How to “Surf Credit” to Earn Huge Bonuses
Credit card companies want you to use their bonus cards. They lure you in with glasses, you accumulate debt, they make enough interest money to pay for the entire venture. Play it right, however, and you can beat them at their own game.
It’s in the best interest of the credit card company, without a pun, to use its product and accumulate debt. This is why they make these cards so appealing. Free travel? Free hotels? Cash back? Yes, yes and yes!
However, keep in mind: this is not the only way to top up reward cards . The cost of these reward programs is passed on to companies, who then pass the cost on to clients. In other words, you pay for these “rewards” in one way or another.
But some savvy users flip these cards over to make them even more useful. This is also called “churning” a credit card or “surfing” a credit card. Whether you are a surfer or a churner, the process is the same: you open and close a series of cards to get multiple signup bonuses (or balance transfers).
Some issuers, such as American Express, have opposed this practice. They will not allow you to take advantage of the sign up bonus if you have opened the same card in the past. And Chase may disapprove of you if you’ve opened five or more accounts in the last 24 months – aptly called the ” 5/24 rule.” However, despite these rules, many players squeeze as much out of these cards as they can.
“I made so much money selling travel credit cards that I didn’t even know where to start,” says Hannah Stein, who writes about her travel experiences. “If you use your cards correctly, you can earn points, status upgrades and more to keep your travel costs down.”
It’s time to make a big disclaimer: if you have credit card debt or a problem with overspending, you should stay away from the credit card shaking game. It just isn’t worth the risk of financial ruin. Plus, bonus cards usually have higher interest rates, so if you’re wrong, you’ll pay. Strongly.
Don’t forget about the annual fees. Most of these awards have a significant annual cost. For example, Chase Sapphire Reserve has a whopping $ 400 fee (I know I spat my coffee out too when I first heard about it), but often the rewards are worth it. The reserve ticket includes a US $ 300 travel credit, Global Entry reimbursement, lounge access and many other perks.
Otherwise, credit card rejectionists usually close the card after receiving the reward, but before the fee is charged (the first year is often canceled). As you can see, there are a lot of things to consider when changing credit cards. If you are going to play this game, prepare to follow the rules.
Basic rules for changing credit cards
The golden rule of changing bonus cards is simple: Pay your credit card balance in full and on time. This is a no brainer.
Whether you accumulate interest and debt, or transfer balances without paying off debt, you are not really beating credit card companies at their own game. In fact, you fall right into their little trap instead. And this is a dangerous trap !
“The main rule of responsible balance top-up is to never and never have a balance on the account, except in those rare cases when offers with zero percent are available and you are 100% sure that you will be able to pay off your balance by the end of the promotional period”, – says JR. Duren, Personal Finance and Consumer Expert at HighYa.com . Think of it this way. More than 40% of Americans with credit cards have balances, of which a significant number have balances of more than $ 15,000, ValuePenguin said. At a conservative rate of 15%, these monthly interest payments are $ 187 per month. Do this 10 times and you will void almost every card with an annual fee of less than $ 500. ”
Even if you don’t spin the balance, there is another pitfall to watch out for: buying things that you don’t normally buy. In an interview with Business Insider, loan officer John Ulzheimer uses the term “reward chase”.
“I call it a reward chase, where you buy things or open cards that normally don’t score points,” Ulzheimer says, noting that he only uses his cards to spend money he will spend anyway. “It’s incredibly dangerous. Most people who end up in dire credit card debt attribute it to using cards this way. “
CreditCards.com offers not only these basics, but a few more churns to keep in mind :
Start from scratch: If you have credit card balances, you should probably not spend any money on rewards at all.
Consider closing your card again: If you plan to close your card to avoid an annual fee, remember that it can negatively affect your credit rating due to the use of credit. This does not mean that you only want to pay to keep the card open, but at least keep in mind that this can affect your credit, especially if it is an older card.
Keep Utilization Low : Credit usage is the amount of credit you have compared to how much you actually use. You need a lot of affordable credit, but don’t spend a lot. Again, you can ensure low utilization by paying balances in full and on time. (Still not sure what the use of credit is? We wrote more about it here .)
