Series Layout
Welcome to the Travel Hacking from Scratch Series – a series dedicated to getting those new into Travel Hacking up the curve as quickly as possible. Below is the layout of the series with links back to already published articles.
Today our topic is Churning Credit Cards, a look into what it means to churn credit cards, how it benefits you, and how you can use this knowledge to quickly earn miles and points.
| The Benefits of Travel Hacking |
| Earning Points |
| Credit Cards – Which Card and Why |
| Category Bonuses |
| Churning Credit Cards |
| US Credit Cards (ITIN) |
| Referral Bonuses |
| Manufactured Spending |
| Using Your Points |
| Alternatives to DIY |
| Understanding the Power of Partners |
| Weighing Convenience vs Cost |
| How to Avoid High Taxes and Charges |
| Sweet Spots |
| How to Travel Better |
| Why You Need Status |
| Leveraging Status |
| Understanding Your Rights |
| Beyond Travel – Financial Freedom |
What Is Churning?
As I alluded to in the previous post, Credit Cards – Which Card and Why, banks and credit card issuers understand that it’s substantially easier to keep existing customers than to attract new ones. In order to attract new clients, issuers pull out all the stops with pretty crazy sign-up bonuses that are far and away more value than the annual fee. Many times, the annual fee is waived as well, which basically means free miles/points. It’s not uncommon to see things like a 75,000 point sign-up bonus after a set amount of spend on the credit card.
Unfortunately, these bonuses are usually only offered in the first year. There are some exceptions to the rule, such as the WestJet RBC World Elite Mastercard, which comes with an annual companion voucher every card anniversary. That being said, it is much more common to see issuers provide little to no incentive past the initial first year offer.
Most people accept this and move on, but not travel hackers. Not you. Not I.
This is where churning comes into play.
Churning is the strategy of signing up for a credit card, meeting the minimum spend, cancelling the card, and then doing it all over again. The goal is to take advantage of the first year’s sign-up bonus over and over again.
I think you can already see how this can amount to a lot of points in a short period of time.
Is This Legal?
I want to clear up this question once and for all. Everything you see in this blog is 100% legal. Legality has to do with Federal and Provincial laws, not the terms and conditions that govern credit cards and their associated loyalty programs.
What we need to worry about is whether or not what we do violates the terms and conditions of the programs we participate in. If it does, the credit card issuer can simply not issue you a welcome bonus, and in extreme abuse cases, confiscate your miles/points and exit you from their program. The term persona no grata is one that comes to mind when this happens and issuers are well within their rights to exercise this right.
Now that I’ve gotten you scared, I should tell you that being exited from a program only really happens when you are egregiously violating the terms of the program of a program is just tired of dealing with you and your shenanigans. Simple churning doesn’t usually elicit such a response but fair warning – know where the line is and don’t cross it.
We’ll talk more about this but you should read the terms and conditions of the program to understand how to stay on the right side of the equation.
Reading Terms and Conditions
This is a skill that I learned early on in my travel hacking career. If you can read, you have a pretty good shot at properly interpreting terms and conditions. Many people feel intimidated with the legal jargon sometimes associated with T&Cs but you shouldn’t be. If you don’t understand what a term means, Google it like you would anything else. For the most part, the terms of a credit card and loyalty program are in plain English.
The way you should read the T&Cs of any program is to ask yourself the question that you are trying to determine the answer to. In this case, “will I get the sign-up bonus if I’ve had this card before?”
Pro Tip: Look for links that say “Terms and Conditions” or “Footnotes” to pull up the terms on a credit card.
Issuers and Their Terms and Conditions on Churning
Let’s take a look at some common credit card issuers and their cards to determine if churning is allowed or frowned upon. If it is allowed, is there a set period of time you have to wait to receive the welcome bonus again?
Rather than copy and paste the entirety of the terms and conditions for each card, I’m going to provide the relevant text and a link to the terms. Let’s dive in.
TD Aeroplan Infinite Visa
The TD Aeroplan card is a great card if you are trying to boost your Aeroplan miles balance. It’s pretty common to see enhanced bonuses beyond the standard 25,000 Aeroplan Miles. About twice a year you’ll see an offer for a first-year annual fee waiver. This is a card that I have cycled through throughout the years but I don’t do it religiously because most of my points from my American Express Membership Rewards transfers.
The specific term that we need to understand as it relates to churning is outlined below:
If you have opened an Account in the last 6 months, you will not be eligible for this offer. We reserve the right to limit the number of Accounts opened by and the number of miles awarded to any one person.
https://www.td.com/ca/en/personal-banking/products/credit-cards/aeroplan/aeroplan-visa-infinite-card/
What this means is that if you have opened a TD Aeroplan infinite card in the last 6 months, you are not eligible for this promotion. The keyword here is OPENED. The term here seems to indicate that it does not matter when you closed your account, but rather when you last opened your account.
Also notice the clause that says “We reserve the right to limit the number of accounts opened by and the number of miles awarded to any one person”. This is TD’s get out of jail free card which basically says they can target you specifically if they don’t believe you should receive the bonus. This is a common catchall clause that many issuers have. It’s just part of the game.
I personally don’t churn this card that often but usually have one opened once a year when their first year free promotions roll out.
