Over the last few weeks, I’ve seen quite a few blog discussions on the dangers of this hobby, most recently on Hack My Trip. And it is a very important topic. As I’ve said many times in my blog: Don’t ever underestimate the lure of plastic and potential disaster it can bring to your life.
I really debated on whether I should write this post because it does involve a friend, even though that particular person doesn’t read my blog. In no way do I want it to sound like a rant, but rather something that can potentially benefit my readers. I think this is a very realistic situation for many of you, and I hope for my experience to become a cautionary tale.
Last February I had a discussion on credit card bonuses. That person asked me to recommend a card, and I suggested Chase British Airways Visa. At the time, it had a bonus of 100,000 miles after spending $20,000 in one year. You would get the first 50,000 miles after spending $2,000, then additional 25,000 after $10,000 and the rest of the miles after $20,000 in spending.
I mentioned, as I always do, that one needs to be careful with that sort of amount and spend only what you would normally spend. She said that she would have no problem charging at least $10,000 in one year and had a specific use for Avios miles.
Everything was great, till a few months later I heard from that individual that she found herself occasionally buying stuff just so she could get the bonus sooner. Of course, I gave my usual talk cautioning against such behavior. Then at the end of 2013, that person said that she was close to spending the whole $20,000, so now she could get the entire bonus. Yay!
Well, it all went downhill from there. Yes, that person did get the full bonus. But she also got in debt and ended up paying interest to Chase for 12 months after her “free” miles posted. And the worst part is, that individual was blaming me for the fiasco. At first, it started with some jabs. Then it escalated into claiming that I encouraged her to spend $20,000 and that is why she got in debt.
Obviously, if you have been reading my blog for a week, you know that I would never suggest someone runs up debt to get miles. In fact, it’s completely contrary to my philosophy. But there is no way to prove it, since I obviously didn’t record the conversation. Thankfully, I wasn’t making commission on the card. Otherwise, it would be even more awkward.
What can you learn from this? First, be careful when discussing or suggesting certain bonuses to your family and friends. Things can backfire in a way you would never expect. Second, be cautious when it comes to taking on cards with very large minimum spending requirements. We are all suckers for instant gratification, so you may find yourself spending more than you normally would.
Some may say that in a way I am partially to blame for this incident. And I can see that. However, I was acting in good faith and knew this person to be very responsible with finances. I had every reason to believe that this disaster wouldn’t occur and had no financial incentive in making my recommendation.
Others may say that it was irresponsible for me to start this blog where I make commission on credit card referrals. After all, if this happened to a good friend whom I personally know, how much worse is it to market bonuses to total strangers?
The truth is, we are all responsible for our own decisions. I do consider it a predatory practice when someone aggressively markets credit cards to college students who have very little grasp on finances. However, that’s not my target audience. I write for families presumably in their late 20’s or older. That goes for all other “family” niche bloggers in the industry.
I assume that by now you have enough common sense to determine risks for yourself. I can provide warnings, and do so frequently. But, ultimately, it is up to you to decide how far you are willing to take this hobby.
Life is full of risks. It’s dangerous to drive a car. In fact, just last week, we narrowly avoided potentially horrible collision while vacationing with our kids. Does it mean that they should stop producing automobiles? Your plane may crash. Should you not fly anywhere? One day you may lose your secure well-paid job. Does it mean you shouldn’t take out a mortgage?
Many families in America can’t afford any vacation, period. They work hard and pay their bills on time, but they simply don’t have anything left at the end of the day. Or they only have enough to pay for gas to go visit in-laws and stay in their house.
They would love to vacation at the beach, but it’s simply not an option. Or that’s what they think. This hobby can provide a solution with very minimal effort. As I wrote in my Monday’s post, you don’t even need to churn cards if you don’t want to. You just need the right credit cards.
Of course, bloggers (especially affiliates) have a duty to act responsibly and disclose the risks. That’s why I have a link to an article on pifalls of this hobby at the top of my bonuses list page. That’s why I don’t focus on manufactured spending, which IMO is far more dangerous that switching cards.
There is an inherent conflict of interest because the more cards you get, the more we get paid. You should always be cognizant of that fact. The biggest problem for many blogs is the overreliance on affiliate commission, something I am all too well familiar with myself. About 95% of my very modest profit comes from credit card sales. Yes, I used the word “sales.” The difference is: I have low overhead, some don’t.
The banks could dump you at a moment’s notice, and they have done so in the past. So when you see bloggers push (affiliate) offers like there is no tomorrow, it’s because there may not be a tomorrow.
This isn’t me being a Devil’s Advocate or a weasel. I am simply trying to address this issue in a civil and vitriol-free manner. Another reason: A well-informed reader is very hard to manipulate.
All in all, I can honestly say that I’m able to sleep soundly at night, based on the advice I have provided in my posts so far.
Readers and bloggers, what do you think about this whole issue? Hit me with your best shot. Don’t hold back, I can take it.