Churning butter, anyone?

I mentioned on Friday that according to some reports, Amex will stop giving out  repeat bonuses starting May 1st, an activity referred to as “churning” in this hobby.  Chase has been restricting it for some time, though in practice, many have gotten the bonus again after waiting 2+ years after closing the card. The truth is, it was only a matter of time till the banks got wiser. The churners represent a small, but very unprofitable group. Think of this hobby as a game. On one side, you have the bank; and on the other, the consumer.

The bank is a formidable player, so don’t ever underestimate it. Its goal is to get you in credit card debt so you can pay interest charges for the rest of your life. Basically, be their slave, for the lack of a better word. Your goal is to sign up for a card, get the bonus and cancel it before the fee hits, then sign up for it again at some point. There is nothing wrong with that, as long as you play by the rules. The bank is not evil.  It’s a business whose goal  is to make money. This hobby is a business of sorts for us as well.

When the banks lose too much money doing business with us, they start to push back, as it happened in this case.  In fact, IMO the golden era of credit card bonuses is probably behind us. As the economy continues to improve, the sign-up offers will continue to shrink. Should we be upset about it?  No. This was free money to begin with. The banks don’t owe us anything. In fact, in most parts of  the world, the standard sign-up bonus is only 5000 to 10000 miles and an annual fee, not waived.

Honestly, even the sign-up bonuses could go away, period. It’s unlikely, of course, but there is always a chance of some legislation going into effect that would make it illegal for banks to offer incentives to consumers seeking credit. My blog is actually written with that assumption in mind. In fact, I spend more time focusing on long-term  card choices than on bonuses. Do I think this hobby is dead? No, not yet. I do think we all need to have realistic expectations going forward.

So, what should you do in light of these events?

I mentioned that with SPG card, it may be best to wait till summer. However, in this case, it may pay to go ahead and apply right now if you had that card in the past. It’s better to lock in 25000 points than potentially miss out on the bonus completely. Currently, I do make a commission on most Amex cards. Alternatively, if you know a friend or a family member who has Amex SPG, check with them so they can send you one.

The same goes for all the other  cards that you may have had in the past. I don’t know how far Amex would look, but you can find out what cards you have had with them by checking your free credit report, which you can access once a year. Usually, it will list even the closed accounts for 10 years. As I said, at this point, the rumor is not confirmed, but was mentioned by several different Amex reps.

Either way, if credit card churning becomes  a thing of the past, you can always join me in churning butter, a favorite activity of all stay-at-home moms!

Picture credit goes to windowontheprairie.com

One thought on “Churning butter, anyone?

  1. Pingback: Miles and Points, Brighton Beach | Miles For Family

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