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United States41565 Posts
Another blog in my money series. Probably only really applies to Americans so if you're not in the United States, sorry (and also congratulations).
What is churning?
Churning is signing up for financial services, typically bank accounts, brokerage accounts, credit cards and so forth, in a way that exploits their offers. In some cases you just hit signup bonuses and then cancel, in others you make good use of loopholes in their rewards points system, it varies. The point is you're in it for the rewards, not the actual service itself.
Where can I find out more about churning?
https://www.reddit.com/r/churning
www.doctorofcredit.com
Testimonial (brag post)
I've been playing with the hobby for about 18 months now and have made about $10,000 doing so. Here's a rough breakdown of what I did.
Amex credit cards signup bonuses for minimum spends
100,000 points Amex Plat
2* 60,000 points Amex Plat Schwab
75,000 points Amex Gold
5,000 points self referral
Total: 300,000 points
Cashout method: Using the Schwab Amex Plat card to convert points into a Schwab brokerage account at $0.0125/point.
Value: $3,750
Amex credit card benefits
$1,600 travel credits ($200 per Plat, per calendar year, reseting on Jan 1st so you can hit it twice in your first 12 months of holding the card, $100 per Gold)
2* Global Entry valued at $100 each
Cashout method: Applied as statement credits so literal cash payouts.
Value: $1,600
Amex Delta cobranded cards for Delta travel points
2* 70,000 Amex Delta Plat
2* 60,000 Amex Delta Gold
Total: 260,000 Delta points
Cashout method: 4 return trip flights across the Atlantic to go back to the UK.
Value: ~$3,500
2*$100 Schwab account signup bonuses just for opening the accounts (needed these for the Amex points cashout)
2*$250 Wells Fargo checking account bonuses (open account, make 10 debit card transactions, get $250)
$200 Bank of America credit card signup bonus
2*$200 BMO Harris checking account bonus
$150 another checking account I actually use
$450 Amex Travelite cobranded card
Cashout method: They literally give you cash.
Value: $1,900
25,000 points Chase Freedom
70,000 points Chase Sapphire
Total: 95,000 points
Cashout method: Convert to United skymiles, buy a transatlantic flight, alternatively I could have cashed out for $950
Value: ~$1,300 (no cheap flights at the time)
There are a half dozen others but this covers the main ones. Also some of the cards had fees which haven't been listed but probably collectively add up to about $1,500 across all of them.
Doesn't this ruin your credit score?
Not really. I wouldn't do it if I was planning to buy a house in the next two years but basically, no. Credit score is composed of number of credit lines (more = better), different types of credit (more = better), payment history (this should always be 100%), average age of account (older = better), number of recent credit pulls (lower = better) and utilization percent (lower = better). Churning lowers average age of account and increases the number of credit pulls but also reduces utilization and increases the number of credit lines. You might see small short term decreases in your credit score but for some cards I've also seen increases. Either way it's all short term, after a year the hard pulls drop off and cancelling cards removes them from impacting the average age of account. As long as you're keeping that perfect payment history you're fine.
A high credit score allows you to trade short term reductions in the credit score for money. That's the purpose of the score to you, you want it because it gives you money, money in lower interest rates, in better offers, in this kind of shit. If you refuse to ever use your credit score then it'll get very high but you'll never actually get anything. Whereas if you churn it down from 800 to 750 every now and then for an easy $2,000 and then wait 6 months for it to go back to 800 then you'll never hit 830, but you will have $2,000.
Is this difficult?
Depends on how dumb you are. If you can't manage to pay bills on time then yeah, don't do this. If you can manage things like autopay and keep track of multiple accounts (Mint makes life easy) then it's super easy. I hit most minimum spends just by buying prepaid Visa gift cards and converting them to money orders which I just deposit. Takes a few hours to get a $1,000 or so in points. For checking account bonuses I just reroute my paycheck when needed to meet the bank's direct deposit requirements. All it takes to manage is a spreadsheet, I write down what I open, what the conditions are, what the payout is and then I check when I meet the conditions and check again when they payout. Also I'm not especially good at this, I just muddled my way through doing whatever seemed worth it whenever I saw it. There are some serious churners out there who make this look super small. If I can do this, you can.
Conclusion
So that's churning. Not for everyone but if you're
1) American
2) Not an idiot
3) Capable of paying bills on time
4) Not already valuing your time above $200/hr
it's totally worth it to pick up the hobby in your free time.
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I have found churning to be an extremely suboptimal way to increase your income. It's a lot of work and maintenance for a relatively tiny return. I don't think you can really claim to make more than $50 an hour doing this. In 18 months, you made $10k, which is good, but you could have done basically anything else in those 18 months and made twice that much money. Start a small side business, negotiate raises, learn a skill that earns you more money at work, or even just reducing expenses.
I'm not saying this doesn't work, because it clearly does, I just think it's more work than is necessary to add more money to your bank account.
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United States41565 Posts
On May 25 2017 01:04 ldv wrote:
I have found churning to be an extremely suboptimal way to increase your income. It's a lot of work and maintenance for a relatively tiny return. I don't think you can really claim to make more than $50 an hour doing this. In 18 months, you made $10k, which is good, but you could have done basically anything else in those 18 months and made twice that much money. Start a small side business, negotiate raises, learn a skill that earns you more money at work, or even just reducing expenses.
I'm not saying this doesn't work, because it clearly does, I just think it's more work than is necessary to add more money to your bank account.
I'm currently employed full time with golden handcuffs due to the benefits being too good for me to job shop. And while they don't do raises (pay is decided by the state legislature) I am getting a job reclassification which will increase my pay by about 16% in 6 months time. I am also pursuing my Masters full time (paid for by my employer), learning Spanish, and working a second job.
