Tuesday, January 7, 2014

Mother's Jan 2014 Credit Card Churn

This past Thursday (January 2, 2014), my father stumbled across a blog post on Personal Finance Digest that discussed a 5% cash back credit card for gas, grocery & drugstore (GGD) transactions.

Now, up through February/March 2014, we can continue to earn 5x Thank You points using my father's Citi Thank You Preferred card at GGD (a special promotional offer we received for signing up last February).

But all good things come to an end, and starting in mid-March, we will have to use our regular 1x Rewards Cards to purchase our Vanilla Reload cards at CVS. While this manufactured spending may still be marginally accretive from a points/miles standpoint, we're still paying $3.95 for the 504 points we're earning through this method (a 0.8% transaction fee).

Assuming we're able to actually redeem those 504 points in the future for ~$10 of value (about 2 cents per point), we're going through a lot of work to make a marginal profit of about $6 per Vanilla Reload card. Compared to before, using our 5x Citi Thank You Preferred card (that allows you to redeem at 1.25 cents/pt), we were earning $27.55 of net profit after deducting the $3.95 VR fee.

Fortunately, we won't have to go back to "only" earning $6.13 per Vanilla Reload card because my mother was approved for her new American Express Blue Cash card.

American Express Blue Cash card
This new Blue card will offer her 5% cash back on GGD Eligible purchases* (after first spending an initial $6,500 at 1% cash back each year, all additional GGD purchases that year will earn 5%...forever!).

* Note that the Terms & Conditions state that you only get rewards on Eligible purchases. However, Eligible purchases do NOT include fees or interest charges, balance transfers, cash advances, purchases of travelers checks, purchases or reloading of prepaid cards, or purchases of other cash equivalents. We'll see what happens.

However, my mother's new Blue Cash card offers unlimited 5% benefits for as long as she owns the card. Since it has no annual fee, it will be a long, long time.

As you can see, it's not as profitable as the Citi Thank You because the Amex Blue Cash card rewards can only be redeemed at 1.0 cent each in the form of statement credits (instead of 1.25 cents/pt), it's still much better than the alternative.

Unfortunately, the Amex Blue Cash rewards won't be as much fun to redeem since they're just statement credits. But money is fungible, so saving $500 on our monthly Blue Amex card statement is ultimately equivalent to receiving $500 worth of airfare or hotel spend for free.

Based on our hypothetical ability to load up $5,000 per month on each of our 4 hypothetical Amex Bluebird cards using Vanilla Reload cards hypothetically bought with our reward credit cards from CVS (and use that to pay off those same credit cards the next month), that's hypothetically $20k of spending each month, or $240,000 each year.

Even assuming this 5x benefit only lasts for 6 months, that's still a hypothetical $120,000 of "spending" which, at 5% rewards, would generate almost $5,800 of hypothetical statement credits. After the fees for each VR card, we're still looking at over $4,800 of hypothetical net profit.

Chase British Airways Visa card
Since my mother applied for one credit card, my father decided she should apply for another card as well since we will need to wait another 3-4 months before the next round of card applications. So she applied for the Chase British Airways Visa card.

While the current promotional offer is just 50,000 BA Avios after spending $2,000 in the first three months, my father was able to find an obscure URL link (click here) that still offered 100,000 BA Avios if you hit some high spending thresholds:
  • Initial 50,000 Avios after spending $2,000 within first 3 months
  • Additional 25,000 Avios after spending $10,000 within first year
  • Another 25,000 Avios after spending another $10,000 that same initial year
Since we have a few other methodologies to generate monthly spending without actually spending more than normal, we're pretty confident we can hit $20,000 by January 2015. For example, we can use the following tactics:
  1. Amazon Payments: $1,000 x 2 parents x 6 months = $12,000
  2. My Daycare: $340/week x 24 weeks = $8,160
So by the end of July 2014, we should be at least 125,200 BA Avios richer (100k for the promotion plus another 25,200 Avios for that $20,160 of spending) which is worth approximately $1,800-2,500 in travel value to my family - all for one annual fee of just $95.

Application Process
My mother applied online for both offers right after one another. Unfortunately, she received a "Decision Pending" on both, but my father was not worried.

The next afternoon, he went online here to check on the status of the Amex application. Without having to speak with anyone or negotiate anything, my mother was approved!

Then we decided to call Chase's Reconsideration Phone Line to see "if there were any additional information we could provide to help our application."
(800) 432-3117 – General Application Status Line, automated
(888) 245-0625 – Personal Reconsideration Line with a live rep
(888) 609-7805 – Alternative Personal Reconsideration line with live rep
(888) 871-4649 – Alternative Personal Reconsideration with live rep
(800) 453-9719 – Business Credit Card Reconsideration Line with live rep
(800) 432-3117 – General Card Services and Application Status, automated
(800) 955-9900 – General Card Services and Application status, automated
Twitter: @ChaseSupport
My mother asked the Customer Service Representative to speak with my father. After answering a few identification verification questions, my mother handed off the phone to my father. He verified the yearly income stated on the application as well as confirmed our status as renters (apartment) and our monthly rent. Then he came back with an offer to approve the British Airways Visa if we shifted some available credit from some of my mother's other 5 Chase cards (4 personal and 1 business). That way, Chase would not increase its total $ credit exposure to my mother. No problem.

She was then immediately approved over the phone. Great success! Hmm, now which cards should we apply for next time?


  1. No problem, Nick. Hopefully the 3 readers I have (2 of them being my parents) will start following your great blog.