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These are the questions I will answer for you - not by reading someone else's information, but by finding out for myself.
Are you ready to start your journey?
The Wild World of Credit Card Churning
What Are Travel Rewards?
Simply put, travel rewards are points gained by opening specific credit cards for their large sign-up bonuses. These points can be used to lessen the expense of traveling, especially since many bonuses are worth $500 to $1,000!
Points may also be gained by using these credit cards, especially when they offer increased earning in certain categories. Maybe your card offers 4 times the points on restaurants, or 3 times the points on travel expenses. By using credit cards strategically, you can maximize your points earning.
What Makes Us Different?
These days, there are a wealth of resources telling you the best travel card is X, and they may even go as far as to break down the benefits of the card. But most resources stop just short of showing you the math behind the card.
But Frugal Firefly is not most resources. We do not ask you to take our word for it. Instead, we break down real use-cases based on my actual applications.
Isn't Opening Multiple Credit Cards Risky?
Multiple credit cards.
If you are like me, this idea immediately sends off warning chimes. I learned from a young age that credit cards only lead to overspending and crippling debt. Sources that are well-respected in the financial community, such as Dave Ramsey, will caution against taking out any credit cards at all.
For the general public, this is probably sound advice. If you are prone to spending more on a credit card than you do with cash, there is serious risk to playing this game.
To be clear, you must know yourself first. If you carry over a balance from month to month, the interest due will far outweigh any benefits you get from sign-up bonuses or bonus categories.
If you are in this boat, do not take out credit cards.
However, if you can be responsible with new cards, only purchasing what you would have otherwise, read on.
Will This Hurt My Credit Score?
Will taking on multiple credit cards hurt my credit score? If you play by the rules I outline here, your score may actually improve!
I have a dedicated post which outlines the 3 Major Ways Travel Rewards Affect Your Credit Score, but the short version is this:
The net affect is a positive boost to your credit, as long as you pay each card on time and in full each month, avoid excessive applications, and be generally responsible on your journey.
An Example from the Frugal Firefly
In December of 2016, my wife and I were in the process of planning our our anniversary vacation to England and Ireland. We had budgeted for the costs, looked up AirBnB's for quaint places to stay on the cheap, and created the agenda to see everything we could in ten days.
Now it was time to spend the money.
Trying to take advantage of any deal I could find, I came across an offer for the Chase Sapphire Reserve. Although no longer available, I was able to get 100,000 bonus points for signing up.
The card also offered a $300 travel credit each year, 3 times the points-earning on travel and dining, reimbursement of Global Entry or TSA Pre-Check every four years, and access the many Priority Pass lounges available around the world.
The annual fee shocked me a bit at first - $450 per year seemed steep. But being a numbers kind of guy, I ran calculations to see if the value could outweigh the fee.
First, I had to decide how to use the bonus points. For Chase, points can be cashed out for a statement credit at a rate of 1 cent per point (often abbreviated as cpp). This is the bare minimum you should accept for redemption value.
For the bonus I received, that's $1,000. But there are better options available.
If you use the points through Chase's travel site, the Chase Sapphire Reserve gives you a 50% bonus to those points. That means the bonus I received would be worth $1,500!
Here are the two situations I considered:
Option 1: Use the Points for Statement Credit
In order to receive the bonus, I needed to spend $4,000 in the first three months. With airfare, rental cars, and food on our trip, it was pretty easy to hit the requirement.
If I assume that we only received the lowest possible earning on our expenses, that gives us an additional 4,000 points by using the card.
Option 2: Use the Points for Travel
Given the 50% bonus from the Sapphire Reserve,
As you can see, using Chase Ultimate Rewards points for travel increases the value by $520 (over 58%)!
Travel Rewards Glossary
Even in the simple example above, we have introduced a few acronyms. If you are interested in getting into travel rewards, here are a few additional concepts and abbreviations that might come in handy.
Note that this is not an exhaustive list or overly specific - think of it as a primer for eventually speaking fluent credit card churner.
1) 1x, 3x, etc.
Typically refers to the bonus in spending. For example, the Chase Sapphire Reserve gives holders 3x on Travel and Dining, which means 3 points (in this case, Ultimate Rewards) on these categories.
It may refer to airline miles, points, cash back, or whatever else the card uses as a gauge for bonuses.
A measure of how many personal cards you have been approved for in the last twenty-four months.
This is especially important for Chase, since they have a 5/24 rule (you may only be approved for five cards in the last twenty-four months - any further applications will be instantly denied unless you use a method for getting around the rule such as applying in-branch, applying to a pre-qualified card, etc.).
3) 5/24, 2/65, 1/30, etc.
These typically reference specific rules for card issuers, with the first number denoting number of cards approved in the second number's time frame. However, the second number may indicate months, days, or something else entirely.
For example, Chase's 5/24 rule is the example outlined above that prevents you from being approved for more than five cards in twenty-four months. Citi's 2/65 rule refers to only being approved for two cards every 65 days.
Annual Fee. Many cards charge an annual fee either on the anniversary of your application or the beginning of the calendar year.
Customer Service Representative. This is also used for the Chase Sapphire Reserve, a popular travel card.
Direct Deposit. This refers to funds deposited direct into your bank account.
"Hang Up, Call Again". This advice is typically given when you do not get the desired result from a CSR.
Product Change. This is when you downgrade or upgrade a card to a different version. It can typically only be done within the same family (Chase Sapphire Preferred PC'd to a Chase Sapphire Reserve, for example). You are unlikely to be able to change, say, a hotel card to an airline card.
"Your Mileage May Vary". Not everything is a perfect science in the world of credit card churning. As an example one person may have luck getting a match to a higher offer, while another may not.
Travel Rewards credit cards offer a unique opportunity. If you play the game safely and strategically, it is possible to gain several thousand dollars of value each year without any additional spending.
If you're ready to learn more about travel rewards, check out our Travel Cards page. There I include each card review completed to date, a set of tools to better understand which cards are most valuable, and links to apply to each card.
Note that I receive a small commission on some of the credit cards I list at no additional cost to you.