I stumbled upon the churning subreddit a few months ago and decided to take advantage of the reward credit cards on the market. Many cards offer additional points or miles for new customers after reaching a spend limit within a certain time frame. These cards usually have annual fees so the idea is to reach the limit, acquire the points and redeem them before the card reaches one year of age. This allows the owner to reap the rewards without paying the fee. Of course, should you accrue a balance with the card and pay interest your gains would melt away rather quickly. The general strategy involves replacing everyday purchases with the card in order to reach the minimum spend. There also exist ways to funnel large purchases that you are otherwise unable to place on a credit card through the credit card in order to reach the minimum spend should you need a boost. This is referred to as manufactured spending (MS) and, while technically against the terms and conditions of the card issuer, is not illegal in any way. One common method for MS is to send money to a friend via Amazon Payments for “goods or services” and then get that money back from your friend so that you may pay the bill. This money comes back to the card full circle with no interest or fees and counts for spending goals.
I decided to apply for a Barclay Arrival World Plus Elite Mastercard and was approved. In general, one mile or point is roughly equal to one cent when redeemed. You earn two miles for every dollar spent. The Barclay card offers a unique way to redeem miles; they can be redeemed for any travel expense on your statement which exceeds $25. The bonus that I was seeking was for 40,000 miles and was obtained by spending $3,000 on the card in the first 90 days of card issuance. 40,000 miles translates to $440 of statement credit when redeemed for travel expenses since they give 10% back if the miles are redeemed in this manner. That’s a free domestic plane ticket! You may also redeem miles for cash, general statement credit, gift cards and various products but they are not as valuable compared to redemption for travel expenses. The annual fee of $89 is waived the first year but is more than paid for with this initial bonus alone for almost five years. It is important to note that miles never expire. Another valuable feature is the lack of currency conversion fees and CHIP + PIN technology.
Another card which I recently obtained is the Hyatt Visa by Chase. After spending $1,000 in three months you are awarded two free nights in any standard room worldwide. The value of this is variable but keep in mind that you can stay in any hotel. The Park Hyatt hotels in Tokyo, Maldives and Paris are among the most expensive and command at least $400 per night. These nights will expire after one year. In addition, you are awarded a free one night stay at any category 1-4 hotel worldwide which is granted at your cardmember anniversary. Categories range from 1-7, with 7 being to most luxurious. The annual fee of $75, waived the first year, is worth it for this benefit alone. Additionally, the card automatically grants you platinum status which provides free room WiFi and late check out.
A third card and final card (for now), which I do not plan on keeping due to the steep yearly fee, is the American Express Gold Premier Rewards Card. It costs $175 a year to carry this card and I probably will not use it enough to warrant the fee. The Barclay card is much better in terms of point value as you earn a maximum of 2.2% for every dollar. AMEX offered 20,000 points after spending $2,000 in the first two months of card ownership. That equates to about $200 off a ticket from major airliners or $150 in gift cards for Hyatt. That is barely worth the yearly fee. In order to keep up the value I would need to spend about $18,000 a year on this card which is not likely. AMEX is known for customer service so I will make sure to take advantage of their help during my travels.
How do I plan to use these rewards? I want to visit Japan within a year and stay for a couple of weeks. Two nights at the Park Hyatt sound amazing and I will have at least $440 dollars to mitigate the cost of a flight. That’s about 33% off! The value of all three cards is $640 plus two nights at any Hyatt hotel. I intend to use those nights at the Park Hyatt in Tokyo with a cost of $408 per night in April. That puts the grand total at $1,456 before any yearly fees! Annual fees lower the value to $1,117. Remember that any interest accrued will further erode the gains. Keep it simple by using a rewards card in place of a debit card for everyday purchases to meet those spending requirements and pay the balances in full each month. You are ultimately earning money for the Visa, Mastercard and AMEX by way of merchant fees but it really is a huge gain if you can responsibly manage your credit.
