Card churning

"When she calls the 800 number, the airline asks for her address so they can send someone to help her IN PERSON"

"she has so many frequent flyer miles she can book a private jet"

"Her passport is so big from all the stamps she has to check it as luggage"

"she's heard the preflight safety warnings so many times she can recite them forwards and back, in 3 languages"

"Her frequent flyer number is easy to remember-- it's 12"

"FAMs give up their seats for HER"




I have benefited so much from credit card churning; as a result, I have been travelling free for a while now. I will be sharing some of the techniques that have helped me become a much more savvy traveler.





Credit card sign-up bonuses provide the largest amount of free travel of all the techniques I use – often thousands of frequent flier miles/points at once. Capital One, for example, recently offered 100,000 frequent flier miles with an approved credit card. That is huge. And enticing. But beware: This can be a loaded gun for many folks who can’t seem to handle it.

Using credit cards for free travel, or any other reason, requires discipline and the ability to pay off your monthly balance in full at the end of every billing cycle. Interest rates on credit cards are huge, late fees massive, and both have gotten more Americans in credit trouble than any other credit instrument. This free travel technique is not for everyone. You know yourself better than anyone does. So before you begin to churn credit cards for frequent flier miles, honestly answer these questions:

1.Do you manage your money well?
2.Do you have a budget?
3.Do you live within your budget?
4.Are you easily distracted and make impulse purchases?
5.Is your source of income and repayment dependable and reoccurring?
6.Are you just getting by on part-time work?

The decision to use credit card sign-up bonuses for frequent flier miles and points cannot be taken lightly. One mistake or one late payment will haunt you for years. Tread lightly, be honest with yourself and, ultimately, your creditors.

Which travel credit card should you apply for first? That depends on the credit score you have established based on your limited history with a retail charge card and small installment loan. You need to know that score number. You’re looking for these target minimums: 700+ on a FICO scale or 800+ on a Vantage Score Scale.

These are the scores we strive for long-term. If you’re young or you haven’t used credit much, it may be too early for you to have this high of a score. If so, you will have to begin by applying for a less-than-premium credit card. Don’t worry. Your time will come if you pay on time.

If your scores are less than the target range, but over 650 on an FICO scale and 725 on a Vantage Score scale, consider applying for a credit card that does not require a premium score but charges higher interest and fees. Remember: You are paying off the card in full every month or borrowing just a small amount to establish a credit trade line. Your interest expense will be minimal while you establish this trade line. These cards, when offered by the airline’ websites, typically offer you one mile for every $2 spent on the card. That is your indication that you are looking at the right credit card for your less-than-“good” credit score. Premium cards pay at least one mile per $1 spent. Stay away from those unless you have premium credit score. You will within six months if you pay as agreed.

If your credit file shows scores lower than the 650 or 725 ranges, check your credit report for accuracy. There may be an error on the report, such as a medical collection, that you missed. On the other hand, it could be that trade lines you have established are not reporting to the three major agencies. In the event of errors, get them corrected right away. A collection is bad, really bad, and needs to be cleared right now.

If you have lower credit scores, I suggest you talk to your bank about a secured credit card. Not all banks will offer them, but when you find one that does, here is how they work:



You deposit money in an account with the bank and they, in turn, give you a credit card with a credit limit equal to or slightly smaller than the amount of your initial deposit. Does it sound like the CD loan? It is. You are pledging your own money as collateral -- a pledge that you will make your payments on time. If you don’t, the bank will close your credit card and collect from your prepaid deposit. There may be a sign-up fee for this type of credit card. This is something you want to get away from as soon as possible. Before setting up one of these with your bank, be sure to ask if your repayments will be reported to the three major credit reporting agencies. If not, move on to another bank.