Category: Wisdom

EDITOR’S NOTE: I’m on an annual blogging vacation for the last two weeks of the year. To make sure you still have content, some of the smartest members of the community have stepped up with guest posts in my absence. Special thanks to today’s anonymous author, who candidly shares his story on the dark side of credit card churning for writing this post. I’ll see you on January 1!

Opening a credit card a few days after I turned 18 was one of the stupidest financial decisions I’ve ever made in my entire life. (Partly because my dad saw it and took away the credit card he had given me – but that’s not the story I’m here to tell today.)

In December 2017, I opened the Discover IT card. The sign-up bonus was only $50, but it was also still eligible to be included in the first year double cash-back match promotion. In Q1 2018, the card’s 5% category was gas stations. I was in college and got my first taste of manufactured spend (MS) by doing midnight cigarette runs to get 10% cash back. 

The problems started with Discover’s generous offer of 12 months at 0% APR. I began to spend money I didn’t have with only vague plans how I could pay it back. I would never borrow money from a friend or relative like that, but somehow to borrow from the bank didn’t feel like I owed anything to anyone, and nobody knew about it either. 

I also had some friends in the credit card game that were making decent money, which to me seemed like an easy route out of my own credit card debt. Six months after opening my first card, I applied for the Citi AAdvantage Platinum Select. It was declined. I begged reconsideration, hand wrote letters describing in detail why they should give me the card, but never got an approval.

Discover has a practice of raising your credit limit whenever your card is maxed out for several months in a row, probably because there’s a good chance that they’ll earn 29% APR on your balances. I’m embarrassed to say that in 2019 when my promotional 0% APR ended with Discover, I was accruing big interest charges and I was scraping to make minimum payments. 

My great grandfather called his credit cards “The American Thieves” for good reason.

In April 2019, I opened my first American Express card, a Cash Magnet. I hit the $300 sign-up bonus by paying my dad’s car insurance, and I promised myself that I wouldn’t touch the 0% APR offered with the card. Then, I paid off my Discover card, and the joy of making that final payment to clear my Discover balance is indescribable to someone who’s never been in credit card debt. Finally, I found a steady manufactured spend (MS) route and began to make a couple hundred dollars a month from 1.5% cash back opportunities and opened an Ink Preferred with an 80,000 point bonus. 

Somehow though, when 2019 ended I owed quite a bit of money to American Express, and unfortunately the credit line was considerably higher than my Discover.

So for the second time, I made the mistake of thinking that more credit cards were the answer to my problem. I opened an Amex Business Platinum with a 100,000 point bonus which was considered high at the time (wow times have changed). All was going well until a Financial Review froze me out of the bonus. I was out of options and ready to drop out of college to go to work and pay it off, but when my dad found out, he bailed me out but with a stern warning to quit the credit card game.

For the next couple of years, I stayed away from credit cards and out of credit card debt. Life is much less stressful that way. Then the Sapphire Preferred 100,000 point bonus came around, and was too tempting to resist. I followed shortly afterward by getting an American Express 150,000 point Business Platinum stacked with employee card offers. 

Unfortunately, the Business Platinum had a 0% APR and the debt cycle started again. I did manage to earn a few good bank bonuses with the money floated from the 0% APR offer, but when the year ended I was still short by several thousand dollars. I took a “My Chase Loan” at 8% interest (again times have changed!) I slaved and scrimped to make the payments on that loan.

I again swore to stay away from credit cards, but the Chase Ink 90,000 point offers broke my resolve fairly quickly, and the vicious 0% APR cycle started up again.

In mid-2024, I crossed the line from casual hobby MS’er, to MS as a side job. In Q3 and Q4 I’ve sold over 7 million points and used plenty for travel as well. (I know some readers are laughing at my low volume, and some jaws are dropping.) I can say that I almost definitely would not be in this position today if I hadn’t opened those first cards back in college.

Was it worth it? If I had instead invested all the money I spent on things I couldn’t afford, as well as the money I paid in interest payments, I would be a lot more financially stable than I am today. But would I have worked so hard if it wasn’t to pay off debt? Probably not. I did enjoy my college years by riding on credit card debt.  If I had never started with credit cards, chances are that by now I’d have a different side hustle and some more savings. A side effect of manufactured spend is that handling so much money that belongs to the banks but is revolving through your accounts greatly devalues your mental picture of money. I’d probably spend less in everyday life if my side job wasn’t manufactured spending.

