Credit Card Churning Experiment: Month One

THIS PAGE CONTAINS REFERRAL LINKS. PLEASE READ MY DISCLOSURE FOR MORE INFO.

Okay! Let’s see how my credit card churning experiment is going, shall we? I first posted about this in July. If you want to see how this started, go read that post then come back for the update.

In that post I said I’d explain the strategy I plan to use for this experiment. I’ll also be giving an update of my first month with the card and anything else I’ve noticed along the way. Sound good? Let’s get started.

My Credit Card Churning Strategy

The Plan

Card #1: Chase Sapphire Preferred (referral link – see note at bottom)

This card is going to get me a 50,000 point bonus if I spend $4,000 in three months. My normal monthly spend is about $2,000 (or a little less) so I knew this would be easy. I’m halfway to the minimum spend at the end of my first month. The card includes a $95 annual fee, which is waived the first year. I haven’t decided whether I will keep this card open past the first year, but probably not. I got this in mid July and should be done with my minimum spend requirements by mid-to-late September.

Card #2: Chase Ink Business Preferred

As a business owner (this blog is a business) I should have no trouble qualifying for this card. I’ve heard individuals can usually easily qualify for business cards too, but I have no personal experience with that. The bonus is awesome – 80,000 points for spending $5,000 in three months. There is a $95 annual fee, so I do not intend to keep this card. Interestingly business cards apparently do not count against Chase’s 5-cards-in-24-months rule, so I’ll be able to pursue more Chase cards well into the future. I expect to apply for this card at the end of September, right as I meet my spending requirements to get the Chase Sapphire Preferred bonus. I should meet the minimum spend in late November to mid December.

Card #3: Chase Southwest Airlines Rapid Rewards Premier Business

Another business card that *shouldn’t* count against my 5/24 limit. The current bonus on this card is 60,000 points after spending $3,000 in three months. There is a $99 annual fee, but they also give you 6,000 bonus points on the anniversary of opening the card so it might be worth keeping it. I still have to think about it. I expect to use this card from December to January.

Card #4: Chase Southwest Airlines Rapid Rewards Plus

The current bonus on the card is 40,000 points after spending $1,000 in three months. There is a $69 annual fee so I won’t keep this one. I should be done with the minimum spend by late January or early February.

I’m getting the Southwest Airlines cards in late 2017/early 2018 so that I can earn my bonus for these cards in January 2018. Southwest has an amazing deal where you can get a Companion Pass (free buddy ticket) if you earn 110,000 points within a calendar year. So these bonuses will get me 100,000 points, my minimum spends will get me ~4,000 more, and I’ll only need to put a little more on the cards to qualify for the Companion Pass. Even better, sometimes the bonuses go up a bit and I might qualify for the Pass just off the bonuses! Plus, the Companion Pass will be good for the rest of 2018 and all of 2019. That’s why you want to qualify for it early in the year. Didn’t I say it was amazing?

Card #5: Chase Sapphire Reserve

The current bonus is 50,000 points if I spend $4,000 in three months. This card has a hefty $450 annual fee, but everybody I’ve talked to says it’s worth it because of all the perks this card comes with. We’ll see. This card would be used February and March of 2018.

Other considerations: I’m looking at potentially getting an American Express charge card to take advantage of their extremely generous military and travel benefits. More to follow. I have to weigh the benefits of the card against potentially affecting my 5/24 Chase limit.

I haven’t planned further out than this so far. And I will adjust as needed to make sure the cards line up with the timing I need, especially those Southwest cards! So this plan may change. I’ll include any changes in future updates.

What I get from this credit card churning experiment

In all, this plan would give me 280,000 points in bonuses in nine months. Probably 290,000 points, since I should be able to get a higher bonus for the second Southwest card. Then I’ll also earn ~20,000 points for my normal spending. To make it easy, let’s call that a flat 300,000, plus the Companion Pass on Southwest.

A “normal” redemption for travel points is one penny ($0.01) per 1 mile. So 300,000 is like $3,000 worth of travel redemption. But I’m going to be smarter and use travel hacking tricks, so I’m hoping for 1.5 to 2+ pennies of value per mile. That only counts for the 200,000 Ultimate Rewards points, not the Southwest points, FYI. So between the ~190,000 Ultimate Rewards points and the ~110,000 Southwest points, I’m actually looking at $3,850-$5,000 worth of travel redemptions, plus the Companion Pass. All for maybe $713 in annual fees. Potentially less.

And not a penny in interest charges because you should only credit card churn if you pay off your bill each month remember this is very important don’t make me come through that screen and lecture you on responsible credit usage.

I’m not going to do this perfectly. I’m sure there will be times when I either don’t spend the points in the most efficient manner, or I don’t even earn them in the best way. That’s okay for now. I’m considering the next year an experiment. I don’t need to do this perfectly. If I can manage to earn more than 30,000 points/$450 in value per $100 spent on fees, I’ll consider this a success. And with all the travel hacking resources out there, I think it can happen.

Cancelling the cards

My initial plan is that I will use the cards for everything until I meet the minimum spend for the bonus. After that, I will keep the card open for most of the rest of the year, occasionally putting small purchases on the cards to keep them active. My initial plan was to close each card out before reaching 12 months on the account, unless the card a) has no annual fee and b) offers benefits that I want.

However, I saw one blog post about credit card churning that made me think about something else. Retention Bonuses! So now my plan is to ask whether the card is willing to offer a retention bonus, such as more miles or benefits that are worth more than the fee, or a waived annual fee. If so, I would keep the card open another year. If not, I will most likely close it.

