Confessions of a Once and Future Credit Card Churner

I was into churning credit cards before churning was cool. I discovered it accidentally on my own. Back in late 1996 I got a US Airways Visa (at least I think it was a Visa back then) and I didn’t even realize it came with an annual fee. They gave me the signup bonus, I got the bill, and I called to cancel because I couldn’t imagine paying an annual fee for a credit card back then!

I wasn’t on the hook for the fee, but those miles were in my account. Awesome!

Fast forward a couple of years, and they were pitching that card again and now I wasn’t first year out of school anymore, I was flying a decent amount, I hadn’t really done much international travel to speak of but I started marveling at award charts. And they got me hooked when an offer came in the mail, I sent it back and… more bonus miles! Cancelled that card, too.

Then I started paying close attention to my ‘junk mail’.

About three more years into the future and I’m signing up for a Chase United Visa every 3 months or so. And an American Airlines Mastercard every 4 months. Back then signup bonuses were paltry, but what did I know? 15,000 miles was more than the cost of a confirmed domestic upgrade back then.

In April 2003 I stumbled on a 20,000 mile signup bonus for the United Visa which I called the most generous credit card offer yet. (There had been 25,000 Delta offers requiring significant spend, and Northwest offers which didn’t pay out the full bonus until the second year, but this was the first 20,000 bonus without either stipulation I had seen.)

Back then I was pretty indiscriminate. I signed up for cards without paying too much attention to the value to me of what I was getting. I even signed up for a Lufthansa co-branded card when it was first offered in the U.S., why I wanted those miles from Miles & More I’ll never know.

The banks were pretty indiscriminate, too, and they just kept approving me for any card I asked for. I had good credit, even though I didn’t really know how credit scores worked. I paid my bills on time, and all these credit card signups meant that my available credit kept growing — and my utilization ratio went down. Spending $2000 on a card in a month when you only have $4000 credit means you’re using 50% of your available credit. Spending $2000 on a card in a month when you have $40,000 available credit means you’re using only 5% of your available credit. Look how responsible you are with credit!

It was a crazy thing that took me a long time to grasp, even though I was signing up for all these cards and that does temporarily ding your score at least in the immediate term, long-term I was building higher credit because I was getting all these cards. Of course I paid them off every month, and the cards with no annual fee I generally cancelled before the fee came due. Or in the case of Chase I figured out I could even keep the available credit lines, I’d just fold one card’s credit into another card’s credit and make the card that was about to have a fee go away. I kept my oldest rewards card, a United Visa, and I still have that card to this day. The annual bonus it gives me is enough to justify the fee, it helps the aging of my credit history, and I’m just too nostalgic for it to give it up.

The age of your accounts matter, so no fee cards shouldn’t be cancelled unless there’s a benefit to cancelling (an issuer tells you that you have too many cards, or too much outstanding credit, and you cancel it to get another card and associated bonus for instance).

And of course, if you’ve got a 760 score on traditional FICO or better then there’s not a real incremental benefit to having a score that’s higher than that, you’ll still get the best rates and approvals either way, so I didn’t worry too much about temporary dings. Though I did more or less take a break from credit card signups in the year leading up to first getting a mortgage, even there though it most likely wouldn’t have hurt me.

I was living high on the hog, getting every card I could possibly get my hands on, probably 6-8 every three months overall. I got Marriott cards, personal and business. I got Priority Club cards, personal and business. I got each one of the Delta American Express offerings. I got the Hilton Visa and the Hilton American Express. In 2001 a friend convinced me to get the Starwood American Express and I made that my primary card for spending at the time, but I kept signing up for cards to get the bonuses.

Along the way I discovered much of what became conventional wisdom on my own. I discovered that I could not get the same American Express offer more than once. But that if a better offer came along and I signed up for it they gave me the difference in points versus what I had received before. And of coruse there were so many variations of cards with Delta that I could still get plenty of Delta miles.

Bank of America was churnable too, and not just the US Airways card they used to offer, so was the Alaska Airlines Visa though I never tried for Hawaiian Airlines or for some of the international carriers they partnered with.

Then there were signup bonuses of cash, I didn’t hit those as hard as I did the mileage cards, and the funny thing is that some of the cash bonuses were worth more than the hotel bonuses. But I didn’t care, I was a miles and points junkie.

