Won’t this hurt my credit score?
We love this question, mostly because it is one of the most common misconceptions in churning. I was definitely on the “credit cards ruin credit scores” train before Brady taught me about what a credit score actually is and what factors affect it. For lack of repeating ourselves, see Brady’s previous post for an in-depth explanation of how churning will likely help your score in the long run. But for now, just know that paying on time and controlling your spending are the most important parts of your credit score – so if you can manage that, you can do this hobby without it hurting you. Depending on how hard you play the game, your score might take an occasional dip, but as long as you don’t miss payments and stay on top of your cards, your score will even out after a couple of months and then eventually surpass its original starting point.
What’s the catch?
Like we’ve mentioned several times before in different places on this blog, the credit card game is not rocket science. It is not, however, designed for over-spenders or people who cannot control themselves with credit cards. If you start buying things you can’t afford or missing payments, then you are 100% losing this game and will end up paying way more than you make. Churning is best for people who have a basic understanding of credit cards (read about them in our Beginner’s Guide to learn!) and who are managing their spending appropriately. If you already use a debit card or cash, and don’t get into debt, you can do this. Luckily for all of you, Brady has spent hours doing most of the research and planning for you – like I honestly don’t think I could add up all the time if I tried! He knows which cards will get you where and for how much, and he LOVES to help people out with this kind of stuff. He is definitely the lead on the Tengberg churn game – he keeps detailed spreadsheets and checks on all of our accounts often. Here is an example of a spreadsheet Brady created to track what cards we are currently working on – feel free to save a copy to your own Google Drive and change whatever you want!
Now I’m not saying any of this to turn anyone away, but just to stress the importance of responsibility in all of this. Obviously the less cards you get the easier the upkeep, but the general rules still apply: Do not spend money you don’t have. Do not miss payments. Do not lose track of dates or minimum spends. Just be responsible and you will be fine! 🙂
What if I can’t hit the minimum spends on my new cards? I don’t spend $5000 a month!
A typical minimum spend is the requirement to spend somewhere around $2-4k in the first three months in order to earn the sign-up bonus. Now most of us, after rent, groceries, gas, fast food/restaurants, all extra shopping, etc. spend at least $2-4k in three months and can easily hit the minimum spend on our cards. But what if you apply for three new cards and now you have to spend ~$10,000 in three months in order to get those sign-up bonuses? Now what if you made your wife or husband sign up for all three of those same cards so that you guys can have double the points, and now you have to spend ~$20,000 in the first three months?!! There were times when Brady and I had so much minimum spend to hit that I thought I might throw up. There is NO WAY we spend that much money normally! Here are the three ways we hit our minimum spends:
- Manufactured spending. It’s a long topic and we can’t write anything better than what’s already been written – so see a detailed guide here on our favorite Reddit page called “Churning.” Manufactured spending can be confusing, so any specific questions you have you can comment below and Brady can answer them! At its most basic form, you are just creating ways to spend money without actually spending it all. Manufactured spend is most definitely a loophole. It’s completely legal, but obviously not what the banks intended by “spend $4000 in the first three months to earn the sign-up bonus.” Here’s an example (but most certainly not the only way or perhaps the most effective) of how we would hit a minimum spend through manufactured spending:
- Go to Smiths or another grocery store and buy a $500 Visa Gift Card. You will be charged an activation fee between 3.95 and 5.95 per card. This is the “cost” of manufactured spend.
- Take that Visa Gift Card, which is really just a DEBIT card, and go to Wal-Mart. Go to the money center (or a cashier) and say “I would like to load $500 to my Serve account (an online bank account, read the guide above for more details on how to open one).” They will say okay, you will confirm the amount on the pinpad, and then swipe your gift card and enter the PIN. Don’t mention it’s a gift card – some stores are weird about it and don’t allow it. Just say it’s a debit card and move on. If they ask to see the card and say you can’t use that here because it’s a gift card, apologize and move on to a different store! Another cashier (on a different day) or another store will let you. Don’t cause a scene and ruin it for other people. We very rarely were turned away, but it does happen occasionally.
