As part of my ongoing quest to optimize my finances, I took up credit card churning almost exactly one year ago today.
Let’s start from the very beginning (a very good place to start!)
What is churning?
In order to attract new customers, banks often offer lucrative sign-up bonuses to those who open up credit card accounts and then meet a minimum spending threshold on the new account within a few months of signing up. Depending on the card, these bonuses usually take the form of cash, airline miles, hotel points, or proprietary transferable points. If you are responsible with your spending and well-organized, it is possible to take advantage of these sign up offers to earn lots of rewards for funneling your ordinary expenses through a different credit card every few months. This practice is known as churning, because of the comparatively rapid pace that the churner acquires new cards over time. To many, it may sound like a hassle, but the rewards can be extremely valuable and should not be overlooked. All it takes is a few hours of up-front research to learn about strategies, a few minutes to apply for a new card or two every few months, and the moderate organizational ability and financial discipline to keep track of your cards, pay them all off entirely in full every month, and not to spend more than you do under ordinary circumstances.
My churning progress
I started learning about churning in March of 2016, after hearing an interview with some experienced churners on one of my favorite podcasts. After a few days of researching (when I first come across an interesting idea, I often spend lots of time reading as much as I can about it and quickly become an expert), I applied for my first card. Since that time, I have applied for a new card every 3 or 4 months and accumulated lots of rewards along the way.
You may notice that all of these cards are issued by Chase. This is due to a policy known as 5/24, meaning that for most cards that Chase offers, they will not approve your application if you have received more than 5 cards from all issuers in the previous 24 months. For this reason, it is imperative that if you are going to start churning, you must start with Chase cards until you reach the 5/24 limit, and only then branch out to other issuers. Since Chase has some of the best card offers, you probably will want to apply for their cards first anyway.
Also note that the sign-up offers and (to a lesser extent) features/perks for each card are subject to change over time. For this reason, it is worth keeping a close eye out for limited-time offers so that you can get a better sign-up bonus by timing your application right. The bonuses and perks that I describe below were the ones that I received, and may or may not still be available should you try to apply today.
Card #1: Chase Sapphire Preferred
I applied for my Chase Sapphire Preferred card online and fortunately was instantly approved. A few days later, the card showed up in my mailbox and I began to use it for all of my purchases until I met the minimum spending goal. Here are the card’s stats:
| Name | Sign-up bonus | Minimum Spend | Rewards earnings | Notable perks | Annual fee |
|---|---|---|---|---|---|
| Sapphire Preferred | 50,000 Ultimate Rewards (UR) points | $4,000 in first 3 months | 2x dining and travel, 1x for everything else | 5,000 UR points for adding an authorized user , Can transfer UR to travel partners, Can redeem UR at 1.25 cents per point in the Chase Travel Portal, No foreign transaction fees, Primary car rental insurance | $95 (waived for first year) |
At the time, this was (and still is) an excellent first card to get started in the churning hobby, as the sign-up bonus is valuable and very flexible to redeem. The card itself is fairly unique, as it is made partially out of metal and has a pleasant heft to it. After meeting the minimum spend requirement and adding an authorized user (protip: you can create an authorized user card with your first initial and last name to get the bonus), I had earned about 60,000 UR points (50,000 from sign-up bonus + 5,000 from authorized user + 4,000 from minimum spend + bonus points from travel and dining spend). Having earned that massive bonus, I was ready to move on to my next card.
Card #2: United MileagePlus Explorer
For my second card, I decided to get the United Airlines partner card as my closest major airport is a United hub, and United offers good redemption value on their Star Alliance partners. Here are the card’s stats:
| Name | Sign-up bonus | Minimum Spend | Rewards earnings | Notable perks | Annual fee |
|---|---|---|---|---|---|
| United MileagePlus Explorer | 50,000 United Miles | $2,000 in first 3 months | 2x United, 1x for everything else | 5,000 miles for adding an authorized user, First checked bag is free on United flights, No foreign transaction fees, Priority boarding on United flights, Greater award booking availability, 2 United Club lounge passes every card anniversary | $95 (waived for first year) |
By meeting the minimum spend on this card, I earned 57,000 United miles (50,000 sign-up bonus + 5,000 authorized user + 2,000 minimum spend).
Card #3: Chase Sapphire Reserve
This is my favorite card in my arsenal. It came out in August of last year and it is essentially a supercharged version of the Sapphire Preferred. It offers greater rewards than the Preferred, and more perks as well. To top it all off, it launched with a monster 100,000 UR sign-up bonus, which made it impossible to pass up. Sadly, the 100,000 bonus has since been reduced to 50,000 UR for online applications, but the 100,000 bonus is still available until March 11th, 2017 if you apply in-person at a Chase branch, so hurry up before it goes away!
| Name | Sign-up bonus | Minimum Spend | Rewards earnings | Notable perks | Annual fee |
|---|---|---|---|---|---|
| Sapphire Reserve | 100,000 (UR) points | $4,000 in first 3 months | 3x dining and travel, 1x for everything else | $300 credit for travel spending per calendar year, Can transfer UR to travel partners, Can redeem UR at 1.5 cents per point in the Chase Travel Portal, No foreign transaction fees Primary car rental insurance, Trip delay/cancellation insurance, $100 credit for Global Entry / TSA PreCheck, Free access to Priority Pass airport lounges | $450 |
By meeting the minimum spend on this card, I earned over 104,000 UR points (100,000 from sign-up bonus + 4,000 from minimum spend + bonus points from travel and dining spend). Plus, due to the $300 travel credit being renewed on a calendar year basis, I received $600 in travel credits ($300 for 2016 + $300 for 2017) for only paying $450 in annual fees (charged every 12 months). For this reason, if you decide to also get the Reserve, don’t apply for it near the beginning or end of the year so that you too can take advantage of the mismatch between the calendar year and your annual fee renewal.
