Usually, these type of posts go up in January, but I’m not your typical blogger, right?
I’ve mentioned before that most of my spending goes toward sign-up bonuses. It’s not for everyone and I absolutely don’t suggest that all my readers do what I do. It works for my family, even though it does get crazy at times, juggling so many cards.
As you can see from that post, through spending $25,000 in one year, we were able to get 443,000 points. Those were not Zimbabwean-type variety, but SPG, Rapid Rewards points and traditional miles.
I didn’t count the minimum spending, so the amount is actually closer to 500,000 points due to bonus categories on some cards. Based on that number, we got a conservative return of 20 cents on every dollar.
The retail value will most likely be at least 40 cents. That’s partially why I don’t go out of my way to maximize 5% rotating categories. Every dollar diverted to those could potentially give me 10% or more return via sign-up bonuses.
Of course, this is scalable to a point. You can only get so many cards before the banks will get spooked. Still, most of our spending goes toward minimum spending requirements, and I don’t plan to change course this year. As I’ve said many times, I fancy the low hanging fruit. My life is hectic enough not to engage in m/s or any other 10-step mile-earning strategies.
Last week, I had a discussion with reader Cheapblackdad who mentioned that he wants to focus on accumulating cash back for one year, but would prefer to apply for a card that comes with a valuable upfront incentive. The problem with that is that most good cash back cards don’t come with a decent ($300-$350 value) sign-up bonus.
Sure, there are cards that give 5% back on grocery and drug store purchases for 6 months, but they are only of interest to MS enthusiasts or those who are willing to buy cards and use them for all purchases, effectively netting them 4% in cash back. It’s a great return, but only if you are willing to deal with the hassle.
Take new Discover It Miles. While return of 3% on all spending for one year is as good as it gets, there is no upfront incentive. Let’s compare it to Citi Thank You Preferred. The card is listed on my page of best sign-up bonuses. You get 30,000 points after spending $2,000 in 4 months, no annual fee (ever). You can redeem the points for Walmart gift card, which is almost as good as cash.
So, let’s say you get Discover It Miles. If you diligently use it for everything and your spending is $25,000 per year, you will get $750, which is pretty good. If you go with Citi Thank You Preferred, you will have 32,000 Thank You points after your minimum spending is done, and probably closer to 32,500 points, since you get 2 points per dollar on dining and entertainment.
That amount can be redeemed for $325 in Walmart gift cards. You could always sell them for around $300 to various retailers like Cardpool, or just use it for groceries. Sure, it amounts to 40% of $750 you could otherwise get with Discover It Miles, but you only used 8% of your yearly spending to get this bonus.
Take another offer on my list: Capital One Venture Rewards. You get 40,000 points after spending $3,000 in 3 months, and the card earns 2 points per dollar. So, you would get 46,000 points once your minimum spending is complete. While that amount is good for $460 off travel expenses, you can also use it for a $460 gift card to various retailers, including Target. Once again, you can resell it or just use for groceries.
Another problem with Discover It Miles is that it gives this incentive only for the first year, after that it’s 1.5 % cash back, which falls short of what you could get with Citi Double Cash or Fidelity Amex. IMO if you are going to use up a valuable hard pull on your credit, it’s best to do it for one of “keeper” cards on my list or a card with a good sign-up bonus upfront.
I think for a typical family, the optimal strategy is to get one or two long-term core cards, and sign up for a few “whale” bonuses per year. That way, you keep things relatively simple and get the rewards as you go, according to your travel needs. Some, like Chase IHG MasterCard don’t even need to be cancelled, so it’s a win-win.
Now, on to my plans. None of it is written in stone. If a special offer comes along, I will adapt and change course. I always have a plan when signing up for new cards, so will explain my reasoning. Right now, I’m working on minimum spend on both of our US Bank Club Carlson bonuses, but as soon as that’s done, I hope to apply for:
1. Chase Sapphire Preferred in April, done in my husband’s name. Then, around the end of June, I hope to get one in my name as well. Minimum spending is $4,000 in 3 months per card. It’s been over 24 months since we each got this bonus, so we are eligible to get it again according to Chase new policy.
