Crazy Calculus and Credit Card Churning

WalletsTons of folks out there talk about their adventures and successes in credit card churning all the time – Holly at Club Thrifty and Brad at Richmond Savers, to name just a couple who have been around the block when it comes to credit card offers.

We had gotten into a very comfortable routine with our 3 cash back cards, but I was curious to see what bonuses we could accrue and how easily we could use them if we gave credit card churning a try for a year or so.

Halfway Through That Year I Want To Poke My Eyes Out!

Lose #1 – Fighting With Technology

With the exception of the Chase cards (these were just added to my existing Chase login and synced perfectly) that I added and churned through, adding new cards to mint has been absolutely terrible. I use a password manager, so each new account requires a plethora of new (fake) answers to a multitude of useless, socially engineer-able (I may have made that word up) questions. And entering and re-entering them multiple times. Then when a customer service agent asks you what street you grew up on and you tell them, “Wait, I need to unlock my database to tell you the answer to that…”, see if you can sense the moments when they try and decide if you are a criminal or not.

In particular, the CitiCards website is close to useless. Seriously. Have you ever accomplished anything of use on it? I had immense amounts of trouble connecting these accounts to Mint (one still won’t connect and I look forward to canceling the card in a few months), and couldn’t even pay these bills online. I’m not a technophobe. Hell, I get paid to write code (amongst other duties). So when I tell a Citicards help desk that I have troubleshooted and am unable to login and pay a bill in no fewer than 3 different browsers in multiple locations (home and work), and there’s a problem on their end, I’m probably right. And it’s kindof ridiculous for the customer service rep to state, “No users are having any trouble connecting right now.” Clearly, at least one is, or I wouldn’t be calling. Duh.

Note to others – Run, Don’t Walk, Away From Citi Cards. The Aadvantage miles just aren’t worth it.

Take Home – Unless you have an incredibly high tolerance for system usability issues, or a boat-load of extra time on your hands, this might not be a good game for you to play.

Lose #2 – Useless Miles and Complex Calculus

One of the reasons I’ve always enjoyed our cash back cards is because they’re just so darned straightforward. Earn $X in cash back, request $X in cash back. Would you like it as a check in the mail, or a statement credit? Done! At worst, there might be a limitation that forces you to wait until you have $25 in rewards before you can redeem them.

But with “miles” and “points” and various travel rewards programs, there’s a complex calculus between them that is far from clear on the surface. And since I have a compulsive need to optimize everything in my life, it’s been a horrible trip down a rabbit hole trying to make sure we’re getting as much value out of these things as possible.

aliceAnd leads to things like this…

“Oooh, British Airways Avios points get more of a value when you transfer them to American Airlines domestic flights… but doh! We have yet to find a trip that we need to take that has an opening when we could actually spend these points!”

“Ooooh, I can get this fare on Delta for 32.5K, but Mr PoP only has 26.4K in his account. I have 21K in my Delta account, but it costs $116 to transfer the necessary miles from my account to his. Hmm, but British Airways lets you transfer between family members for free. Why does Delta charge a fee?  But look! Hyatt points transfer in for free… hmmm, at a rate of 2.5 Hyatt points = 1 Delta mile. That sucks. But I can get a 1-1 transfer of Hyatt points from our Chase Sapphire Preferred card, which I have 3K points left on. So that gets me 1200 fewer points Delta I need to pay to transfer, right? Not so fast! There’s a minimum of 5K points can be transfered at any given time between Hyatt and Delta. So is it worth it to pay $116 for the right to use miles from a different account? Or would it be better to pay $300 for a full ticket and save up miles until we have enough to use them all at once… which might be quite some time considering we don’t generally fly Delta all that often (recent trips to Australia notwithstanding). Aaaahhh!!!”

“The amount of waste is driving me nuts. Miles/Points are going to be left in these accounts and expire because we’re unable to use any small denominations, but need to transfer miles in generally much larger denominations. If this were cash back, I’d get my pennies – at least eventually.”