The only time I went heavy spending with a bank-branded points program was Citibank’s Thank You Points. Because the early program was so darned lucrative. They’d bonus various categories of spend, and you could get them to redeem for really expensive tickets, just find a flight you wanted with only very high non-refundable fares available and you had a credit for future use when you cancelled the ticket. They got wise and capped the redemption values, but business class tickets were still redeemable at 3 cents in airfare per point. If you earned 5 points per dollar, you were getting a 15% rebate to spend on airfare. And people got more than 5 cents per point, e.g. with Drivers Edge Mastercard got 6 points per dollar for gas and grocery spend, matched by the miles you drove, so you could actually get 12 points per dollar for that spending category. And with each point worth 3 cents each, it was a 36% rebate on your gas/groceries. Of course my focus for redemption was with Delta, because once I cancelled a ticket I had to issue the first one out of my travel credit to myself but after that I could use the travel credits for others, mostly for my wife.

But now we’re getting far afield from the topic. Which is credit card churning and how I think about it today, not how I spend money on cards. For where I put my actual spending to maximize my rewards, I wrote a recent post on that.

Around 2007 or thereabouts Chase decided that the merry-go-round with them was over. You could no longer get the same card’s bonus more than once. I was one of the first to find this out, before there was any discussion online I got a letter in the mail from them. They declined my bonus on the Priority Club Rewards Visa. It was always in their terms and conditions, they just got around to checking.

There were some squirrely things people did back then to still try to get the bonuses (like not quite filling out their applications fully and correctly) but as far as I was concerned the Chase party was over. Except that they had so many cards and they kept coming out with new oens.

It’s a shame really that I ran through most of their major offerings in the early days. I would sign up for Marriott Rewards cards when the bonus was 20,000 points — nothing like today’s 70,000. I couldn’t get the big bonus on British Airways either time they offered 100,000 … and even though both times I believe I was the first to break the story about the card offering. Because I had gotten the 15,000 mile bonus. That’s alright, I used those miles to good effect, redeeming them (along with more points, like the ones I got for test driving a Jaguar) to go to El Bulli for dinner with my wife.

Now 50,000 is the new 20,000, an average (though well worthwhile!) signup bonus. Citibank started cracking down on churners. No more 3 month applications for the American Airlines card at 25,000 miles apiece. Sad thing is that I assumed my last 25,000 mile signup meant that I wouldn’t be able to jump on the mega-bonus bandwagon when they started offering 75,000 and 100,000 miles for new cardmembers. Boy, all that hard work I did, getting 4 cards over the course of a year, and a new cardmember can just fill out an app and meet one minimum spend requirement to get just as many miles? The new world is sure a crazy one it seemed.

But I waited. I bided my time. And over the summer I finally bit the bullet on a couple of 75,000 mile cards, figuring that it had been a year since I had cancelled my last one and more than 18 months since I had gotten the bonus for it. Approval. Bonus. And that much closer to AAdvantage 3 million mile status, just before the window for non-flight miles to count towards lifetime status closes on December 1.

A couple years ago Chase started saying not only would they only give a bonus one time for each card, but they would only give any one person a new card every six months. I started conserving my Chase credit card applications! Sure there might be a 50,000 mile offer out there, but should I waste it? I might forego a limited-time opportunity for something even better. And when I finally realized last November that I hadn’t ever had a Continental Mastercard (how did I let that one slip by?) and I managed to get 46,000 miles to sign up for it, it meant that I wasn’t in a position to jump on the Hyatt Visa when it first came out. Which was frustrating because as a Hyatt Diamond member the signup bonus was two free nights in a suite.

I let about three or four months pass and applied anyway, despite that 6 month conventional wisdom. And was approved.

Newly emboldened, I waited about three or four months and applied for the Chase Sapphire Preferred card. I was enticed by 50,000 bonus points (the offer is now 40,000 points) transferrable to United, British Airways, Hyatt, Marriott, etc. And double points in various categories, for my own needs the biggest was restaurant spend.

This time I was declined. I don’t think I had ever been declined for a credit card before. That’s ok, I didn’t know what to do from personal experience but I sure knew what to do from reading my buddy Rick’s blog. I called the Chase reconsideration line at 888-245-0625.

The call was quick and simple, I told them that I wanted the card because it was so valuable and that while I had several other Chase products in my wallet this was the one that was going to secure my future spend and business. I told them that I didn’t really need more credit than they were already giving me, I just wanted this new card they were offering. They were happy to shift around my credit in order to approve me for the card. And they did. I got the card, I’m happy with it, it’s beautiful… Am I a credit card nut, or what, if I think a credit card is actually sexy? It’s heavy and the numbers aren’t embossed on the front. Outstanding design.

Now, it’s important to have the right cards in your wallet. Most airline elites, or those chasing status, really want to have the card associated with their airline of choice because spending on that card can usually help towards re-qualifying for status or moving up a tier. And depending on your spending patterns, various cards will offer the most lucrative return on that spend.

