Introduction to Rewards Credit Cards
I first stumbled across travel rewards while in college. I had little bit of credit and was able to apply for and get a Hilton Honors points credit card. Earn a free hotel night or two to supplement a trip? Sign me up! Over the course of the next ten years we would earn a few free nights a year. Eventually we added the Hilton Amex and has a brief run with manufactured spending (thanks Us Mint!) In 2015 we got serious about rewards card churning and have consistently earned $2,200 or more a year in signup bonuses.
Some Things To Know:
The Players: There are four Visa/Mastercard issuers that consistently issue $500+ signup bonuses. Chase, Capital One, Barclay’s, and CitiBank. Bank of America and Wells Fargo are secondary players that will occasionally offer $500+ rewards. Amex is a beast of its own which I don’t use for credit card hacking, but it has some unique rules you can find online.
A married couple can accomplish $2,200+/year by sticking with the four main issuers.
The 5/24 Rule: Chase originally instituted a rule that would automatically decline borrowers if they had opened five or more credit cards in the last twenty four months. Other issuers have followed with similar rules of their own.
The most simple way to meet four signup bonuses a year is for a couple to get one card from each of the issuers per year, alternating between partners for who gets which card. The card schedule could look something like this:
Partner 1, Year 1: Chase, Barclays
Partner 2, Year 1: CapOne, Citi
Then alternate the card issuers to the other partner:
Partner 1, Year 2: CapOne, Citi
Partner 2, Year 2: Chase, Barclays
Since I consider Bank of America, Amex, and Wells Fargo as secondary issuers, we will work them in for the 5th card within the 5/24 rule.
Manufactured Spending (MS): MS is generally considered spending money on a credit card then getting reimbursed somehow in cash or paying a transaction fee where it would not otherwise make economic sense. In 2008 I cold order dollar coins from the US Mint, pay with a credit card, they were shipped to my house for free, then I would deposit them into the bank and payoff the card. That was the easiest manufactured spending of my life.
Today there are more complicated ways to manufacture spending, but its a constant game between the credit card churners (mainly frequent flyers) and the card issuers. The FlyerTalk forums are my go to source when I want to dip my toes into manufactured spending.
What have our results been over the past two years?
Disclosure: Sign up bonuses only are included in the math, not the points earned from “regular” spending, which are worth $0.01 to $0.02 for each dollar spent. Annual fees paid and manufactured spending costs are offset against these results.
Chase Sapphire Preferred: Opened late 2017, received 50,000 Ultimate Reward Points as our signup bonus and two referrals and two 10,000 referral bonuses, one back to our self and one to a family member who had a large purchase coming up on a credit card. Result: 70,000 Ultimate Rewards Point, Value $875, no annual fee in the first year.
Chase Sapphire Preferred: Opened August 2018, earned 50,000 points plus one referral bonus for an additional 10,000. Value $750, no annual fee in the first year.
If you decide you want to sign up for the Chase Sapphire Preferred, I’d appreciate you using this link. You’ll get the signup bonus and it will also send some bonus points my way!
Barclay’s Aviator AA Card: 50,000 AA points after one purchase, pay the $95 Fee. Value $405. (I could add another $70 to this, we technically saved a bag fee on a trip in October)
Citi ThankYou: 50,000 flexible points for $4,000/spend. This card can be referred to as the Sapphire’s estranged step brother. It attempts to be a Sapphire, but Citi’s flexible rewards are not as robust and the annual fee is paid in the first year. $625 in Value, but the $95 is charged. Net Value of $530.
Total Bonuses earned in 2018: $2,560. No manufactured spending necessary!
2019 Plan & Results
2019 may be a chaotic year for us with retirement, a potential move, and adjusting to a new lifestyle, so we decided to front load our 2019 credit card hacking. This involved taking our mortgage off escrow and use rewards credit cards to pay our property taxes and incur the 2.2% transaction fee.
We currently live in Texas, so substantially all of our tax burden is paid via property taxes and this resulted in near effortless manufactured spending.
Barclay’s Arrival Card: The arrival card was running a special for 70,000 miles, first year’s fee waived, and $5,000 minimum spend. These 70,000 miles translate into $735 in rewards and they are simply offsetting eligible travel expenses, including things more difficult to use reward points on like rental cars and AirBNB rentals. $5,000 is a big minimum spend number to hit, so we put a $4,720 payment for property taxes on the card and incurred $106.20 fee. The net benefit to us came out to $629
Capital One Savior Card: $500 cash back for $3,000 spent, no fee the first year. This accounted for a 16.6% rebate on the first $3,000 spent, plus its normal 1-4% cash back for any category. The card has the added advantage of sending you a check for your rewards, so there’s no hassle on offsetting charges or booking travel. The statement ended and we requested a rewards check and the check showed up before the payment was drafted out of our account! We put $2,400 in property taxes on this card and incurred a $54 fee. The net benefit to us on this card came out to $446.
Bank of America Premier Rewards, Part 1: If the CitiThank you card is the ugly stepbrother to the Chase Sapphire Preferred, then the BofA Premier Rewards card is the slightly less appealing brother to the Sapphire. This card requires the $95 fee to be paid, rewards 50,000 points for $3,000 spent, plus has a couple of other perks.
This card will offset $100/year in miscellaneous travel expenses per calendar ear plus reimburse for TSA pre-check once every five years ($85). AA e-gift cards code as a miscellaneous travel expense. Net benefit to us was $590 without any manufactured spending.
Bank of America Premier Rewards, Part 2: Repeated the process above including the minimum spend, a $100 AA card, and signing up for TSA precheck. This time we paid $45 in transaction fees for the $2,000 charged for property taxes. Net benefit of $535.
Chase Southwest Card w/Companion Pass Offer: This offer required spending $4,000 in exchange for 30,000 points plus a companion pass for the remainder of the calendar year. The points are worth $300 in direct credit towards tickets on Southwest. The companion pass value is the big unknown, especially since you must hit the minimum spend, wait for a statement to cut, then the terms allow up to eight weeks to issue you the companion pass. We live near a major Southwest hub, but don’t have much scheduled right now for Southwest. Conservatively I will say its worth one flight at $300, but its value could balloon over the year.
We paid a $56 transaction fee to manufacture some property tax spending and this card required the $69 annual fee to be paid, so net benefit to us is estimated at $475
Early 2019 Results: We ventured into the Bank of America card to utilize a 5th issuer and bump up against the 5/24 rule. This allowed us to churn a 5th card for the year and we’ve earned $2,675 to date. One of us comes out of the 5/24 rule in May of 2019 and we may slip in a 6th card for the year. We have repeated some form of this process since 2015 and it really is the easiest money a couple with good credit can earn!
* Shout out to Apathy Ends for the inspiration of this posting. The web is full of these posts with affiliate links, but writing out the detailed results without trying to snag signup bonuses was a first.