In short, I got started with credit cards very early on in life and quickly fell into the 0% APR trap, resulting in many financially irresponsible decisions. I now make a solid profit each month off my credit cards. Was it worth it? I would say not. You can’t turn back the clock though. I hope my taking the time to write this posts saves at least one person from making the same mistakes I made.

– anonymous churner

Sometimes the churning cup of sunshine and rainbows leaks.

EDITOR’S NOTE: I’m on an annual blogging vacation for the last two weeks of the year. To make sure you still have content, some of the smartest members of the community have stepped up with guest posts in my absence. Special thanks to today’s author who is infamous enough to not need an introduction but get one anyway, SideShowBob233. I’ll see you on January 1!  If you’re interested in writing a guest post, please reach out!

So it’s been about a year since my Chase post, which has been mostly well received.  I’m a year older, a year wiser (really you’re thinking, are you wiser SideShowBob233 – and yes you’re still saying the 233 part), have a lot more rakes behind me (but still too many in front of me) so do you still think Chase deposit accounts are a bad idea?  

The answer is yes.  After my post I continued to hear many people report shutdowns with deposit accounts, including quite a few shutdown within a couple of weeks of opening the account for a bonus.  Each one makes me want to put a rake in front of them and watch gleefully (which is how I do all my watching, sometimes with only my clown shoes on – get that image out of your head!) as they step on it.  Why people risk their Chase relationship over less than $1,000 is a mystery to me, as is how to walk past a rake without stepping on it.  

What really gets me mad (about this – I’m not talking about my anger over Bart and definitely not about my anger over people who spell “lose” as “loose”) are the people who argue with me that it’s fine and that I’m making a big deal over nothing.  Some people took issue with my characterization that you are more likely to get shut or that you will get shutdown, which is a fair argument if you take my posts as fully serious, which is something only a clown would do.  

When I say you will get shutdown I’m talking odds, but with odds there’s never a guarantee.  However, my trusty buddy Chad ran the numbers for me and there is a 420.6969000000000012% increased chance of being shutdown by Chase when you have a deposit account (I believe Chad had some assistance with his calculations from the Fluz interns).  Now that doesn’t mean you will be shutdown, but I don’t like those odds (OK maybe I like parts of the odds, but not all together).  And again $1,000 is nice (I could get a gold-plated rake!) but you can get that from a single Ink card bonus so why risk it?  Not to mention Chase deposit accounts report every penny to Early Warning System (EWS).  

“So SideShowBob233” you’re thinking (let’s face it you’re not thinking that you’re saying it out loud and your family is wondering whether your meds have worn off and you’re talking to your imaginary friends again), what if I haven’t heard of a single Chase shutdown ever caused by this?  To that I say you need to get out more, especially out of the rubber room they keep you in because it happens often, both to people who know better and to people who don’t know better but should (and even to random people who don’t churn at all, because Chase really doesn’t care if they screw you over for no reason).  Even if you don’t hear about them, I hear about them, and if you dig enough you will too (or they’ll restrain you for trying to dig in your rubber room, if that happens definitely don’t mention the clown with the orange hair and rakes, it won’t help your case).  

I’d like to end this by pointing out there are tons of banks and credit unions (and I weighed them all to confirm there are in fact tons, not just metric tons) all of which are not Chase, do not report to EWS, and also have bank bonuses.  So please stay away from Chase (and Citi) bank bonuses.  There are even some lovely fintechs that are not banks and for a fee (but often for free!) will lose your money for good.  

Now I’d really like to end this (and I can hear you muttering SideShowBob are you ever going to really end this, but you left off the 233 this time because the elf on the shelf told you to stop saying it because it makes you sound crazy) by suggesting you use a business bank account for anything you can, especially one that does not report to EWS (some do, like BOA business checking for some sole prop businesses). Stay tuned for more.

– SideShowBob233

SideShowBob233 (pictured) dictating this article to MEAB (pictured?)

MEABNOTE: I’ll be going on a blogging vacation at the end of the year and there won’t be any daily posts between December 18 and December 31. After that, we’ll ring in the new year on January 1, 2025 with the 2024 version of Travel Hacking as Told by GIFs though, so no need to be up in arms, but I guess it’s ok if you’re up in legs.

By popular demand we’ll have at least a few guest posts during the break. If you’d like to write one, please reach out, I’d like to find guest posts for the whole break!