But it’s equally important to draw a distinction between the cards you sign up for to get the bonuses versus the cards you actually put spending on (at least spending beyond the minimum necessary to meet spend requirements for the initial bonuses.

Back in the day there was no such thing as a minimum spending requirement, bonuses were provided after first purchase. I guess the card issuers saw too many people pocketing the bonuses, and they figured if they could get consumers into the habit of actually using their card (using the lure of the bonus in order to do so), that those consumers would likely continue to use the card.

The first minimum spend requirement I remember seeing was $250 on the United Visa. Nothing like the much higher requirements we see these days… Now I think Sapphire’s $3000 in 3 month requirement is ultra-low.

Where once upon a time, though, I used to sign up for a couple dozen cards a year, I’ve drastically scaled back in recent time. Oh, I’ll still jump on a lucrative bonus. But there are far fewer opportunities for me to do so. I’ve had most of the great cards, and issuers don’t want to keep giving me bonuses for the same ones. I was greedy early, using up my card apps on 15,000 mile bonuses so today miss out when the bonus is 100,000.

There are fewer options for me. Card issuers are more careful about how many cards they’ll give you, how much credit they’ll give you, and how often. So I hold my fire. I don’t want to ‘waste’ an application on a miniscule bonus only to be unable to get the next big score.

And I’m also a bit further along in my life then when I got that first rewards card at age 22. I never did the uber-Fatwallet kind of thing where I’d sign up for 0% credit cards, use their balance transfer checks to put money in a savings account, and earn the interest during the 0% promo period. But I did sign up for a lot of cards that seem pretty low value on reflection.

I no longer bother with a card unless (1) the signup bonus is especially good or (2) I actually want to use the card.

Now, we’ll each have our own threshold. One that was suggested to me recently is “don’t bother for anything less than 50,000 points.” I don’t quite agree that that’s a firm metric.  The Alaska Airlines Visa doesn’t just have a signup bonus of miles, each year you get a $99 companion ticket and there are no capacity controls on that ticket, it can be used for any seat on any Alaska flight. The companion books into the same fare class and has the same rules, restrictions, and mileage earning as the paid fare. So a refundable first class ticket to Hawaii gets a second refundable first class to Hawaii for $99+tax. I’ll take that and 40,000 (or even 25,000!) miles any day

But on the whole that seems right to me. I’m not sure I’d jump on a 50,000 mile American Airlines offer or a 50,000 mile British Airways offer, since both offers have been bigger in the past on more than one occasion. I’d probably hold on until a 75,000 or 100,000 mile offer comes around.

And right now there aren’t any monsters. But there are good cards worth doing.

• Chase Sapphire Preferred Visa. 40,000 points transferrable to United/Continental, British Airways, Korean Airlines, Marriott, Hyatt, Priority Club, Southwest. Fee waived the first year. No foreign currency transaction fees. Double miles on all travel spend (not just air and hotel, even cabs and tolls) and restaurants. This is a card I’m actually keeping and will pay the fee on.
  
• Ink Bold Charge Card from Chase with 50,000 points for spending $5000 within 3 months, fee waived the first year. These points are combinable with the points from Chase Sapphire — so transferrable to United/Continental, Marriott, British Airways, Priority Club, Hyatt, etc. So the next time I feel like Chase will approve me for a card, I’m going with this to pocket the bonus. I don’t need it and Sapphire, but I do need the 50,000 points.

• 50,000 points for the Southwest Visa, $69 annual fee, points are worth up to $833 in paid travel on Southwest, can be redeemed for gift cards, and get you about half the points needed for a companion pass (a designated companion travels with you free for a year). I’m not a big Southwest guy but it’s a generous signup bonus, and I’ve had numerous conversations with friends and co-workers the past few days about the beauty of Southwest — these are the tickets you give to relatives you aren’t close to, you look like a hero and you don’t actually have to fly them. This is one I probably apply for, get the bonus, and cancel before the fee comes up.
• Citi ThankYou Premier: 50,000 ThankYou Points after $2,500 in spend within 3 months, no fee the first year. Worth a minimum of $500 in gift cards, often worth marginally more for travel spend. This is one I probably apply for, get the bonus, and cancel before the fee comes up.

So here’s the tough thing. Three of these four are from Chase. If you have other Chase cards, you may not be able to get more than one, though if you do please report back. I like that there’s a Citibank card I haven’t had, it’s great to be able to mix up card issuers. I’m certainly willing to take lower bonuses from other card issuers.

Big banks don’t get ‘thank yous’ for very much. But I do appreciate their dedication to making sure that I can fly in international premium cabins for almost free on a regular basis.