How whipping works
“Mixing involves three things: good standing, discipline and research,” explains Duren. “First, you have to have a good reputation to get the best deals. Second, you must have the discipline to pay off the balance in full each month so as not to pay interest. Third, you need to do your research to find out which cards give the best deals. “
The first step is to find cards with the best sign up bonuses. Our readers have shared some of their favorites here , but sites like NerdWallet , Bankrate and CreditCards.c let you compare all the best cards at once. Duren also suggests visiting the Reddit forum .
Once you know which cards you need, it’s time to apply. This means that your credit history should be good to excellent, ideally a score of 740 or higher. Pro tip: If you can, time your app for a big purchase like a wedding, home renovation, or holidays. This way, you will meet the spending requirements for the sign up bonus, which usually requires you to spend several thousand dollars in the first few months, without any purchases.
As we suggested earlier , keep an eye on the terms of each card (yes, use the spreadsheet!) So you can make sure you hit the spending threshold and also qualify for signup bonuses.
Chase Sapphire Reserve has one of the biggest sign-up bonuses of 50,000 points, but you will need to make purchases of $ 4,000 within the first three months after opening the card. The Balance recommends that you pay attention to the following, in particular:
- Credit card issuer and specific credit card
- Credit card opening date
- Annual credit card fees and waiver
- The date on which the annual fee will be charged if canceled in the first year (if you are not maintaining an account, you will need to close the account before that date)
- Bonus
- Expense claim
- The date you need to meet the expense requirements
- Your current credit card balance (and all credit card balances)
- Your progress towards meeting spending requirements
- Has a bonus been applied to your account
- Have you used the bonus
- Time for any promo bet
We can’t stress this enough: don’t buy things that you wouldn’t normally buy just for a reward! This is counterintuitive, and credit card companies want you to do this: spend money you wouldn’t otherwise spend, and (hopefully) it builds up debt. Spend only the money you intend to spend.
How churning affects your credit
Yes, ditching credit cards can really affect your credit, and your credit can affect everything from your monthly bills to your ability to get an apartment.
For example, every time you open a new card (or any new line of credit, really), your credit score gets a little temporary blow, said NerdWallet’s Kimberly Palmer. “So if you apply for multiple cards at the same time, those amounts will add up,” Palmer told us.
It may not matter much in the long run, but if you’re in the process of buying a home, taking out a car loan, or applying for any other line of credit, Palmer warns that opening this new card will hurt you (when I applied for a mortgage a year ago (I opened Chase Sapphire Reserve after getting approval and the lender still called me worried about it).
And unlike buying a mortgage or other loan, most scoring companies do not allow you to “group” requests. This means that you cannot reveal multiple cards at the same time and expect to receive only one hit. WalletHub explains :
The Buy by Bet bonus does not apply to credit cards, so do not blindly apply for them in large batches (as each will count as a separate request). Instead, do your research and be selective about which offer you apply for. “
However, the result of your query will usually not be great; according to Bankrate, the request will only cost you a few points . (But your own mileage may be different. Palmer said that after opening a new card, her own score dropped by almost 20 points). Just make sure you don’t open a new card around the same time that you might need to use your credit for whatever reason. …
In addition, your score may suffer if you cover the card that you knock. Credit usage accounts for 30% of your FICO score. Closing a line of credit means you are inadvertently increasing your utilization rate, which could lower your score. Keeping a card open is easy enough, but it can be problematic if you’re whipping a card with an annual fee, and most cards worth whipping come with a fee.
Consider closing your card right before fees drop, or better yet, “when you get rid of your credit card, consider upgrading to the free version or transferring your credit line to another card at this bank.” Stein suggests. “This way, the line of credit remains active and does not affect your credit rating as if you canceled it.”
If there is no commission on the card, just leave it open. If you have a spouse or partner who is willing to work with you, you can also minimize credit impact by getting them to open cards too.
“The best way to keep your loan safe and sound is to pay off the balance every week to ensure that there are no large balances left on your card,” says Duren. “Set up automatic payments on your cards and select the option to automatically pay off the entire balance each time.”
Don’t forget, if you’ve frozen your loan after the Equifax fiasco, you’ll need to unfreeze it before applying for any new card. Be sure to keep track of your credit using sites like NerdWallet, CreditKarma, or WalletHub . They will tell you how much your account has dropped and make it easier to keep track of everything.
“It just underscores the need to monitor your credit,” Palmer said. “You need access to your credit history, you know how to check it, and check it regularly.”