Lose #3 – Points Prices Make 0 Sense

Remember the 32.5K trip above that I was trying to book? Well, I also tried to split it up and see if I could book one way using Mr PoP’s 26K points, and the other way using my 21K points. Even if there’s a small cost to doing so, it should work, right? NO! A roundtrip 32.5K mile trip is somehow equivalent to combining a 25K one way trip and a 40K one way trip. What?!? Same flights. Total cost double to book it as two separate trips instead of one round trip. No sense at all.

Lose #4 – This is REALLY not Fun For People Who Have To Travel On Specific Dates

I imagine these kinds of deals work best for people who have a lot of flexibility in their travel arrangements. People who can say something like, “Oooh, half price miles flights available on the 3rd Tuesday of every month in the off-season next year. Let’s book!” And then follow-through without work and life getting in the way.

Our reality is pretty far off that mark. With limited vacation days through our job, and a large portion of our travel needs coinciding with “peak” travel times to maximize those vacation days by pairing them with long holiday weekends or specific events we plan on attending, we just don’t have a ton of flexibility in booking flights.

For instance, when looking at flights to New Orleans for a wedding later this year, it was of no help at all that flights arriving a few days earlier or departing a few days later were significantly cheaper (both in terms of miles and dollars). As it is, taking 2 days off work in Q4 is a big sacrifice for both of us to make for the bride and groom and stretching that further not only would have cost shifted to require us more spending on accommodations (canceling much of the savings), it would have meant more time out of the office, which just isn’t an option that time of year.

This means that if we can even use the miles on the dates we need to travel, we’re often not getting a very favorable exchange ratio on them. For instance, we had to pay “full fare in miles” for two one-way tickets to Omaha for the Berkshire Hathaway meeting, though that same 50K miles would have covered two round-trip tickets to Omaha a week earlier, and still had left 15K miles left over to put toward another trip.

It’s Not All Bad, I Guess

So far, with all this insanity, we’ve spent enough churned points to get us the equivalent of 5 one-way fares for a total cost of about $150, which I think would have cost us in the neighborhood of $1,200. But we’ve also forgone (based on past averages) around $400 in cash back bonus rewards that we would have gotten with our normal (lazily optimized) cash back card usage.

So as of now I’m putting a halt on the great card churning experiment of 2014. We’re likely to have pretty high spending early in 2015 (because of that planned kitchen remodel), so if we want to churn any cards that would likely be a good time to do it, and leaves plenty of time to plan a strategy out in the meantime. That is, if we decide it’s actually worth it to try again*.


How does this match up with your experiences in churning credit cards for travel rewards?


* This may or may not depend on whether our 100K+ BA Avios miles are ever actually usable.

34 comments to Crazy Calculus and Credit Card Churning

  • It does get complicated. That’s why I only stick to certain programs and ignore the rest. Too many things to juggle!

    The main reason people pursue airline miles and hotel loyalty points is because they are far more lucrative than cash back. 50K AA miles (the signup bonus for the Citi AAdvantage card) is more than enough for a round-trip flight to Europe during off-peak which could cost upwards of $1,500. You just can’t earn cash back quick enough to get those kinds of redemptions under normal circumstances.

    I don’t use Mint so I’ve never had a problem with Citi AAdvantage. I actually have almost 500K AA miles- time to plan something!

    I also think it helps if you enjoy the planning aspect. It’s a hobby to me so I LOVE figuring out the best way to plan a trip. Greg, on the other hand, does not love it and gets confused by all the different sets of rules. If he had to plan our trips using points and miles, we would never go anywhere.
    Holly@ClubThrifty recently posted..Who Wears the Financial Pants in Your Family?My Profile

    • I’m glad it’s an enjoyable hobby for you, but I think I’d rather do something else for fun. =).

      As for citi- I couldn’t even log in to pay my bill online most of the time. It was ridiculous!

  • So you are churning credit cards for the miles rewards? I guess my strategy when I do this will be churning cash back credit card rewards and just getting the sign up bonuses. It looks like unless if you are Financially Independent the miles credit cards are a hassle because you cannot be as flexible as they are.
    Kipp recently posted..Choosing a Broker for the ROTH IRAMy Profile

    • The cash back cards tend to be harder to find and churn, which is why we wanted to try and give miles cards a chance. But our schedules are just too inflexible to make it work these days.