Echo Chambers

The internet is full of echo chambers in which opposing viewpoints mostly don’t exist because of something like: selection bias, moderation, “the algorithm”, or another reason. Because I know you need some examples, there are a few you may already be familiar with:

A recent FlyerTalk post titled “Any Success Stories of Living Off [Manufactured Spend]?” is a perfect illustration of how we can get stuck in echo chambers without realizing it. The thread itself is rather short, and if you read it in its entirety you’d think that maybe a couple of people lived off of manufactured spend in the past but it’s probably not happening much anymore and might also have weird tax consequences. Everyone in the insulated forum is reinforcing what they already believe, and it makes sense because it’s aligns with their world views.

On the other hand though, I personally know at least a couple of dozen people that live off of manufactured spend, and I’m sure there are plenty more that I don’t know of. Also, I’m not a tax guy and I’m definitely not your tax guy, but it’s not hard to account for and to pay taxes on your manufactured spend based earnings. Based on my personal experience, the FlyerTalk thread is naive at best and gate keeping at worst, and it illustrates a lesson that can take you a long way in churning and manufactured spend:

Sometimes the prevailing discussion in your echo chamber is wrong, and you can use that to your advantage.

– MEAB

Or, to rephrase in Michael Scott form:

“Trust but verify – Ronald Reagan“

– MEAB

Happy holidays and I’ll see you next year!

(I think it was actually John Quincy Adams, but ok)

MEABNOTE: I’ll be going on a blogging vacation at the end of the year and there won’t be any daily posts between December 18 and December 31. After that, we’ll ring in the new year on January 1, 2025 with the 2024 version of Travel Hacking as Told by GIFs though, so no need to be up in arms, but I guess it’s ok if you’re up in legs.

What happens with your points when a major bank shuts down your accounts? If you’re in New York, you’ve got 90 days by law to redeem your points, though the options for redemption may change on shutdown. If you’re not in New York, here’s what the landscape looks like:

  • Chase: You’ve got 30 days to redeem or transfer your miles
  • Capital One: Your miles are immediately redeemed at 0.5 cents per mile
  • American Express: Your points are forfeited at the end of the business day
  • Citi: Your points are forfeited at the end of the business day
  • Wells Fargo: Your points are forfeited immediately

With American Express and Citi, if you’re quick at noticing the shutdown, you can call their redemption departments immediately and likely get your points redeemed or transferred out. The phone numbers for each:

  • American Express Membership Rewards: 800-297-3726
  • Citi ThankYou Points: 800-842-6596

If your points are forfeited, you may be able to mediate or litigate to get your points back, but of course I’m not a lawyer and I’m definitely not your lawyer.

Good luck and stay safe!

Captured: The moment a Membership Rewards bucket drains.

The last week of November saw groups of shutdowns from three major banks: Discover, Wells Fargo, and Chase. If you were affected, sorry – that sucks. But even if you weren’t, we can learn from what happened. Let’s go bank by bank:

Discover

Summary: Repeated negative balances pushed the risk team over the edge.

Explanation: One of the tricks of the trade in high volume manufactured spend is to prepay your credit lines, creating a negative balance on your account in order to be able to spend more than your credit line. Some banks don’t care when you do this, but Discover isn’t one of those banks.

Lesson: Be cautious about overpaying credit lines. Discover isn’t the only bank that doesn’t like it.

Wells Fargo

Summary: Non-standard payment methods spooked the risk team.

Explanation: Sometimes paying a credit account directly via ACH isn’t the best way to pay; as a /r/OldSchoolCool inspired example, CheckFreePay at Walmart Money Centers used to be a great way to pay your Visa and Mastercard bills using Visa and Mastercard gift cards. In the case of recent shutdowns, a payment method that a regular customer wouldn’t normally use was advantageous, at least until Wells Fargo decided it wasn’t.

Lesson: Consider the source of payments to your credit accounts, often banks don’t like abnormal payment methods, and side note: that’s especially true with anonymous payment methods.

Chase

Summary: Prior chargebacks related to fitness club associations finally caught up to bag holders.

Explanation: There was a private manufactured spend group a few years ago that imploded, leaving hundreds of people with outstanding money that wouldn’t be paid back (no, this isn’t Synapse). Some people initiated chargebacks on that money, occasionally well into five figures or more, and Chase finally decided that those chargebacks made account holders personae non gratae.