You're right that some of the most profitable work you can do is investing in yourself through increasing your skillset, employability, applying to other jobs and so forth. But I'm already pretty maxed out on that stuff. And given that I don't make $50/hr at my second job, even if I am getting $50/hr for churning it's still very much worth it. Most of it I do in my down time while on the clock at my first job though.
When I get my CPA license next year and start making some real money (and probably working 80 hour weeks) then churning will probably fall below the acceptable time value of money for me to do. But right now I'm not paid enough to not do shit for $50/hr (a number I reject but even if I accept your valuation it's still super worth it). If I didn't do this I couldn't fly back to England to see my family whenever I wanted.
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Hong Kong9145 Posts
i just did alaska boa 30k points plus 100 statement credit an actually free (pay tax and fee only) companion fare off 1k in 3 months in a month normally so it's pretty great
no reason not to do this even if you are already making decent money with your time but im all about the minmax life
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Canada13378 Posts
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i get paid to develop, design and implement systems to prevent churn 
keep up the great work! it creates more demand for my services.
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United States41565 Posts
On May 25 2017 03:25 JimmyJRaynor wrote:i get paid to develop, design and implement systems to prevent churn keep up the great work! it creates more demand for my services.
Please no (((
On a serious note, can you talk more about your work or is it all NDA? Hearing about that stuff would be super interesting.
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BMO and TD track each and every incentive method via a "source code". if a particular "source" of new CC holders results in hardly used or dormant cards and very few using the card lots then that incentive method is discontinued. the algorithms for assessing levels of "new card holder activity" vary wildly. This is how they keep a lid on these schemes.
BMO and TD have tried desperately to phase out these incentives, but they've failed every time i've seen them try. I think you'll be able to keep doing this into the foreseeable future.
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On May 25 2017 04:21 JimmyJRaynor wrote:
BMO and TD track each and every incentive method via a "source code". if a particular "source" of new CC holders results in hardly used or dormant cards and very few using the card lots then that incentive method is discontinued. the algorithms for assessing levels of "new card holder activity" vary wildly. This is how they keep a lid on these schemes.
BMO and TD have tried desperately to phase out these incentives, but they've failed every time i've seen them try. I think you'll be able to keep doing this into the foreseeable future.
TD was giving away 40 and 50 inch samsung tv if you opened an account with them a couple years ago. They were all 4k and costs $500/$1k respectively. I think the requirements was open a chequing account, deposit 500 or 1k, and make 10 interac/bank withdrawals. Once you made the 10 interac/abm withdrawals, you had to return to your branch bank for your tv.
My sister and her husband opened 2 accounts each, made the withdrawal, and closed the account a few months later. probably spend a hundred, for two samsung 4k tv.
Not quite churning, cuz they use the tv, but I'm sure you can flip those tv for 500-800 on kijiji, craiglist, etc. It was a pain in the ass, but so worth it in the end.
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I'm American but not residing in America. This is interesting.
Also, can you give advice on banks/credit cards for international? I left my Wells Fargo account open for a bit and didn't keep the minimal amount in it - got charged 72dollars - fucking ridiculous.
My friend would love this idea of churning though and it sounds like you're in a job that is great but not exactly challenging/with a lot of free time to allow you to do this. Good idea
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Do you ever get money from referrals? I keep thinking my wife and I could refer eachother... thoughts?
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How is your grand scheme of using tax loopholes to retire in like 30 and never work again going? I vaguely remember it busted somehow, or am I mistaken? If that's the case though, it doesn't really give much credibility to your yet another scheme for easy money ...
All things considered, I find that by far the easiest way to make money is to not spend them.
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United States41565 Posts
On May 25 2017 23:13 opisska wrote:
How is your grand scheme of using tax loopholes to retire in like 30 and never work again going? I vaguely remember it busted somehow, or am I mistaken? If that's the case though, it doesn't really give much credibility to your yet another scheme for easy money ...
All things considered, I find that by far the easiest way to make money is to not spend them.
You are very much mistaken. The stock market has been going crazy and I'm riding it up. Also that first scheme for easy money consisted of "earn money, invest it", hardly an insane plan. Churning is a part of that scheme, when I have free time at my first job I use it to do stuff like churning to make another $10k to invest. Also what's there to dispute the credibility of here? Do you think I'm lying or do you not understand how having $10k is better than not having it?
I'm on schedule.
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United States41565 Posts
On May 25 2017 20:53 Cauld wrote:
Do you ever get money from referrals? I keep thinking my wife and I could refer eachother... thoughts?
Not much. The private referral offers are generally worse than the public ones which are available sometimes. The Amex Plat offers 100k point ($1250) bonuses from time to time and 60k the rest of the time but if you refer someone then they get 60k and you get 5k, even if there is a 100k offer available.
I got one referral for 5k points ($62.50) but most of the time it's better to wait.
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Hahaha I love you Kwark. I'm too boring to try something like this. I like keeping as few plates spinning as possible, you seem to be the total opposite.
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yo kwark, just stumbled on this as i found out sc is still around only recently. ur name def rings a bell from lonnnng ago in uk sc scene. good to hear ur doing well in general
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Solid post, thank you, forget the haters.
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United States41565 Posts
Sup Ket. Speaking to you that one night in Brood War GBR-1 got me into poker, changed my career path and potentially pushed me into a completely different direction. Must be about ten years ago now, if not more. How's poker treating you? I think I saw some of your blogs a while ago on liquidpoker.
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EPT
