The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: RumbleKittie on January 02, 2014, 10:03:30 AM
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I haven't really looked into it in-depth, but it seems that whenever I run across topics on travel hacking, people mention 'churning' credit cards to rack up sign-on bonuses. Wouldn't that negatively impact your credit score?
What are some blogs/books/websites that you guys have found useful for figuring out this whole travel-hacking thing?
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It does impact your credit card score a little bit but it's marginal. Check out reddit.com/r/churning
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It does impact your credit card score a little bit but it's marginal. Check out reddit.com/r/churning
Plus, the hit you take for having your credit pulled by the issuing agencies is temporary.
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Thanks for the heads-up on the subreddit!
If I were to sign up for credit cards just for the bonus miles, should I leave them open after I meet the requirements to get the sign-on bonus? I know that the average age of your accounts affect your credit score, as well. I imagine one or more brand new accounts would skew the average to the young side. Is there any detriment to closing recently opened accounts?
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I've been looking into this lately too.
Seems like the bottom line is that every credit card you apply for is gonna take 5-10 points off your credit score in the short term, but that effect will wear off over the ensuing year. To get the best rewards, you need to have excellent credit to start with, and if you do it right and space everything properly you should be able to maintain excellent credit.
I did a moderate amount of research and decided for my situation it's probably worth it, but haven't been able to pull the trigger on much. Mostly I want to avoid anything that will change my spending patterns by making me want to hit minimum spending to get rewards. Just a dangerous path to go down, I already have to work pretty hard to fight lifestyle inflation.
To dabble, I got the 2 best sign-on bonus cards I could find. I should be able to hit the spending minimums and spend the rewards without changing anything I do. $950 in (effectively) cash without doing anything and my credit score doesn't seem to have budged. Once I hit the minimum spend on those I may go for another round and see what I else I can do.
They say that you should leave the cards open a while. Apparently there's some risk of a CC carrier "blacklisting" you for getting the bonus and immediately canceling. I'm planning on cancelling mine after 10-11 months, right before the year 2 annual fee comes due.
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Thanks, @StatsTerhune! Lots of practical insight. I'll likely add points expiration as a criterion when deciding which bonus cards are worth it, and maybe start out signing up for 1 rewards card a year, and see how it affects my credit.
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Mostly I want to avoid anything that will change my spending patterns by making me want to hit minimum spending to get rewards.
This is what keeps me from really going gung-ho with this. Unless I'm suddenly able to start paying my rent with a credit card, I won't be able to meet minimum spending limits in excess of $1,500 for three months. I'm sure many people around these parts have the same problem.
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I responded recently to a similar thread about this:
https://forum.mrmoneymustache.com/ask-a-mustachian/airline-miles-game-mustachian/msg188940/
Essentially yes, I definitely think it's worth it as long as you don't go too crazy and keep the effort pretty minimal.
Mostly I want to avoid anything that will change my spending patterns by making me want to hit minimum spending to get rewards.
This is what keeps me from really going gung-ho with this. Unless I'm suddenly able to start paying my rent with a credit card, I won't be able to meet minimum spending limits in excess of $1,500 for three months. I'm sure many people around these parts have the same problem.
Eh, there are ways around this. I personally never go for a bonus that requires more than $2000 over 3 months because I find it stressful, but you could easily just buy some gift cards or Visa cards or whatever and just spend them down over longer periods of time. There might be fees but probably worth it if you're talking about tons of miles. And there are definitely people who use methods like Amazon Payments, where charges on credit cards are sent as "payments" to their spouse or whatever without any fees up to $1000 a month. There are many ways to provide "manufactured spend," but some ways you may feel more comfortable with than others (I personally have never done the Amazon Payments thing).
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Oh, I forgot I was going to mention resources. Flyertalk forums are probably the most detailed but overwhelming I think. A decent place to start is a blog like The Points Guy or Millions Mile Secrets - more accessible and can walk you through the basics.
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Thanks, @StatsTerhune! Lots of practical insight. I'll likely add points expiration as a criterion when deciding which bonus cards are worth it, and maybe start out signing up for 1 rewards card a year, and see how it affects my credit.
Yep, good call on the expiration, the criteria for me was:
1. can get the sign-on bonus without doing anything I otherwise wouldn't
2. can use the rewards points without doing anything I otherwise wouldn't
I don't think anyone would argue with (1), but even I'm not sure about (2). The cards I got are both things I'm going to be able to claim on expenses I'd already planned for 2014. A lot of people seem to use points very differently than this though -- using airline and hotel points to take trips they otherwise wouldn't, or take more "luxurious" trips than they otherwise would.
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I think you don't want to have more than two hard pulls on your credit every 12 months.
I think it all depends on what your situation is. If you're planning to take out a mortgage or large loan anytime soon, then I probably wouldn't mess with any of this stuff -- the gains aren't worth the risk of a slightly higher interest rate. I'm not planning to ever take out any kind of loan, though, and the only thing I will ever need good credit for is to qualify for credit card bonus reward offers, so I'm willing to push this a little further.
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Just a note about credit scores. They can also affect things like car insurance (and maybe homeowner's insurance?) rates.