Lesson: If you ever need to use chargebacks to bail yourself out, make sure the value of the chargebacks exceeds the value of your relationship with the bank.

Good luck out there, and happy Wednesday friends!

Another potential shutdown affecting all churners: Failed identity verification.
(Thanks to Vince for the unfortunately real screenshot)

One of the best pieces of business advice I ever got was at my first startup: “It takes just as long to do a small deal as it does to do a big deal.” That’s often a slight exaggeration because in business, bigger deals usually mean more people are involved, but the sentiment is still roughly correct. Focusing on the big deals is a better use of time when you’ve got a good pipeline.

We can apply that wisdom to all of this weekend’s opportunities in gift card reselling, buyers groups, online arbitrage, point alchemy, and to an extent with travel bookings too. My companion advice to the above for this weekend, specifically, is:

Set a minimum deal size and minimum effective hourly wage for all of your shenanigans. If something flashes by and it’s below that threshold, wait for the next thing. It’ll come.

Have a nice weekend!

Pictured: My first startup, or something.

Bank of America, Wells Fargo, Chase, Citi, and plenty of your favorite credit unions offer premium (or sometimes even fee-free) cards that offer annual credits tied to the calendar year. Most issuers also let you refund an annual fee up to 30 days after it posts too. Combined, that means December is often the best time of the year to get a card because:

  1. Your first statement is usually issued 30 days after getting a card
  2. Your annual fee posts on the 12th statement around 360+30 days after opening
  3. Most issuers give you an annual fee refund if requested within 30 days of posting pushing that to 360+30+30 days
  4. 12 statements will straddle three calendar years: 2024, 2025, and 2026

Let’s take the American Express Business Platinum. Annually, you’ll earn (amongst other things, like I dunno, prolly a $1.50 monthly credit to Dollar Tree):

  • $200 airline incidental credit
  • $400 Dell credit ($200 in the first half and again in the second)
  • $199 Clear credit

So if you apply for a card in late November or December, your 12th statement won’t generate until between mid-December 2025 and mid-January 2026. Once that happens, you’ve still got another 30 days for games and an annual fee refund. You’ll get:

  • $600 in airline incidental credits (2024, 2025, and 2026)
  • $800 in Dell credits (2H2024, 1H2025, 2H2025, 1H2026)
  • $450 in Adobe credits (2024, 2025, and 2026)
  • $597 in Clear credits (2024, 2025, and 2026)
    (though you should discount those Adobe and Clear credits significantly)

There are a few gotchas to watch for: Bank of America’s annual fee refund after it posts isn’t guaranteed; Capital One’s is guaranteed, but the guarantee is that they definitely don’t offer fee refunds; or how the stupid Dell credits may be going away from the American Express Business Platinum in July, 2025.

Happy Tuesday!

Next time: The Halloween triple dip?

The Stunt

Sometimes travel hackers get stuck with a ticket that’s got a cancellation fee (I’m looking at you and your stupid $75 award ticket redeposit fee FlyingBlue) or a ticket that simply isn’t cancellable for any fee even if you’re Steve Buscemi (actually, especially if you’re Steve Buscemi). You’ve got two choices if your plans change and you’re not going to take one of those flights:

  • Pay the fee to cancel if you can, or just eat the ticket cost if you can’t
  • Play the odds and hope that you don’t need to do either of the above

Playing the odds means waiting for the airline to offer free changes or refunds due to one of:

When one of those things happens you won’t be taking off for Lubbock, but instead you’re headed to refund-town (but you’ve probably got to request the refund from the airline, and in some cases before departure). The odds aren’t great though; at best the chances of this working are somewhere between 1/6 and 1/10, unless you own a pregnant turtle.

The Gotchas

There are a few ways this can malfunction:

  • You forget to cancel before the cancellation window expires after the game didn’t work, which matters especially with programs like Virgin Atlantic that require you to cancel before the check-in window opens
  • You don’t request a refund in a timely manner from the airline
  • The airline disagrees about what a significant delay is (but 2+ hours is usually sufficient)

Personally I put a reminder in my phone for an hour before the flight or cancellation window, whichever comes first, to figure out whether the stunt is going to work and to pay the cancellation fee if I can and it didn’t.

Good luck!

AA’s new Flagship First catering meal concept: “playing chicken with an airline”. They’ll end up cutting the ketchup at launch for cost savings though.