  • Sorry to hear this has been such a bad experience for you!!

    I got such a good laugh out of the, “And leads to things like this…” section of the article, as I can definitely relate to a lot of those problems.

    Like Holly, I try to focus on certain programs that are easy to use, while trying to maximize value where I can. The hotel programs are the easiest, so for those people frustrated with award availability, the focus should be on them.

    Southwest Airlines is another great option since their points are just based on the cost of the flight and there aren’t any blackouts or limited availability.

    If people stuck to Southwest and Hyatt/Starwood/Club Carlson (Radisson), they’d be doing okay and wouldn’t have to worry about the frustrations.

    The other important thing I preach is flexibility and planning. There are limited award seats and people like to book these things quickly. Based on our conversations, I know flexibility is not possible for you and Mr. PoP in most cases, so this isn’t going to be ideal.

    If you were interested in some cards, the aforementioned hotels would work, as well as the Barclaycard Arrival and Capital One Venture. If you each opened those 2 and hit the spending requirements you’d have nearly $2,000 in flexible travel.

    Or some cards like the Chase Sapphire Preferred, Chase Ink Bold and Ink Plus give you statement credits, so it amounts to free money. Hit the spending on all 3 cards (really six since you each would open) and you’d have another $3,000 in free money (cash).

    That’s vastly better than the 1-2% cash back you’d normally get. So it is great you’ve realized this concept just doesn’t work for you and you don’t want to waste more of your time, but you can pivot and easily earn ~$5,000 in free money from those 10 cards over a 2 year period, which is a lot better than the cash back you’d normally be earning.

    Just a thought to consider!
    Brad @ recently posted..Points and Miles: The Best Transferable OptionsMy Profile

  • We’re not that hardcore with churning for miles (yet?) but we did get to travel for free a couple of times this year. Last year I applied for two Southwest credit cards (Chase) and got 110.000 miles out of it, which means we qualified for the companion pass. With that, my husband gets to fly for free when I book a ticket, and I use those miles 110k so that makes me travel for free as well. I love that you can cancel your flight with just a click of a button, just book a couple weeks in advance when prices are still low and cancel if something comes up.
    Mrs. Southbound Savers recently posted..A Big Thank YouMy Profile

    • Tell me more about this no penalty canceling … I assumed most fares booked with miles were non-refundable, except perhaps for the full-fare in miles versions.

  • We haven’t had any problems with Citicards, I don’t think. But we’ve had it a really long time.

    I do enough traveling through work that we tend to have points saved up for a good portion of our discretionary traveling just through regular miles. We’re going to have even more now that DH has to travel for his work. Redeeming miles can be a bit of a pain too, depending (mostly because you have to jump through hoops for booking a separate ticket for a minor, and then attaching it to the main ticket– if it were just the two of us it wouldn’t be such a hassle).

    Churning cards sounds pretty terrible to me! We just do cash back with Citi ($50 minimum to redeem). Probably if we were to add another it would be that reward card that only rewards big spenders, I think an American Express card of some sort. But most likely we won’t.
    nicoleandmaggie recently posted..Useless skillsMy Profile

    • I’ll have to post the screen caps I took when citi was giving me problems. I’m curious if you have ever had them happen to you before.
      Amex has become our default for cash back rewards – pretty easy to use and the categories don’t change all the time.

  • Debbie M

    “No users are having any trouble connecting right now.” – Maybe a user is defined as someone who has connected.

  • Ha! The calculus is kind of a pain, but I embrace it. As you noted, the payoff is certainly higher than with traditional cash back. But, as always, there’s no such thing as a free lunch…
    Done by Forty recently posted..Why Aren’t We Getting Better With Money?My Profile

  • I decided I didn’t really like credit card churning either. I did: 1) Chase Freedom when it was a 20,000 point bonus for spending $500 in three months, 2) Barclaycard Arrival when it was a 40,000 point bonus for spending $1,000 in three months, and 3) Chase Sapphire Preferred when it was a 40,000 point bonus for spending $3,000 in three months. The first two were easy, but I gave up after the Chase Sapphire Preferred. I’ll actually probably keep the Barclaycard even after the annual fee hits because I love it so much!