My Credit Card Churning Experiment ROE (Rules of Engagement)

1. I will only be opening one new card at a time. I’ll be keeping my oldest credit card, because having long term accounts helps your credit score. I haven’t decided whether I will be keeping my Chase MileagePlus Explorer card. I’m going to call them this week to see if they will waive my annual fee.
2. I hope to be able to complete this experiment without having to manufacture any spending. Manufactured spending is when you create expenses just to meet your minimum spend to earn the bonus. For instance, if you need to spend $4,000 in three months to get the bonus and you are at 2.5 months with only $3,000 worth of charges, you might buy a bunch of gift cards to complete your minimum spend. I’m going to try to avoid this.

My backup spending plan, if I need it, is to pay my rent via credit card. I live in a High Cost Of Living area, so my rent would create a pretty significant amount of my needed spending. However, it would cost me $87.78 in fees to do so, which would eat into my benefits. And my landlord only accepts certain credit cards. So I’ll keep this in mind, but hopefully I won’t have to do it.

Month One Experience

I was approved for the Chase Sapphire Preferred card instantly. As in, I received an email about 3 seconds after I applied for the card. Wow, things have changed since the last time I applied! Since I already have one Chase card, I was able to log into my account and see that the new card was already there. Pretty cool.

There are three things I did immediately upon approval for the Chase Sapphire Preferred card. First, I sent Chase an email asking for the card to be expedited to me. This totally isn’t necessary for most people, but I was about to complete some travel and I wanted to earn the 2x points on travel and dining! I received a message within a few hours saying they’d sent out the card on a Rush Delivery, and that I would see it in 1-2 days. Sure enough, it arrived via Fedex shortly thereafter. Perfect.

After I sent the expedite request, I set up monthly automatic payments from my checking account to the new card. You can choose to set up automatic payments for the minimum monthly amount, or for the full amount due. I set it up to pay the full amount due, which is what I always do. Remember: if you are not able to pay your card in full each month you should be focusing on that aspect of your finances. Credit card churning is a dangerous game if you aren’t used to paying off the balance each month!

The third thing I did, as soon as I activated the card, was transfer all of my monthly recurring payments to the new card – except one. I kept one small bill on my old card just to keep it in use. Everything else went on the new card in order to meet the minimum spend as quickly as possible. I also set up this card as my default card in Amazon so I wouldn’t accidently charge things to my old card.

All of these actions took a total of less than 2 hours. The time was well spent, as I know all of my expenses are going towards my goal of earning the bonus and I won’t have to pay interest because the automatic payments are set up. Ahhhhhhh….peace of mind is a wonderful thing.

My Month One Results!!

Everything here is based on my statement date, which happens to be the 17th of each month. So expect my monthly updates to happen about week three of every month.

Starting Points/Miles:

• Ultimate Rewards: 0 (none)
• United: 38,060
• Delta: 12,775
• Southwest: 1,637

Total Points/Miles as of July 17th: 52,472

Points/Miles Earned:

• Chase Sapphire Preferred: 2389
• Chase United MileagePlus Explorer (my old card): 130
• Other: 0 (none)

Points/Miles Earned In Month One: 2,519

New Point/Mile Totals:

• Ultimate Rewards: 2,389
• United: 38,190
• Delta: 12,775
• Southwest: 1,637

Total Points/Miles as of August 17th: 54,991

My Credit Score

I’m not wildly concerned about my credit score, as I have no major purchases planned, no need to take out a loan anytime soon, and a high starting score. However, I’m keenly aware that one of the most common questions asked about credit card churning is “What will it do to my credit score???”

I applied for the Chase Sapphire Preferred card in mid July. I’d used the free credit score function available via USAA to check my credit score on July 6th, so it was only a few days before applying for the card. Between July 6th and August 21st, my credit score went down by 7 points on USAA.

I also checked my score via Discover’s free credit score check on July 17th. As of August 21st, it was 4 points lower than it was on July 17th.

Now, obviously my experience will not match your experience exactly. But from what I’ve seen in other posts about churning, this is a fairly standard result. I’ll continue to report this each month to see how it changes over time.

BTW, if you are paying to see your credit score STOP. NOW. I currently get my credit score for free from three completely reputable sources – USAA, Mint.com, and Discover. There’s absolutely no reason to pay for this anymore. USAA uses Experian VantageScores, Discover uses FICO, and Mint uses Equifax.

Final Thoughts

So far, so good on this credit card churning experiment. I’m on track to easily meet my minimum spends. That means I’m on track to get those sweet, sweet bonuses. Because I already had a Chase brand credit card, getting everything set up was incredibly simple. Moving all of my recurring expenses to the new card was not nearly the hassle I imagined, and it’s definitely something I can do every couple of months.

Overall, this is going well and I’m excited to keep experimenting!

Are any of you credit card churners? What’s the best deal you ever received from a credit card churn?

NOTE: The link I’ve provided to the Chase Sapphire Preferred card is a referral link. If you sign up via that link, I will receive up to 10,000 points per referral, up to a max of five referrals. You will receive an offer to get the same bonus I’m pursuing – 50,000 points after $4,000 spending in three months.

If you want to use this referral link, great! Thank you so much, you rock! If not, I completely understand. No hard feelings. I’ll literally never know.

Please do NOT use the link if you don’t plan to pay off your balance in full every month. I’ve been through the pain of having credit card debt, not paying off my bill each month, and even a couple late payments. That’s not something I recommend for anyone. Besides, the rewards are only a good deal if you pay off your balance in full each month. If you don’t, the interest you are paying will outweigh the rewards. Use credit wisely!