Quick tip: Always spend a few hundred extra dollars beyond the minimum spending requirement. You never know if you’ll need to return one of your purchases. Also, annual fees and cash advances don’t count.
Why: The sign-up bonus is very attractive and I absolutely love Ultimate Rewards. Not enough to renew CSP, as both cards will eventually be canned. But the points are great, no question about it.
At the moment, we are down to 75,000 Rapid Rewards points in Southwest program. I plan to get 4 one-way tickets from Florida to Seattle for our cruise to Alaska in 2016, so most of it (if not all) will be gone. Flights run between 13,000-20,000 per person one-way, and who knows how things will be with this new Southwest devaluation.
That’s why I want Ultimate Rewards so I can top off my account if needed. Another reason I covet this program? I hope to transfer the points, wait for it … Hyatt! Say what? Well, as I’ve mentioned earlier, I wouldn’t put my everyday spend in order to get Hyatt redemptions. However, using points from the sign-up bonus is a different story.
There is another silly reason. I really want to stay in Hyatt Place Orlando (gets rave reviews), so I can try that famous complimentary breakfast everyone is raving about. The property is Category 1, so it costs 5,000 points per night. The room in this hotel goes for $140 or more per night.
Breakfast is my favorite meal of the day, so I have to see what the fuss is all about. Speaking of, you know that American proverb that says: “Eat breakfast like a king, etc.” ? Well, Russian equivalent goes: “Eat breakfast yourself, split lunch with your friend and give dinner to your enemy.” The modern day version would go: “Give dinner to the United States.”
Whatever is left of the bonus would go to Southwest Rapid Rewards. No, I don’t like how they are making the program less transparent, but it’s still incredibly useful to my family. I might also end up transferring some points to United. Another post on that later.
2. Around August or September, I plan to apply for Citi Prestige in mine and my husband’s names. Minimum spending is $2,000 in 3 months per card. I won’t repeat myself as to all the reasons, but the short version is: I hope to have Citi Thank You points that I can transfer to Air France program next July.
3. Once the minimum spend on the previous cards is done, I’ll apply for Barclaycard Arrival Plus World Elite MasterCard in my name. Minimum spending is $3,000 in 3 months. I’ve had this card before and cancelled it.
Reports are: It is churnable, which means you can get the bonus again. Barclay’s doesn’t like my husband at the moment, as he recently got denied twice for a card with them. So, I plan to wait a year before making an app in his name.
Honorable mention: Spirit Airlines MasterCard
I keep going back and forth on whether to get it or not. We could fly roundtrip from Fort Lauderdale to San Jose, Costa Rica for only 5,000 miles per person (not a typo) due to special pricing accessible to cardholders. This redemption is only valid during off-peak (when kids are in school) dates, but if you are flexible, you can find availability for 7 seats on some flights in November. Read this post for more on this card
Keep in mind, this is Spirit, so everything costs extra, or as they cheekily put it:
I should totally apply to work for their marketing department, don’t you think?
And it’s a wrap! So, to recap: I plan to get a total of 5 cards (maybe 6), and will devote $15,000 of our regular everyday spending in order to get the bonuses. All of this, of course, assumes that the banks will bite. This will probably be a bit of a light churning year, and I will a do a switcheroo if an amazing offer pops up.
Once again, this is not an informercial telling you to do the same thing.
Image courtesy of imagerymajestic at FreeDigitalPhotos.net
What? Her again!?
Full disclosure: Most of these cards do pay me commission, so there is, obviously, an extra incentive for me to pick them over other offers. You can read more on all of them in my page “Best credit card deals for family.” As always, don’t bite more than you can chew, and don’t get them just because I’m doing it. Everyone is different, and what works for me, may not work for you.
Readers, what are your churning plans for 2015?
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