- You now have $500 on your “Serve” account online. You log on to Serve, and can either 1) pay off a credit card directly, or 2) withdraw the money to your bank account (and then pay your CC bill from there). You have now “spent” $500 dollars according to your CC company, but are only out the ~$5 that you spent on the activation fee.
- Ask relatives to spend on your card for you. I love this one. “Um, hey mom? Can you use my credit card to buy that $4,000 sectional you are getting for your living room? Pretty please?” No but seriously, calling on all generous parents and rich uncles out there – please help us with our minimum spends! You’d be surprised how much your mom spends on Amazon every month…
- I haven’t tried this yet, but you should be able to just Venmo someone for a 3% fee with a credit card. This should be a last resort because 3% is pretty hefty, but it’s also a huge time-saver and might be worth it for some people. Do your own research first, this might incur “cash advance” fees. I’ll try to update as I learn more about it.
Which cards should I get first?
Brady wrote an awesome blog post about the Best Credit Cards available right now, where he listed our favorite cards and explained what you can get with each sign-up bonus. The best thing to do is decide what you want or where you want to go and then get the cards you need to make it happen! For example, if you live in Texas and want to fly home to Utah once a month to visit family, then you’ll probably want to start with the Southwest card and earn yourself a fat sum of free flight miles, since they fly direct on that route. If you are getting married and want to honeymoon at an overwater bungalow in Bora Bora for 8 days, then Southwest cards would be useless for you. Check out our Instagram for more travel ideas, pick your dream destination, and then reach out to us to find out how to get there!
What if I don’t want to pay the annual fees? Are you guys just keeping all these cards open or how are you dealing with that?
There are a few options for getting around an annual fee, but it is important to first understand that even if one of our suggested cards requires an annual fee for the first year, the sign-up bonus always makes that annual fee pay for itself. Or in other words, the sign-up bonus is worth more than the annual fee. As long as you know what you want and know that you will use the benefits of the card you’re getting, the annual fee will be more than worth it to you. A ton of cards have no annual fee for the first year, which is great for us – but for ones that do (or for cards that have an annual fee start the second year), here are 3 ways to avoid the financial burden:
- DOWNGRADE: When the second year rolls around and the annual fee is coming due, just call the number on the back of your card and ask if there are any “no annual fee cards” that you can downgrade your card to. For example, the Chase Sapphire Preferred can be downgraded to the Chase Freedom Unlimited, which has no fee and still earns Chase points. You keep your points and your “average age of accounts” gets bigger, which will increase your credit score. It’s a win-win!
- RETENTION OFFER: If you don’t want to downgrade your card (or there isn’t a no-fee version available), then there is a trick – retention offers. Call that same phone number on the back of your card and tell them that you are thinking about canceling your card or downgrading it to another version, because you don’t want to pay the annual fee. I say something like, “I’m just not using the card as much as I thought” or “I have other cards that are giving me a better benefit.” They might offer this proactively, but if not just ask them if they have a retention offer they can give you to convince you to stay. Why? It’s a lot cheaper for a bank to retain a customer than to get a new one, so they really want to keep you (and your potential future spending on the card). And a lot of times, they do! We have gotten thousands of free points by using this trick. They will either waive the fee itself, give you a statement credit to offset some of the cost, or give you points that are worth more than the fee. Don’t ever just accept paying a fee without trying to get something more out of it!
- CANCEL: It’s not the end of the world. You can read more about this in Brady’s post about how churning affects credit scores. If you do this, see if you can transfer your credit limit over to another card with that same bank (if you have one) so you don’t lose your high credit limit (which helps your score). I try to do #1 or #2 to avoid making banks angrier than necessary, but I do resort to this probably 20% of the time.
Why should I start with Chase cards? What is this 5/24 rule I’ve been hearing about?
Chase Bank doesn’t like us churners because we just use them for their bonuses. I mean…who can blame them? So, they have a rule that they will only approve you for certain cards if you have less than 5 new personal credit cards (from any bank) in the last 24 months. The way around this is to simply apply for the Chase cards you want FIRST, then cards from other banks after Chase has approved your first five. Even if there might be other bonuses that are higher value currently, I really recommend starting with Chase so that you don’t preclude yourself from ever getting their cards. If you want to read a much more detailed post about which cards are/aren’t under this “5/24” rule then I would recommend this page from Doctor of Credit. It’s much better to make sure you get Chase’s best cards, and then move on afterwards. To see which cards are currently our top recommendations, check out our best credit card page here.
