Churning for Points

Late last week, after weeks, possibly months, of research and cleaning up my credit report, I dove into the world of Credit Card Churning.  There are many websites/blogs that discuss the major details of churning credit cards, so I will only hit the main points and then discuss the results of my first churn.

Credit card churning involves applying for multiple credit cards at the same time (read: same day) to obtain buckets of miles and points that you can then turn around and use for vacations/trips.  IT IS NOT FOR EVERYONE, so please read cautiously the following tips:

1)  ONLY get involved in this if your credit is very good to excellent (read: 700+ from all three credit bureaus) and your history is free of negative remarks (it is still possible to churn with a negative remark if you can explain it reasonably during reconsideration since you will most likely get denied).

2)  ONLY get involved if you pay off balances EVERY month.

3)  Your credit score will take a small hit (2-5 points) for every application in the short term, but will slowly creep back up and surpass the credit score you had when you performed the churn.  The reason it takes a hit is that when a credit card company looks at your credit history/score, it is considered a "Hard Inquiry Pull."  Hard inquires are a factor in your credit score (the more you have the slight dip in credit score).  For a more in depth explanation of what makes up your credit score, click here.

4)  During each churn, only apply for one credit card per bank (there are exceptional circumstances where 2  for certain banks can be done, but try not to be greedy).

5)  PLAN.  Plan your application order; plan your calls to the reconsideration lines, plan which cards you want based on the current offers.  Included in the planning aspect is reviewing you credit score to see if you can even perform a churn.

6)  Professional churners pull this off every 91+ days.  Evidently, most banks let you have another credit card every 90+ days.  Do research on this and only do this if your credit score is still very good or excellent.

7)  If you are planning a major purchase (home or car), don't churn for about a year in order to let the score climb up where you get the best rates.

So with all that in mind, here is how I went about my First Churn (and the results).  Please keep in mind there is a lot more detail about churning that can be readily found by a quick search for "credit card churning".

Step 1: Lots of research (discussed above)

Step 2: Clean up Credit Report.  You can obtain a free credit report from AnnualCreditReport.com.  This was enacted by the federal government years ago and is no gimmick on the website provided.  You can get free copies from each of the 3 credit bureaus (Experian, TransUnion and Equifax).  You can get them every 365 days.  I snagged one from each and made sure everything on there was accurate.  If items were wrong, I disputed them and got them cleaned up (requires filling out forms, calls, etc).  But it's worth it.

Step 3: Obtained credit scores.  You have the option to buy your credit score when you get the free credit reports.  I used MyFICO which gave me my actual scores for Equifax and TransUnion and I got my Experian score direct from Experian.  My scores were not excellent, but were in the lower end of very good so I thought it was worth a shot.  My credit includes a negative item as a result of bad credit management during a past divorce judgement.  Oh well, it could be explained, I hoped.

Step 4:  Determine which credit cards.  After tons of research, I figured out which credit cards (and sign up bonuses) were the most lucrative and useful.

Step 5:  Pull the trigger.  I applied for 7 credit cards and here are the results (in order of application):

1) Starwood (SPG) American Express - Instant approval - Result: 25,000 spg points (enough for as many as 12 free nights at a Starwood hotel or 1 round trip airline flight);

2) Chase Sapphire Preferred - approval pending, called reconsideration line, got approved - Result: 40,000 Chase Ultimate Reward points (good enough for about 2 nights at top of the line Hyatt or almost 2 round trip airline flight);

3 and 4) Citibank American AAdvantage Amex AND Visa - pending approval, will wait for result and write letter if reconsideration is required (Citibank reconsideration seems to only work with letters).  Possible haul of 50,000 AAdvantage miles per card;

5) Bank of America Hawaiian Airlines - pending approval, called reconsideration, got approved - Result: 35,000 Hawaiian Airlines miles that convert to 70,000 Hilton Honors points (good enough for 2 nights at a Hilton hotel);

6)  Bank of Hawaii Hawaiian Airlines - pending approval, called reconsideration (same call as Bank of America since affiliated banks), got approved -  Result: 35,000 Hawaiian Airlines miles that convert to 70,000 Hilton Honors points (good enough for 2 nights at a Hilton hotel);

7) Barclay's US Airways - Instant approval - Result: 40,000 US Airways (Star Alliance) points (good enough for 2 round trip airline flights).

You can see there is a haul of 245,000 points with a potential of 100,000 more.  All that means free miles and points.  Some of the credit cards have annual fees (some waive the first year) so there is a minimal cost, but the miles earned on the application come cheaper with first year fee than earning the same number of miles a different way.

Also keep in mind that to receive the points, I have to spend a certain amount of money in a certain amount of time (ie: $1,000 in 3 months for the Bank of America card).  So when planning which cards to apply for, make sure you take into consideration the spending requirements needed to get the bonus miles.  Of course some professional churns just purchase gift cards to reach spending limits.  With the Mrs and I's monthly spending level, and my work expenses, we can easily meet any requirements.

So all in all, I am very happy with my first churn haul.  Upcoming posts will explain why I picked the credit cards I did.