If it isn’t already obvious, you should be keeping meticulous records of when you open and close your cards to understand if you qualify for a promotion.
American Express Platinum Personal Card
American Express has become more and more stringent in their terms and conditions as it relates to churning. They have added pretty strict language around the idea that sign-up bonuses are “once in a lifetime” type offerings, meaning that if you have had the card before, you won’t get the bonus.
his offer is only available to new Platinum® Cardmembers. For current or former Platinum® Cardmembers, we may approve your application, but you will not be eligible for the welcome bonus. Offer subject to change at any time.
http://www.pointsnerd.ca/go/amex-platinum-personal/
These terms now match up to American Express’ US card’s terms. Previous to this, AMEX did not specifically use this language to discourage churning. They do now so exercise caution here.
American Express Platinum Business Card
The churnability of the AMEX Platinum Business Card has been a question that I have been fielding left and right in the comments and via email. American Express is pretty clear in their terms when it comes to the question of whether or not you can hold concurrent AMEX Business cards.
This offer is only available to new American Express Small Business Cardmembers. For current or former American Express Small Business Cardmembers, we may approve your application, but you will not be eligible for the welcome bonus.
http://www.pointsnerd.ca/go/amex-platinum-business/
The way I read this term is that you CANNOT hold concurrent Small Business credit cards from American Express for the same business. If you have more than one business, you should be able to hold another AMEX Business Platinum card. For example, if you have a business called Bob’s Dog Grooming, perhaps you have another business called Bob’s Dog Walking. Each company should be able to hold a Business Card from American Express as long as they are a separate legal entity.
I want to be clear – I would never suggest that you make up businesses. These cards are intended for actual small businesses, including sole proprietorships.
MBNA Alaska World Elite
I have long written about the MBNA Alaska and your ability to churn the card. I believe this to be the most churnable card in Canada and my opinion has not changed. MBNA’s terms do not explicitly forbid receiving the bonus more than once and all reports indicate that folks churning the card have been successful.
Account must be open and active on posting/delivery date to qualify for bonus Miles. Limit one-time bonus Miles offer (no cash value) per new account. Reissues, fraud, lost/stolen and reopened accounts do not qualify for this offer.
http://www.pointsnerd.ca/go/mbna-alaska/
The keyword here are “per new account”. I know that once you cancel your card with MBNA (now TD), your account is considered “closed” meaning that as soon as you hang up the phone, you cannot reopen your account if you change your mind – you have to apply for a new card. To me this suggests that your account is closed and any new application is considered a “new account”.
The MBNA World Elite card is one of my favourite cards in Canada because of the insane number of Alaska Miles you receive for a sign-up bonus. 30,000 Alaska Miles after you spend at least $1,000 in the first 90 days of card ownership for a $99 annual fee. If you apply through Great Canadian Rebates, you will receive $60 cashback, meaning your annual fee is effectively $39. And the best part of this whole equation is that you can do it over and over again. I recommend meeting the minimum spend, cancelling the card and reapplying after 3 months from date of cancellation. There have been reports that people have been doing it more often but I would personally wait the 3 months to be on the safe side.
You should be able to receive the $60 cashback rebate on each one of your approved cards but there have been some reports that people have not been receiving their cash back so take that with a grain of salt. I have never been denied for a cashback rebate from MBNA for what it’s worth.
If you aren’t familiar with how cashback sites work, I’ll point you to some suggested reading on the subject.
Enforcement of Terms and Conditions
Here’s where we start moving into a gray zone. Just because a card issuer states something in their terms and conditions, doesn’t mean that they are enforced. Each issuer is different and things change over time. You have to consider that many of these issuers are using antiquated IT systems to enforce their terms and sometimes these systems just aren’t up to the task.
When you get into churning, you have to be ready to accept the fact that you may not receive the bonus if you are a repeat customer. That’s just part of the tradeoff when you play this game. It a risk/reward game that we play and for the most part we tend to be on the winning side of the equation but always be prepared to lose.
If you aren’t getting a repeat bonus, you could always call your card issuer and explain that you thought that you were going to get the bonus but because you are not you would like to cancel your card and receive a refund on the annual fee. Some issuers have policies that provide pro-rated refunds if you are within the first 3 months of card ownership. Your mileage, like anything in this game, may vary.
Conclusion
I have often advised people to read the terms and conditions of everything they sign up for to fully understand all the nuances involved in the promotion at hand. Credit card sign-ups are no exception. Read these terms carefully but read them with an objective in mind. You’ll be surprised at how well the terms cover off your specific question or objective.
As a writer of these terms in some WestJet promotions, I knew that I could never catch every permutation of how someone might work to sidestep my best intentions. Companies are obligated to stand behind the terms they put out to the public so you are well within your rights to point to the terms that are presented to you when you sign up for the card to enforce your rights. Take screenshots of the terms before you submit your application so you have some ammo if you need to use it later on.
I won’t suggest it’s easy to get an issuer to change their mind on your eligibility for the sign-up bonus but I can almost guarantee you have no shot at changing their mind if you can’t point to a specific term that suggested you are in the right. Do your due diligence.
Next up, we will talk about US credit cards – why you want to consider them and how you go about qualifying for them.