fact you have a big planned expense coming up be the reason for opening a new card so that you can apply those dollars towards the MSR.
    • Bills - Many bills like cell service, internet, electricity, and household gas can be paid with a credit card. Sometimes utilties offer discounts when autopaying out of a bank account or charge additional fees for paying with a card, so weigh this against the value of the bonus.
    • Manufactured Spend (Advanced) - There’s a whole sub-genre in the world of credit card churning called Manufactured Spend where people buy fairly liquid (i.e., easily converted into cash) items with credit cards to meet MSRs and get credit card points with the intent of selling the items to recoup the cost. The ultimate example of this was a time some years back when the US mint sold rolls of dollar coins at face-value with no shipping fees and let people pay with credit cards. People would literally buy boxes of coins and then go straight to the bank and deposit them. I don’t do manufactured spending personally, and you probably shouldn’t either, especially starting out. I just bring it up for completeness.
  3. Is the annual fee worth it? Most of the cards offering large signup bonuses also come with annual fees. Before I got into churning, I would dismiss any card with an annual fee outright. However, after doing this a bit, I’ve changed my criteria and now consider the following to determine whether an annual fee is worth it:
    • What is the value of the bonus vs. the fee? If you’ve answered question #1, you should have a dollar amount associated with the bonus. A card with a $150 annual fee offering a bonus that’ll get you airline tickets you would have paid $1000 for is probably worth it - it’s sort of like buying those same airline tickets for $150. Also consider that if the only thing that makes the fee worthwhile is the initial signup bonus, you should plan to cancel the card or downgrade it to a free card option before the next annual fee posts. This requires some organization and planning on your part, especially if the card account has to be open to use the points. It’s a good idea to keep a spreadsheet of cards you’ve opened to help stay organized.
    • What other benefits does the card offer? Some cards offer benefits that may offset the fee cost - things like reimbursement for TSA Pre or Global Entry, annual point deposits in your frequent flier account or free hotel nights every card anniversary, statement credits up to a certain dollar amount for every dollar spent with a particular airline or hotel, or reimbursement for subscription services you already pay for. If these benefits provide you with value, count them against the fee.
  4. Is the current bonus higher than normal? Bonus offers change all the time. Do some digging and find out if what’s being offered at the moment is better than what’s normally offered. Each of the major banks place limits on how many bonus offers you can take advantage of (sometimes within a certain time period), so it’s good to try to make the most of each new card by leveraging larger bonuses when they’re available. This one isn’t necessarily a deal-breaker, though. A bonus is what it is, and if it provides a good value, it may be worth pursuing even if it’s not currently the best offer the card has ever put forward.

If these four factors tell you that the bonus is worth it, and you answered yes to the first 4 questions of whether or not you should be churning, then it’s probably a good idea to sign up for the card.

What Cards?

There’s no universal answer for this, and because sign-up bonuses regularly change along with bank policies for taking advantage of them, it’s good to do some research into the current state of affairs. The Points Guy is a helpful resource. The Churn, Baby, Churn! subreddit is also full of helpful information. It’s easy to let analysis paralysis stop you from moving forward at all. Don’t let that happen, but do take a look at these few tidbits that will hopefully help you avoid major blunders that could lock you out of good opportunities.

  • Most banks limit how many bonuses you can receive from their cards in a given period of time. Some banks consider all the credit cards you’ve opened in a period of time. For instance, Chase bank has many popular cards and enforces a “5/24” rule. In other words, they won’t approve you for a card if you’ve opened 5 or more credit card accounts in the past 24 months. Many other banks have similar rules, but don’t consider credit cards from other banks, so it can be good to start with the Chase cards and move on to others once you’ve reached 5/24 with Chase.
  • Often times you’ll be limited to a single card in a card family. An example of this is that once you have a Chase Sapphire Preferred or Reserve card, Chase won’t approve you for the other card. Similarly, you can only have one Chase Southwest card from the three personal cards they offer. The business cards offer some avenues around this (they also don’t count against the Chase 5/24 limit, and you might be surprised as to whether you’d qualify for one), as well as some hit-or-miss methods like the “Modified Double-Dip”.
  • Cards generally have limits on how often you can receive a bonus. In some cases, it might be once every 48 months for a given card family. In other cases, it might be once ever for life. This is one reason it’s good to apply to cards when they offer higher-than-normal bonuses. Thankfully, there are lots of cards out there, so don’t fret that limits on bonuses are going to bring a quick end to your churning career.
  • If you’re married, you and your spouse can both make use of sign-up bonuses. It may be beneficial for you to both sign up for cards as separate individuals rather than getting one card and then adding your spouse as an authorized user.

These are some cards with bonuses that I’ve found valuable. For full transparency, the links I’m posting here are referral links that will give me points when somone uses them to sign up. My hope is that if you’ve found the info in this post useful, you’ll know whether it’s a good choice for you to sign up for a card, and if you do, me getting points is just icing on the cake. Note that card benefits change regularly and I’m not updating this post as they do, so do your own research.

  • Chase Sapphire Preferred This card earns Chase Ultimate Rewards points. These points can be redeemed for a number of benefits. The best value from these points generally comes from transferring them to any number of airline partners.
  • Chase Southwest Cards These have been some of the best cards we’ve gotten. Note that bonus points you get with these cards count towards Companion Pass (where a designated person can fly with you for free). In some cases, it may be possible to get Companion Pass by just getting two of these cards and receiving the bonuses (perhaps by getting one business card or by pulling off a Modified Double Dip)
  • Chase United Cards If you regularly fly United, these can be good cards to get United Miles. Some of them also offer a limited number of United Lounge passes each year.
  • Chase World of Hyatt Cards Hyatt Place hotels work well for our family with their larger rooms and pull-out sofa beds, and this card’s bonus has funded quite a few stays at these hotels over the past few years.
  • American Express Platinum Card This is a permium card with a hefty annual fee (nearly $700), but at the time of this post it offers a large signup bonus (100,000 AMEX points that can be redeemed with a variety of travel partners) and it also offers a number of benefits that may apply to things you already pay for, like $240 a year towards various streaming subscriptions (including Disney+), Uber credits each month, a Walmart+ subscription, the cost of a standard CLEAR membership ($189 a year), up to $200 of fees with a selected airline, and $200 of certain hotel bookings. You also get access to Centurion lounges which are quite nice (but sometimes crowded). If not enough of these things check your list to make the fee worth it (it is a very steep fee), then you can use this link to check out other AMEX cards as well that have lower or no fees (including cards with Delta, Hilton, and Marriott)

Wrap-up

Hopefully now you have some idea of what credit card churning is and whether it’s something that could save you money or make it easier for you and your family to travel. I’ve tried to hit the major points to help you answer those questions, but there are a lot of things I haven’t covered. Definitely check out some of the links I’ve included if you want to learn more.