As I posted on “Travel Hacking“, the most common way to earn points and miles is through credit card welcome bonuses.
There are other ways – such as “Manufactured Spending” where you create artificial spending via methods such as buying coins from the mint that has the same nominal value as the cost and depositing it at the bank, over paying your hydro or tuition account and asking for a refund or loading the maximum daily balance to some form of prepaid card; withdrawing the cash and depositing it back to your account.
Some people think of huge, crazy elaborate schemes to get points. I’ve read about a person who put down a deposit with Tesla model 3 with no intention of delivery then fought his way to cancel the deposit and get a refund cheque.
Or; how about this guy who did it with pudding cups?
MS (manufactured spending) through coins – 5 toonies for $10 & free shipping.
It used to be much easier with larger tenders such as $200 silver coins for $200, but these coins are discontinued due to the travel hacking community going crazy with these.
It’s also a bit of a hassle trying to deposit these coins and tellers look at you like you are crazy trying to deposit “funny money” at a branch.
Let’s focus on the easier way for now – credit card bonuses.
So, credit cards. Many people have pre-formed opinions on credit card churning so I want to address a few points first:
1 – Credit Scores
Signing up for many credit cards DO NOT ruin your credit score. Yes, each hard inquiry lowers it by a few points but over time it evens out even if you keep churning. There has been many articles written on this subject so I wont repeat it here, but as a case study, a RFD member here lists his credit scores (and he applies for 1 or more cards every month). His score averages out around 713(Equifax) and 785 (Transunion).
My credit score on Credit Karma – and I have been churning cards for a while
Another thing I want to point out (having been through this experience personally), is having a 720 score rather than a 800 credit score has no impact to qualifying for a mortgage or loan. As long as you pay all your bills on time and assuming the same income, it’s not like a person with 1 credit card will qualify for the mortgage while the person with 6 cards.
Finally, you have to ask yourself this: would I rather have a insane credit score that no one knows about or would I rather travel the world and discover new life experiences.
For me, the answer is clear…
2 – “Churning” Cards
You can absolutely cancel a card with a welcome bonus (sometimes as soon as the bonus posts) and re-apply for it again to get the bonus again.
Most people suggest you wait 3-6 months again before re-applying but I have seen data points of people re-applying for the same card the day after they cancelled and getting the bonus! Amex, MBNA, RBC, TD (TD has a well known 6 months hold) has tons of data points showing this works.
In our small Canadian credit card market (compared to the States), this is usually the only way to get the required miles year after year to travel in luxury.
Some people might feel guilty or we are unfairly taking advantage of the system by doing this. Especially for some cards that award bonuses on first purchase, it feels wrong to cancel as soon as the bonus is posted to the account only to do it again.
The thing is, if you aren’t doing this, others are and you are effectively subsidizing them. Also, credit card companies and banks makes billions every year and if this really becomes a problem they would have shut this down years ago.
3 – Maximum Number of Open Cards
Related to the point above, there is no maximum number of cards you can have active at once.
I personally currently have 9 active cards at the moment and at one point had 13. I have yet to be denied a credit card once, so it really makes me wonder how aggressive I can take this to.
My currently active credit cards
The bottom line is credit card companies wants your business. The only thing they care about is whether you can pay your balance or not – if you have a history of doing so, there is no reason for them to deny your application.
4 – Spending a little for Miles
It is completely worth it to pay annual fees on a credit card if the welcome bonus is worth it. The unfortunately reality is if you want to earn LOTS of miles fast, you will need to spend a little bit of money getting there.
This can include paying some annual fees on premium credit cards or paying third party payment providers like Plastiq to meet your minimum spend.
However, the difference with the knowledge from this site is that you pay a fraction of the actual cost of the actual ticket. Again using our Toronto-HK in business class trip as an example, a standard off peak season revenue ticket costs almost $5,000:
Prices from Google Flights.
If you follow the plan on the next step of this guide, you will spend roughly $500 to get the same flights, and you can even get more stopovers at other countries if you so wish. For reference, you can’t even get discounted economy tickets for $500, direct flights costs around $1,200.
5 – Air Canada dropping Aeroplan
Most of you have heard that Air Canada is dropping Aeroplan. However, this won’t happen until June 2020, so we have 2 more years of Aeroplan churning before the rules change. 2 years a quite a lot of time, so its definitely not too late to start.
Note that you can use Aeroplan to book Star Alliance flights until June 2020 – so you can actually redeem for flights until June 2021, covering us for another 3 years or so.
In addition, Aeroplan is still the best points for Canadians at the moment. Aeroplan is the easiest to collect (due to the abundance of Aeroplan branded credit cards in Canada) and also very flexible to redeem with their very generous routing and stopover policies.
Aeroplan also gives us access to redeem flights on Star Alliance airlines, which is the biggest group of airlines compared with the other 2 groups – SkyTeam and OneWorld. This gives us the most flexibility and redemption availability (in theory).
[Update August 2018: Air Canada has decided to buy Aeroplan! This means AP miles can still be used for Star Alliance flight after June 2020, but I expect a devaluation before then]
In the next part of the guide, I will tell you exactly which cards to apply for and the plan to get 150k miles in a few months and using only $300.