Yesterday we made our big announcement that we’re stepping up our travel game and taking a RTW trip over the next nine months. The big question has been how can we make this happen? Our goal is for all of our flights and accommodations to be free thanks to points and miles.
In a span of just over two years, we collected nearly two and a half million airline miles and hotel points solely from signing up for new rewards-earning credit cards, which is the primary reason we are able to take our round-the-world trip. We’ll be breaking down exactly which cards we used tomorrow, but for those unfamiliar with the world of travel hacking, or “credit card churning” as we’ll sometimes refer to it, here’s an overview.
According to an article on Forbes.com, “The term [travel hacking] describes ways frequent travelers save loads of money. It’s more than finding a “deal” online. It’s discovering a magical world of free travel, upgrades, and elite status.”
Essentially travel hacking is collecting miles and points to use for free flights and hotel accommodations. Even though these are commonly referred to as “frequent flyer miles,” it turns out the best way to earn frequent flyer miles is not by flying at all. There are multiple ways to earn miles and points (promotions, shopping portals, maximizing business travel, etc.), but the primary and easiest method to rack up points quickly is through credit card churning. Credit card churning is finding the best credit card sign up bonus deals to earn flyer miles, free hotel stays and bank rewards points.
The credit card market is extremely competitive, and as a result, credit card companies are willing to hand out huge bonuses to get you to sign up for their products. Sign up bonuses range from 25,000 to 100,000 points per new card application. For a point of reference, 100,000 miles is enough to get you a round-trip business class airline ticket from the United States to Europe. As you can see, taking five to 10 minutes to fill out a credit card application can pay for a ticket that could cost you over $5,000 if you paid out of pocket. If you think this sounds too shady, read this post, “Why Travel Hacking is Allowed…”
Credit card churning usually means signing up for multiple credit card applications on the same day, and then waiting at least 91 days before doing another “churn,” or round of credit card applications. It is important to diversify which types of cards you are signing up for (will they earn you hotel points, airline miles or bank rewards), as well as which banks you are applying for credit from. Chase bank is one of our favorite banks because they provide the most quality offers, and their Ultimate Rewards points are very valuable because you can transfer them at a 1:1 ratio directly into other airline or hotel loyal programs. But if we are going to apply for 10-12 cards a year (which we do), then they cannot all be from Chase. American Express, Barclaycard, Us Bank, Citi, Capitol One, and Bank of America all offer rewards cards.
The biggest concern I hear about credit card churning is “Will it hurt my credit?” The short answer: no. We have actually seen our credit scores go up about 30 points each since we began churning two and a half years ago. Churning can actually positively impact your credit score because by applying for more cards you increase your overall amount of credit extended to you, which causes your credit utilization ratio to drop. It is recommended that you have a credit score of at least 700 (get a free estimate of your score at Credit Seasame or Credit Karma) before you begin churning credit cards.
It is extremely important that you are able to pay off your balance in full each month. Accumulating interest fees is typically not worth the miles and points you’ll obtain from churning. Let me be very clear about this, credit card churning is not wise if you are unable to pay your balance off every month. Managing multiple credit card applications, hitting the required minimum spend for each bonus (typically between $500 to $3,000 per card), keeping track of when annual fees are due and which cards you plan to keep and cancel, can be overwhelming. This hobby is not for everyone, but responsible credit users who are able to stay organized can quickly earn hundreds of thousands of points and miles to enable you to travel for next to nothing.
The “miles game” or the “points world” is very exciting, but can be overwhelming for those first starting out. I recommend Googling and reading as much as you can before getting started. It seems like there is a lot to it, but you’ll catch on quick!