Card #4: Chase Hyatt
As I was approaching the 5/24 limit with Chase, I wanted to secure some Chase cards that would be worth keeping long-term, as I likely would be unable to get them after reaching 5/24. Chase offers 3 hotel-affiliated cards which reward the cardholder with a free hotel stay every year on the card’s anniversary. Since I intend on travelling to a particular city every year, I did some research to find which hotels in that city would be eligible for the free night offers, and I decided that two would suit my needs: Hyatt and IHG (Card #5).
| Name | Sign-up bonus | Minimum Spend | Rewards earnings | Notable perks | Annual fee |
|---|---|---|---|---|---|
| Chase Hyatt | 2 free nights at any Hyatt hotel | $2,000 in first 3 months | 3x Hyatt, 2x airline / car rental /dining, 1x for everything else | Annual free night at category 1-4 Hyatt hotels, $50 statement credit on first purchase, 5,000 points for adding an authorized user, No foreign transaction fees, Hyatt Platinum status | $75 |
By meeting the minimum spend on this card, I earned 2 free nights at any Hyatt hotel, plus 7,000 Hyatt points (5,000 from authorized user + 2,000 from minimum spend).
Note that Hyatt recently changed their loyalty program and Hyatt cardholders now receive Discoverist status, which arguably is not as good as the old Platinum. This is an example of benefits being subject to change.
Card #5: Chase IHG
My final card to bring me to 5/24 is the Chase IHG card. Like the Hyatt card, it gives a free night every year to cardholders, but unlike the Hyatt card it has no restrictions on which hotel the free night can be used! This means that for paying the $49 annual fee, you can get a night at a $500 / night hotel!
| Name | Sign-up bonus | Minimum Spend | Rewards earnings | Notable perks | Annual fee |
|---|---|---|---|---|---|
| Chase IHG | 80,000 IHG points | $2,000 in first 3 months | 5x IHG, 2x gas / grocery / dining, 1x for everything else | Annual free night at any IHG hotel, 5,000 points for adding an authorized user, No foreign transaction fees, IHG Platinum status, 10% point rebate on redemptions | $49 (waived first year) |
By meeting the minimum spend on this card, I earned 87,000 IHG points (80,000 from sign-up bonus + 5,000 for authorized user + 2,000 from minimum spend).
Card #5.5: Chase Freedom Unlimited
Since I had already reached 5/24, I was ineligible to get this card by applying for it directly. Instead, I was able to get it by product-changing my Sapphire Preferred. A product change essentially just exchanges one card for another one, without needing to apply for a new line of credit. Because I decided that I will keep my Sapphire Reserve for the long-term, I exchanged my Sapphire Preferred for the Freedom Unlimited (before I had to pay the $95 annual fee!) so that I could pair the earning power of the Freedom Unlimited with the perks of the Sapphire Reserve.
| Name | Sign-up bonus | Minimum Spend | Rewards earnings | Notable perks | Annual fee |
|---|---|---|---|---|---|
| Freedom Unlimited | N/A, due to product change | N/A, due to product change | 1.5x UR earned for all spending | None | $0 |
On paper, the card doesn’t look very impressive, but Chase allows cardholders to transfer UR points from one card to another. This allows points to be earned on one card and redeemed through another. In this way, I can earn 1.5 points per dollar spent on everything, transfer the points to the Sapphire Reserve, and then redeem the points for a minimum of 1.5 cents of value. When paired this way, the Freedom Unlimited effectively gives me a minimum of 2.25% (1.5 x 1.5) reward on all of my purchases!
Conclusion
As you can see, by strategically taking advantage of credit card sign up bonuses and perks, in my first year I was able to earn:
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Over 164,000 UR points
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57,000 United miles
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2 United lounge passes ($118 value)
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7,000 Hyatt points
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2 free nights at Hyatt hotels (as of this writing, $1,136 value for the hotels I intend on visiting)
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87,000 IHG points
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Platinum status at IHG and Hyatt hotels
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Global Entry / TSA PreCheck membership good for 5 years ($100 value)
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Unlimited access to Priority Pass airport lounges
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$600 in travel credits
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$50 in statement credits
If you use the point valuations as suggested by The Points Guy, at the time of writing my earned points are worth $5,034. Add on the value of other rewards listed above (I will conservatively discount the value of hotel status and priority pass lounges to $0), and the total earnings come to…
(drumroll please)
$7,038!
Subtracting the $525 I paid in fees, I came out ahead by $6,513!
And the benefits of some of these cards (like free hotel nights) will continue to pay dividends in years to come.
Look for another post soon where I will detail my award redemptions!