    I like how Holly treats it, as a hobby. It’s much easier to see it that way. I’ve decided that the research is more of a hobby to me, but the implementation is just annoying.
    Leigh recently posted..Reflections on Home Ownership: 2 Years InMy Profile

  • Yep! I have a few different point programs I use, and I know the in’s and out’s of them, but I’d be hard pressed to sign up for a card that has a point system I’m not thoroughly familiar with.
    Alicia recently posted..Tackling Another Closet Purge.My Profile

  • IT sounds really complicated and something that many people can get wrong if they dont read the fine print. It does sound cool to get 5 free flights for opening a few cards. Good Luck.
    EL @ Moneywatch101 recently posted..Rich Uncle EL Random FactsMy Profile

  • we have the amex sky card bc it’s simply. FOr every $7500 you spend, you get $100 statement credit toward travel. It has been incredibly easy to use. I’ve been putting my tuition on the card so we rack up points pretty easily. In a year, we had enough to pay for our flights to Cabo (it was like $700) so that’s pretty good right?
    plus no annual fee.
    We also got the southwest card bc they offered 50,000 points sign up bonus. Excpet we just found out, it’s only in my name, so Eric can’t use the points.

  • Thank you for this! Credit card churning is such a hot topic right now. I understand how it can be exciting, and that everyone wants to share how to get the best deals, but it gets to be a bit overwhelming to those of us who don’t use credit cards. I have zero issues with people using credit responsibly and to their advantage. But for some of us, it’s best not to go down that path. I feel like 50% of the blog posts I read are telling me how much I’m missing out on by not churning credit cards. It’s nice to see someone post about how it isn’t all it’s cracked up to be. We all have different tactics for saving and growing our worth. Some things just aren’t worth it to some of us!
    Cindy @ GrowingHerWorth recently posted..Net Worth Goals UpdateMy Profile

  • I think it’s worth it in the long run but it definitely requires a lot of patience and for me it seems like a large learning curve. I got the 100k Avios miles that BA offered but it’s been quite difficult to use. Of course I always forget about it until it’s most likely too late to book the reward seats even when going through AA. It seems like to really get good deals on booking the travel you need to be pretty flexible with both dates and location which doesn’t work for my wife and I at this time.
    JC @ recently posted..Recent BuyMy Profile

  • Love the Alice in Wonderland analogy–very fitting! We’ve stuck with our Starwood Preferred Guest AmEx (which Brad mentioned) as our exclusive travel rewards card and it’s been great for us. We get free hotel stays worldwide with no blackout dates. We’re usually date constrained on our travel too and I agree, it’s pointless if all the dates you need are blacked out!

    We recently added the cash back rewards Visa and it’s perfect: we’ve been getting most of our Amazon orders for free since signing up! Mr. Frugalwoods got a pair of new hiking boots for $8 using the cash back system and we’ve had free toiletries for months. It’s pretty fantastic IF you order the bulk of your household goods from Amazon.

    But, we haven’t ventured into churning (except in a few rare cases, like when we booked flights to Hawaii) and I don’t think we will for all the reasons you outline and more.
    Mrs. Frugalwoods recently posted..How to Replace Exterior Window TrimMy Profile

  • Interesting post, as we were just discussing whether we should keep using cards for the travel rewards bonuses (which have so far saved us big time — lots of free flights!) or switch to cash back. The reason we decided to stick with churning for travel was because, as Holly pointed out, is that they’re so much more lucrative. It does take some planning and work, which is why we were so tempted by the more straightforward cash-back cards! But I think in the long run the extra effort is worth it when it translates into more money in our pockets.
    Kali @ Common Sense Millennial recently posted..Millennials, Stop Putting Your Money in the MattressMy Profile

  • I’ve stayed away from the points cards until we paid off most of our debt – and fortuitously, we determined we’d be moving (and getting a new mortgage), before I had gotten more than one card. So, we’re delaying our entry into the points and miles world for a bit. But with the one card I did get (HHonors Reserve from Citi), we’ve already used the sign-up reward certificates for $800 worth of hotel rooms later this year. I’ve not had any problems with Citi’s site, but that doesn’t mean you’re not. It’s one of the more annoying sites though… (if you want broken, try MOHELA – student loan processor, I can tell horror stories about that one)
    Mom @ Three is Plenty recently posted..Temporarily UnemployedMy Profile

  • We only have one credit card with travel points on it, and we use it for spending that we know we will be paying off immediately. We haven’t decided to stop using it because for us, it is still worth it as far as flights go.

