This is a paradox I recently encountered - using credit cards can create another asset in the form of airline miles. A friend who is currently a college student (and just left a summer job as a postal carrier) used airline miles to pay for a weekend in a very nice hotel. At full rate, his few days would have cost more than a month of rent at my luxury apartment. He earned these miles through his ~20 airline-mile credit cards, and so now I'm researching how to game this "free to play" system.

Yep. I put my brother in a bad spot. It doesn't really hurt him much right now but I messed up some business work using CCs under his name. With his permission of course. I can't pay them off right now, but I've managed to get my credit score close to 800. So I'm going to be getting a couple of credit cards and balance transfer my debts over to myself.

All the decent or better CCs I've seen, offer pretty nice opening offers. I'll definitely be taking advantage of the "spend $3K in 2 months and get $500" sort of deals and pay off those balances. It'll essentially be free money. Like churning you said, Reddits churning subreddit provides a lot of info. Not sure if there are other good communities, but that seems good.

Spend $3k and get $500 in rewards... Why not just spend $2k instead?

Maybe spend the time increasing your income.

(I have done this... Rarely would the hassle.)

Because you are probably spending 3K in 3 months anyway. If you absolutely aren't (or you can't hit the minimum spend in other ways [pay for your friends etc.]), sure, don't get the card.

More work: - cancel the card because yearly fee. - pay tax on churned $. - shorten cumulative account age (lowers credit score).

I've done this... Not worth it. Focus on more important things.

One card with a yearly fee is probably worth it for the other benefits. Other than that, the traditional way is to downgrade it to a free card. Either way, it's fine if you think it doesn't make sense for you, but it's pretty much no-hidden-costs net positive, and that's why so many people actively churn.

I understand why. Semi-free money.

Invest in increasing your income instead. That's my recommendation. Long term thinking.

Can't you do both?

The older you get the more you realize how important it is to focus. Specifically long term.

I'm spending the money anyway. Don't see the issue in this case.

The "save money by spending money!!" argument is nonsense. People have just been brainwashed into conspicuous consumption to prop up the economic metrics.

Here's a brief list of where I use credit cards (which I always pay off monthly):

- Car payments (they let me use credit cards with no fee, >$9 / month rewards)

- utilities ($1 fee, with >$1 rewards)

- Food (>$20 / month rewards)

- Gas (>$5 / month)

There are more, but that's what $40 / month. If you then use a churning method to get more points, like opening a new card where you spend $4000 in three months get $500 back, then it's even better. It depends how much you normally spend, but for me - I don't need to change spending habits. Just only use that single card.

Last year I made $2500 from credit cards with my standard spending. I took out three new cards, paid for my wedding, then paid them off. Haven't used them much since and I didn't need to spend any more than I normally would have.

>There are more, but that's what $40 / month.

Help me understand, US$ 40 in rewards agains a monthly spending of?

Assuming a good cash-back rate of 2%, $2000 spent on the credit card for $40 back.

The point being he's spending the $2000 anyway, so he'd rather get $40 back from his credit card company rather than $0 back if he used cash or debit.

But cash-back is not the same as reward points.

Cash-back is "money", reward points (more or less) is "discount on given good".

Many cards let you cash out rewards points now. With Chase, for example, you can get a check in the mail, use points to pay off your CC balance directly, or use points on amazon (at full value).

Using Chase Ultimate Rewards points at Amazon is only worth 0.8 cents per point, not 1 cent per point like the others.

Then you have to pay income tax on the churn.

Income tax is only assessed on deposit accounts that offer sign-up bonuses. Credit cards aren't deposit accounts.

I stand corrected!

No, the scam is that all other shoppers are subsidizing your reward points in the form of slightly higher prices.

There are some apartments around here that let you pay rent by credit card. You'd be foolish not to take advantage of that and save at least 1% on your rent.

I think what go is saying is that credit card companies have trained us to spend more money by using credit cards. It is possible that you are in a small minority of people who has common sense™ but most of us (including me) tend to spend more or simply decide to spend or not bad on the small stimulus. Again, I'm not accusing you of irresponsibility. I'm just saying what I think is common.

Edit: I agree. If you're making an expense anyway, it is obviously better to get the highest reward you can get. But we're talking local optimization now.

I'd ask for a cash/direct debit discount instead. Cut out the middleman.

As an operator of multiple businesses, I much prefer customers who pay with cards than cash. There is a high cost to handling cash, making sure employees don't steal, counting it, getting change from bank, depositing it, etc. Therefore, it might not behoove the owner of the business to provide a cash discount.

Direct debit (or cash). Rental is more often done with direct debit than credit cards.

It would be nice to offer a discount for debit cards, but unfortunately, the card processing systems I've seen don't have the capability to determine credit vs debit and charge different price for it. It would be great if merchants could automatically charge people with rewards credit cards more.

You can spend completely normally and still make money from CCs if you pay them off. Everyone needs basics like food (supplies), transportation costs, and household/hygiene items. Maybe you're better than us, but most people also have utilities like internet and cell phone bills.

You likely paid for however you typed that comment. Putting that on a credit card with rewards and paying it off asap wouldn't hurt you one bit. Only can help you if you have the discipline not to over spend, which seemed like a given in OPs post.

> discipline not to over spend

Like the discipline to never use Facebook? Extremely rare. And psychologically expensive.

No facebook account here. Never had one, never will have one.

Also pay off CC in full every month, so no interest payments on what are effectively short term loans.

Neither is at all psychologically expensive. However paying off CC in full every month does require sufficient income (and/or restraint in spending for those without the sufficient income) to be able to do so.

Spending cash is a lot harder psychologically than spending money with a CC. Dopamine is in effect.

Much easier to keep scrolling and consuming on FB than stopping.

That's the comparison.

For some, it only takes discipline while you're establishing the habit, then it is very easy to keep it rolling.

I'd say FB is way different than the discipline to not over spend on CCs in a community like this. Not over spending on CCs being far easier.

It depends on what your choose to define as overspending.

Easiest thing in the world and it is psychologically a gain, not a cost.

What exactly?

Not using facebook.

Barring becoming a subsistence farmer, I have to buy groceries. Amex offers 6% cash back on groceries. As long as you pay it off every month, it's a significant savings.

Okay, so never buy food again and tell me how that goes.

If "invest what you don't pay" is the only benefit to buying a very quickly depreciating asset then you're not a very good investor.

Buy a used car and invest the bulk of the cash (if you actually have any). Can't get great deals on used car loans compared to new.

Fees/depreciation quickly kills the allure of a good rate.

If your user credit cards for rewards you don't realize that it actually makes you spend more money than you're getting in "rewards".

This right here. These companies are milking people and they have no idea because they only want to believe what already confirms their biases.