Boomer Travel Hacking 101 (Part 1): Credit Card Churning

We travel lots for almost no money, and mainly in Business class, and without the benefit of an Infinite Improbability Drive.

In response to the countless requests of friends, family and colleagues who do not have the time or skills to navigate the system on their own (and for those Boomers who roll their eyes and don’t believe us) we have summarized how we do it below.  The information provided is just the very basics.

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Credit Card Churning

Canadian millennials (born between 1981 and 1997) are changing the loyalty points landscape. According to TSYS, millennials, unlike Boomers, are disloyal, love rewards, and churn. This behavior is impacting the Canadian credit card landscape with more and more cards offering cash-back rather than sign-up bonuses; however, it’s not too late to dip your aging toes into a churn. Its “not quite dead yet!”

In a nutshell, credit card churning is when you apply for a credit card with a loyalty program reward point sign-up bonus, with no intention of keeping the card forever. Sometimes the credit card has an annual fee that is waived or discounted for the first year, and sometimes there is a fee you can’t escape. After completing the minimum spend (the amount you must charge to your new credit card in a defined period of time in order to qualify for the sign up bonus), you receive the sign up bonus (e.g., 40,000 Aeroplan points).

After you receive the sign up bonus, most people choose to either keep the card and continue to collect travel reward miles or points, or pay off the balance and not use the card again (if the card has annual fees, you should probably call the provider and downgrade to a no-annual-fee card and keep the same account).

But, if you cancel the credit card and keep the bonus (remember to ask for a “closed by request” note on your account and obtain confirmation about the status of any earned points), then you are officially churning.

Then apply for a new card – maybe even the same card (although not all cards offer this option) – with a promotion or sign up bonus, meet the minimum spending requirement, collect the points, pay off the card, cancel the card. Rinse and Repeat.

It is important to remember that banks, credit cards, airlines, and hotels are there to make money. By understanding and using the system, following the rules and responsible reward card management, you can maximize the opportunities that are available to you.

Credit Card Churning is Not For Everyone

1. If you do not pay off your card balance each month or have difficulty living within your means, then credit card churning is not for you.

Travel reward cards tend to have higher interest fees than other credit cards. If you are paying interest then you may be paying more than the value of the miles and points.

2. If you need to purchase items that you do not need to meet your minimum spend, then credit card churning is not for you.

Most travel reward cards have minimum spends that you must complete in order to collect the reward (e.g., $1000 in the first three months). It is important to not pay more for something or purchase something you do not require in order to meet the minimum spend. But note that there may be ways around this, for more advanced card churners – more in a later post.

3. If you have difficulty tracking information (or do not have someone to do it for you), then credit card churning is not for you.

4. If you are planning on buying a home, renewing your mortgage, making a large purchase in the next couple of years, the credit inquiries can impact your credit score which in turn can impact future financing and credit card churning may not be for you at this time.

5. If you do not know what you want to do with the points, or are planning to take a three hour tour with the Skipper and Gilligan, then credit card churning may not be for you.

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