Yeah but you guys have 30 credit cards. I don’t want to do that! Do I have to get a bunch of cards in order for this to work?
Reading a blog about running from a marathoner doesn’t mean that you have to run 26 miles all the sudden – one or two miles is great to start! Same with credit cards. If you’re obsessive like us, you’ll realize this isn’t so hard and end up with 30+ cards and 2 million+ points after just a year of churning. If you’re like a normal human, then you’ll end up with a couple of cards and a free one-week vacation per year! The best thing to do is decide what perk you want to receive (i.e. Southwest Companion Pass) or what trip you want to do (i.e. 10-day honeymoon in Fiji), and then get the cards that get you that perk or trip. If you’re hooked and want to keep going, then keep going! If your travel bug has been smashed, then you’re welcome and goodbye! 🙂
What do you do to get points after the initial sign-up bonus?
The sign-up bonuses are the big money maker. It’s going to be really hard to get as many points through everyday spend (if you’re like us, we just don’t spend enough to accrue tons of points). So, get a new card!
Realistically though, use your card(s). As long as you are using credit cards responsibly (i.e. DO NOT SPEND MONEY YOU DO NOT HAVE!!) then paying for things with a credit card is always better than paying with cash. Whether it’s redeemable travel points or just cash back, paying with a credit card earns you benefits that cash and debit cards never could. Most of our credit cards just sit in the sock drawer untouched, but others we use for everyday purchases like groceries, gas, restaurants and shopping. Make sure you know which of your cards earns you the most on what. For example, I use a different card at the grocery store than I do at restaurants, because the point bonuses are different on each card. You are still spending the same amount of money every month, but at least with a credit card you are racking up more points in the process! Think of it this way – if you use your Chase Sapphire Reserve rather than cash to spend your usual $2,000/month, that’s ⅕ of a Southwest flight or ⅛ of a hotel night! Brady has ingrained it in me that cash is basically money down the drain. We never ever pay with cash ever.
There are some unique situations that might necessitate doing other things – say you are 10,000 points short of a flight you want to book and need to earn those points quickly. In that scenario, I would consider doing some manufactured spending to get the points. It isn’t as profitable or worthy of your time as when you are hitting a minimum spend for a big bonus, but it can be worth it if you only need a few more.
What are some options of places I can go using points?
…that’s like asking, “What countries are represented on a world globe?” Seriously though, you can go anywhere. There are, of course, some places that are easier to get to and that are more compatible with points, but the sky’s the limit! Some common/super easy places to get to are Hawaii, Europe, anywhere in the U.S…if we don’t already have a “How To” guide for where you want to go, message us and we’ll put it on our list. in the meantime, check Award Hacker to see the cost in points for flights, and Award Mapper for all chain hotels.
Can I use points for other things besides just flights and hotels?
Definitely! Some people, for example, churn cards in order to pay down student loan debt or to buy Christmas presents for family. I know people who built up a combined 500k Amex points and then redeemed that for a $6250 check to pay off their student loans. Could they have gotten a higher dollar value for travel? Maybe – but that’s obviously a huge financial burden lifted off their shoulders. The caveat to that is that it’s usually a poor value of your points. For example, some people redeem their AA miles for gift cards – it’s better than letting them go to waste, but it’s about 30-40% of the value you could actually get if you used the points for travel. Travel is definitely not the only way to use your points, but we think it is the most fun 🙂
Is churning only beneficial for couples?
Nope – it does not require a spouse to have an awesome time traveling the world for free! It’s always nice to have someone to help you double up on cards and points, but that could just as easily be a friend, sibling, parent or coworker. Orrrrr just go solo and find yourself a lover in Spain 😉 If anyone has seen “Field of Dreams” there is a part where the main character says, “If you build it, they will come.” We subscribe to that mentality. What better thing to say to someone you’re dating than “Oh I have enough points to take us to Tahiti, wanna tag along?!”
I have more questions. What do I do?
That’s not possible. JK, comment below or email us at firstname.lastname@example.org so we can answer anything else that might come up! You won’t bother us, and we love to help!