Travel Credit Cards - Credit Card Churn Example

As I mentioned on Monday, I'll be going through a series on Travel Credit Cards for those of you LCD readers out there who are fiscally disciplined/responsible and are interested in jump-starting their miles and points collections.

Chapter 1 - Three Types of Travel Credit Cards
Chapter 2 - Credit Card Churn Example
Chapter 3 - Credit Score FAQ
Chapter 4 - Tracking Your Points/Miles
Chapter 5 - Meeting Minimum Spend Requirements
Chapter 6 - Maximizing Regular Spend

A "credit card churn" was originally defined as repeatedly applying for the same credit card and getting the sign-up bonus again and again. However, the term has evolved to be used to mean applying for multiple different credit cards at once.

In my 17 months of life, I've found that a detailed example is oftentimes the best way to explain/understand something and it works much better than a vague summary overview. So with my father's permission, here's exactly what my parents did since January 1, 2013 to increase their miles & points accounts.

But before we go through that, let's start with their SMART goals for this credit card churn.

• First, they wanted to get the Chase Hyatt Visa to get the free nights for their upcoming trip to Paris in May so that they could stay at the Park Hyatt Paris Vendome (one of the best hotels in the world) for free while my father would have Hyatt Diamond status (complimentary breakfasts!). 
• Second, they wanted to get a credit card that gave bonus points/miles on groceries & drugstore spending, because that's been a larger % of our family's monthly budget as well as a key way for us to "manufacture spend" (more on that in an upcoming post). 
• Third, with the upcoming merger between American Airlines and US Airways, now was the time to really bolster your mileage balances in each individual airline program before they combine later. Even though, we tend to fly United (and their Star Alliance partners) because my father has United Platinum status, the OneWorld Alliance (American Airlines, Cathay Pacific, British Airways) does have some amazing first/business class award availability to Asia and Europe. And who needs status when you're flying in First Class?

So with those specific goals in mind, here's what they did the past 3 months:

January 1 - It had been almost 2 months since their last credit card churn (November 9th). Ideally, our family's next round of credit card applications would be at least 90 days after their last so something like Feb 10th. That would have been ideal, but...

January 8 - While in Israel, my father saw a blog post that, for a limited time (2 days), American Express was offering their Platinum Card with a sign up bonus of 100,000 Amex Membership Reward points (worth at least $1,000+) if you spent $3,000 in 3 months. Normally, the sign up bonus is only 25,000 points, so this was an amazing deal, but definitely a Booty Call Card.

After doing some research, he saw ways to "offset" most of the $450/year annual fee if you traveled at least a few times a year on the same airline. My father decided it was worth it, so he signed up. My mother also separately signed up for her own card as well. Now, they both had 3 months to spend $6,000 total between them and were going to be charged $900 in annual fees. Yikes!

January 13 - My father's sister checked his mail back in NYC and confirmed receipt of the 2 Amex Platinum cards. She gave him the numbers over Skype which allowed my parents to activate the cards and start using them for online transactions (charitable donations they had planned on making anyway and using the infamous Amazon Payments) so they could start chipping away at the minimum spend requirements while they were still in Israel.

February 22 - My father emailed Hyatt to request the Hyatt Diamond Status Challenge (stay 12 paid nights in 60 days). He timed this request and his next round of applications so that (a) he would have the Chase Hyatt Visa credit card to use for his upcoming 12 Hyatt stays as well as (b) the Hyatt Q1 Promotion (3,000 bonus Hyatt points every 3rd paid night through May 31).

In addition to getting 3x points for all Hyatt spend using the Hyatt credit card, signing up for the card when he was a Diamond would give him 2 free nights in a suite at any Hyatt in the world if he spent $1,000 in 90 days (non-Diamonds get 2 free nights in a regular room).

February 26 - My father applied for his credit cards from his hotel room in Koh Samui.

• Chase Hyatt Visa - $75 annual fee, but got a $100 statement credit; 2 free nights in a suite for spending $1k in 3 months; 3x points for Hyatt spend; 2x on restaurants (Booty Call Card)
• Citi Thank You Preferred Mastercard - no annual fee; 6,000 Thank You points for $300 spend in 3 months; 5x points for gas, groceries and drugstores for 12 months (Marriage Card)
• Citi American Airlines Business Mastercard - $95 annual fee but waived the 1st year; 35,000 miles for $1,500 spend in 3 months (One Night Stand Card)
• Barclays US Airways Mastercard - $89 annual fee but waived the 1st year; 35,000 miles after 1st purchase (One Night Stand/Booty Call Card)

The reason he applied for so many on the same day is because every card application results in 1 hard credit inquiry by the issuing bank. Too many recent inquiries (the past 90 days) is a red flag credit risk to the bank. So if you apply for multiple cards at different banks in a single day, then one bank won't see the other inquiries from the other banks until the following day. This increases the chances you'll be approved for all the cards.

As it turns out, my father was immediately approved online for 2 of the 4 immediately (the Citi Thank You and the Barclay cards). The Citi Business card required a call to their Reconsideration Line (800-645-7240) to explain what my father's sole proprietorship business did (personal and business financial consulting), but then he was approved immediately over the phone.

The Chase Hyatt card was a bit trickier. He already had 4 Chase personal credit cards (Sapphire Preferred, United Airlines Select, Freedom, Priority Club) as well as 1 Chase business credit card (Bold Ink), so they were probably wondering why he needed yet another card.

When he called the Chase Reconsideration Line (888-245-0625), my father proactively told her how he has been a great Chase customer for over 15 years and how he's very excited about getting the Hyatt card because his company just shifted their preferred hotel chain to Hyatt.

The agent thanked him for being such a loyal customer and said his credit score looked fine. She asked if my father would shift some of his $40k of total available credit across his 4 other Chase cards to the new Hyatt card (instead of extending my father even more available credit). She went ahead an recommended approval. But after putting my father on hold, she came back on the line and said the application has been sent for Additional Review by a senior reviewer.

Now this development potentially threw a huge monkey wrench in my father's Hyatt Diamond Status scheme. They said it was no reason to be concerned, but you know how over-achieving types like my father can be. So after waiting impatiently for about 5 days (and a few more futile calls to the Chase Reconsideration Line), my father saw that he was finally approved when he logged onto his online Chase account and saw the Hyatt Visa in his list of credit card accounts. Success!

So for January and February, my father now had 5 new credit cards, each with their own sign-up bonus and minimum spend requirement in the next few months. This was in addition to my mother's Amex Platinum card from January and her own Citi American Airlines Amex card (50,000 AA miles for $3k spend in 3 months) that she applied for during my father's February 26 churn. Unfortunately, she was denied for the other 2 cards she applied for (Citi AA Visa and Barclay US Airways) because you couldn't no longer apply for 2 Citi personal cards at once ("Citi 2-browser trick") and didn't have a long enough credit history for Barclays, respectively.

But that was fine because they had more than enough minimum spending to do in the next few months.

• Amex Platinum x 2 - $3,000 each, $6,000 total
• Chase Hyatt Visa - $1,000
• Citi Thank You Preferred Mastercard - $300
• Citi American Airlines Business Mastercard - $1,500
• Barclay US Airways Mastercard - $1 
• Citi American Airlines Amex - $3,000

They now needed to spend a total of $11,801...

(To be continued)