Update: BlueBird has shut down many accounts of people who have used them to Manufacture Money Spent as in this article and others. While not all have been shut down and it is still possible to open accounts and do a bit of MMSing, it is dying and should not be seen as a guaranteed option.
Until I was twenty, when I was about to go on my first backpacking trip, I, like many, was nervous about credit cards. I was mainly concerned about having to pay interest on something i could pay cash for, rather than actually getting into a lot of debt; I never buy anything I can not afford. My dad had urged me to get one for a couple of years, telling me that as long as I paid the card off in full each month, I would never have to pay interest on any of my purchases, but for some reason, I was not convinced.
One day, I received a promotion in the mail for a cash back card with a sign up bonus of $200 cash back after spending $3,000 in three months and it got me thinking, if I am not going to pay any interest, not allow myself to get into any debt that I can not afford, and could actually help my credit score, why not get a credit card?
I looked further into it and decided that I would get one to try. I used my card to pay for things I would previously would have used my debit card for, nothing more, and I hit my spending requirement to receive the bonus after a couple of months.
I set up autopay, linked to my bank so the previous statement amount would be paid in full on the due date each month. This way I never had to think about paying it on time and never had to pay a cent in interest. I considered this a very successful test with a nice profit, so with this, I was hooked.
I applied for, and got accepted for, about four more credit cards before I started getting rejected, now that seems like it would come with a lot of spending requirements, but I got smarter as I went along, finding spending requirements of one purchase, $500, $1,000, and $2,000. It was not much more than the previous requirement from the first card and I watched as the percentage I was getting back for each amount spent increased to above 20% (I kept finding better offers.) These sign up bonuses paid for a lot of my travel gear along with some snowboarding gear.
After my trip, as I mention in my post Introduction to Travel Hacking, I began learning about travel hacking, and that a major part of this was travel credit cards. As I researched this new topic, I began learning about different types of credit cards, cards that give bonus points for rotating or set categories (usually 3-5 points per dollar) vs. cards that give a lower, but set, amount on any purchase (usually 1 or 2.)
Cards that are used for one loyalty program vs. cards that are transferable to multiple programs. I also learned which points and miles are more valuable, therefore which travel cards are more valuable (more points does not always mean more value.) As I was learning all of this, I decided that travel cards were much more valuable, when used to travel, than cash back cards, and again, started applying.
At first I was hesitant about the annual fees on a lot of the better cards out there, often ranging from $70-100 each, with some up to just under $500! So, I stuck to the weaker, free, cards, but soon realized that cards can be cancelled before the next annual fee and that the benefits and bonuses of most of these cards vastly outweigh the annual fees. They offer benefits such as free checked bags, buddy passes, access to lounges and priority check in, and often the annual fee is waived for the first year.
The best part about these cards is definitely the signing bonus, and it is my favorite way to earn a lot of points, very quickly. Keep in mind, as I mentioned, different programs have different values, which I will discuss in a later post, so one point or mile, more often than not, does not equal one cent.
Before I apply for a card, I will consider what benefits it comes with to decide if it would be worth keeping after the first six to nine months and paying the annual fee the next year, but I mainly look at the sign up bonus. I try to wait until a card has at least a bonus of 50,000 miles or points before applying. My highest bonus was 70,000 points with an un-waived annual fee of $89 and $5,000 minimum spending requirement in six months, but there are targeted promotions for up to 100,000 for certain cards.
There are also a few cards, like the American Express Starwood Preferred Guest (SPG, Starpoints) card, whose bonuses I have never seen reach above 30,000 points, but these cards, these points, are also widely considered the most valuable points out there because of its wide variety of transfer partners. This bonus is more valuable than some cards with a 50,000 point bonus.
Watch for the high rollers and apply without discrimination; they will all add to your mile/point balances and there is no such thing as having too many credit cards. At the time of writing, I have twenty active cards, with one more on it’s way and looking forward to many more, but I only use two to four for my everyday purchases.
Don’t worry too much about the required spending amounts to receive the sign up bonuses either, just Manufacturing Money Spent to hit them. Even with all of these cards, we travel hackers have excellent credit and pay off our cards in full each month. We are not rich, we just realize that paying the high interest rates on these cards highly outweighs the benefits of having them in the first place. Use these cards wisely, as a person would with a debit card, only buy what can be paid off, and enjoy the free travel that comes with it!
I will go further into detail about which credit cards are best, which to apply for first, how to manage all of these new cards and rewards programs, and much more info in later posts. Please post any questions you have and I will be happy to answer them!
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