  • bleagh! Do you ever suspect (grab your tinfoil hat for this one!) credit-card companies are full of people who allay their boredom by jacking customers around and jumping them through silly programs like these?

    Myself, I’m too lazy to fool around with churning credit cards. Who has time for that? Maybe it’s worth it if you travel a lot and it’s not on the company dime, but flying is such a PITA these days that I can’t see doing it for “fun.” And I wouldn’t work for an employer who wouldn’t cover work-related travel.

    On the other hand, I do use credit cards that pay cash kickbacks. My AMEX card provides the heftiest annual return; the Mastercard back-up, for use when merchants refuse to take AMEX, is a close second. It’s even occurred to me, in the churning dept., if it would be possible to pay the $1150 recently put on the MC with my line of credit at the credit union and then pay off the line of credit with the AMEX card, thereby engaging two cash-back transactions….

    The electronic stuff is an ongoing headache. I use Quickbooks but do not allow it or anything like it to communicate with banks and credit-card companies. The password miasma consists of a list with the websites in code and the usernames omitted, so all that is visible, should a bad guy find it, is something like B3: abra/ca/da!bra. Good luck, dear hackers, figuring out what B3 is and what username will get you in there.
    Funny about Money recently posted..OMG! Call 911! It’s…it’s FB! He’s not breathing!!!My Profile

  • Teri

    Aside from my Amex for cash back, I don’t know if I have the time or energy to credit card churn. I would love to be able to give it a shot once but I just don’t think it’s the right time for me. It’s refreshing to see someone say what a pain it is after reading non-stop blog posts about how great it is.

  • Amy K

    Thanks for the validation that I’m right, I would hate churning! The comments above about Southwest are sounding good, especially the refundability. I did a quick peak at our mid-winter trip to Florida, the only flexible off-peak we do every year, and Southwests’s prices are good though it does say that the flights are only refundable if booked with points.

    We have an Amex Blue Cash for everyday, we just got the Amazon card for Amazon (and Restaurants) and we still have my old Discover from my college days with the rotating rewards and redemption for discounted giftcards, which is the closest to churning I can handle. Oh, and the Target store card because I can’t beat the instant 5% off there.

  • […] get super cheap flights for our trip to Hawaii last year). Mrs. PoP at Planting Our Pennies wrote this great post on why she and Mr. PoP don’t churn cards, which pretty much sums up why we don’t […]

  • Your experiences sound very similar to mine! While I haven’t gone all in with the churning, I have felt compelled to get the most out of my credit card points and airline miles. I’ve practically made spreadsheets to calculate all my options, and eventually it just feels overwhelming. It does seem like you need to have real dedication to churn correctly.
    Natalie @ Budget and the Bees recently posted..5 Photography Tips to Amp Up Your Skills Before You TravelMy Profile

  • I’ve been churning for the last 10 years or so with a lot of success and relatively little frustration (given the thousands of dollars in rewards I get every year).

    But I know what you mean. It’s frustrating at times to use the rewards successfully. I like to stick to cash-like rewards where I can either redeem for cash back on travel or other purchases, or redeem for gift cards to places I frequent (walmart, home depot, lowes, etc). Or flexible hotel card like Starwood preferred guest which gets me free hotel stays all over and has saved me thousands over paying for a hotel room.

    But I’ve become quite a snob. I won’t sign up for a card unless it’s offering me $250+ in rewards! That way I can focus on the highest value offers.
    Justin @ Root of Good recently posted..Our Bad Experience With AirBnB Rental Had A Happy EndingMy Profile