My Credit Score Is Fine, and Other Unfounded Concerns
Before I send you blindly into the night with the mission to open up a pile of credit cards, I should probably address the nagging concerns that you have. To identify what those concerns are, I’ll defer to WiseBread’s list of reasons of why you shouldn’t do this.
You Can End Up Paying Interest for Your Rewards
Yes, you can, if you’re stupid. But, you are not. You are smart. If you spend as you normally would and pay the entire balance when it’s due, then you will not pay a dime of interest or late fees. It is as simple as that. Your behavior with credit card usage should not change simply because you are changing the card that you’re using more often.
You Can End Up Paying a Lot of Annual Fees
Once again, yes, if you’re stupid. Sometimes, the annual fee is worth paying. However, it usually isn’t. In those cases when it’s not, then you cancel the card prior to the renewal (and annual fee) date.
Your Credit Score Will Take a Hit
It will? Your credit score is made up of five factors:
Even though I know the breakdown, I have no idea how credit card churning impacts all those algorithms. I can make some guesses. The positives: your credit usage % will drop, your payment history will stay the same or improve, your credit mix will improve. The negatives: your credit will get pulled more often and your average credit history will decrease. But, rather than prognosticate, look at my score over the past year or so.
I removed the number axis; I’m not quite comfortable enough showing my exact score quite yet. However, I will tell you that from when I started churning (first application was in February), my score has increased by eight points.
A credit card is a simple and easy way of overdrawing money from the bank and using it for personal reasons, but for big expenses
A Lot of Points Might Go to Waste
This is a legitimate concern, but is easily avoided by doing two things: 1.) Staying organized enough to know when points might expire, and 2.) actually using the points you accrue. Once again, points are a little like the digestive tract–you only notice it when it’s being used. That’s why we have been actively using points: a trip to Minnesota; a train to Atlanta for Thanksgiving; a couple hotels and flights for loved ones; a night in Nashville; a trip to Miami; a trip to SeaWorld. Even with all of that in only a few months, our points balance continues to climb. Rest assured, nothing is expiring over here.
There Are New Rules Designed to Curb Churning
Yep. However, there are tons of these offers. What’s more, if you cancel, you can usually re-up after a waiting period (18-36 months, on average). I’m not exactly sure how this will play out over many years. However, in the Credit Card Churning forums at FlyerTalk, there are tons of veterans in this space, and I’ve yet to hear of any horror stories. What’s more, in ten years, I expect I’ll have enough money to not need to do this. In fact, I have enough money right now to not need to do this (after all, that was my reality before this year). However, I shall continue until a reason not to presents itself.
What Are You Going to Do With All Those Cards?
Well, you cut them up, and then cancel them. Easy Peasy.
The first ten months of this has been an overwhelming success. Over $530 bucks a month in cash and travel, all while my credit score has gone up. It’s actually a relatively fun hobby, so even the couple hours per month I spend in spreadsheets and on the phone doesn’t much feel like a hassle. Plus, it makes me feel good to take my family places while simultaneously scratching my frugality itch.
When it comes to side hustles, they are not created equal. Some require a lot of work with little reward (cough, blogging, cough). Others, though, like credit card churning, reward you with hundreds per month while doing nothing but a little paperwork.
If you have any questions, please contact me or drop a comment below. And, if you found this entertaining enough to share with your friends, you can do that, too!
Thanks so much for reading Retire29!