After the TSP, I invest my money in Betterment and Vanguard. I track all of my investments with Personal Capital. I also wrote a short, 2 hour book summarizing this site. You can buy it here.
I’ve been playing the credit card bonus game for a few years now. I’m not alone. Some people make thousands a year doing it. However, I don’t enjoy keeping track of multiple credit cards. I usually cancel the cards that aren’t meeting my needs or carry an annual fee.
I’m also wary about offers that would take me out of my normal monthly credit card spending (around $1000/month). To keep it simple and not waste my time, I wait for the big bonuses. If they’re offering only $100 to open the account or if it’s just points offered without an easy way to extract them (easiest way: a check – next easiest: airline mileage program), I don’t bother. Usually if I have to spend more than $2000 to activate the bonus or the bonus is under $300 cash value (airline points or a check), I don’t bother. Some AMEX Business cards have $10,000 minimum spending in 3 months to activate the bonus! Too much commitment to spending for too little gained.
My most recent “churn” was two American Express offers:
I Saved 98% on Round Trip Tickets to Miami
AMEX sent me two offers that would require $3000 worth of spending. The bonus? 125,000 Delta Skymiles points. Worth it?
I cashed in 80,000 points (plus $20 in fees) for two tickets to Miami for this summer. I checked the price just before I booked. If I had booked them and paid cash, they would have come out to $1,467.20.
(1467-20)/(1467) = .986…
that’s over 98% savings.
Another way to look at it is: 80,000 points for $1,467.20 = 1 points = $0.018. Almost 2 cents per point. Considering most credit card companies only offer a penny a point if you take cash back, this is quite a good deal. Granted, I wouldn’t book these tickets at that price. I would definitely seach on Kayak.com or some other site to find a better deal.
Cashing in 80,000 points left us with 39,000 from the signup bonuses, almost enough for another round-trip ticket. With another $1000 of spending on the AMEX Delta Skymiles card, we can get another free ticket.
How I Churned my American Express Cards for Skymiles
The two pre-selected credit card offers arrived in February from American Express. One was for an American Express Business Gold Card. The other was for a American Express Delta Gold Card. The Business required $2000 of spending for a 75,000 bonus reward points which could be transferred to Delta Skymiles program for free.
The AMEX Delta required only $1000 of spending for 50,000 points. We received our bonus points within 2 weeks of receiving the card. Very easy. This card was purely Amazon Payments transactions (see below for details). It required no additional spending on our part. The Skymiles posted with 24 hours of me paying off the charges.
For the AMEX Business Gold, I applied as a sole proprietor and used my Social Security number rather than a business tax ID number. This is completely legal and almost all “business” credit cards can be obtained by individuals. For this card, we put one month of our expenses on the card, a couch we’ve been saving to buy, and a $500 Amazon Payments transfer. We met the spending requirement in 6 weeks and as soon as the second month’s statement posted, the Membership Rewards points were credited to our account.
The Membership Rewards points waited until the statement closing date to post to my account. These weren’t Skymiles yet, but AMEX offers you the option of transferring your points to several air carriers. I already had several thousand Delta Skymiles, so I decided to get my free ticket through Delta.
Once I had the 76,542 Rewards points in there, I went to the Membership Rewards center and transferred the points to my Skymiles account. There was an “excise tax” charge of $40 or 8000 points. I chose to pay in points, which is why I’m a few thousand short of my 125,000 promised in my Skymiles account.
The Membership Rewards points posted to my Delta account in less than 5 minutes. I booked two round trip tickets to Miami that would have cost me over $1400 for only 80,000 points and $20 in fees moments later. Not bad for just using a different credit card for 6 weeks. 98% savings. Thanks, Delta and AMEX!
Both cards carry an annual fee, which is waived for the first year on both cards. $175 per year for the AMEX Business Gold and $95 for the AMEX Delta Gold. There may be a way for American Express to waive the annual fees for military members under the provisions of the Servicemembers Civil Relief Act (SCRA). I’m researching this at the moment, check back for updates.
How I Met the Credit Card Bonus Spending Requirement
To make meeting the spending limit easier, I recently started using Amazon Payments, a PayPal competitor. The fee structure is much easier to understand and you can send $1000 a month via credit card to anyone else using their email address, with no fees.
This feature makes it even easier now to meet minimum spending requirements for credit card signup bonuses. I’m not the first to use the service. 2millionblog wrote about using it in 2011. It still works. I sent $1000 to my wife and she sent $1000 to me through Amazon Payments. We deposited the money into our Bills account and paid off the cards within a week. Bonus activated!
Effect on Credit Score Churning American Express
I check my score about once a quarter for free from Credit Karma. It’s actually free, unlike the scam sites like freecreditreport.com. I’ll post the graph of my score before and after churning these cards once the credit reporting bureaus pick them up. Check back soon!
2 Websites I Use to Achieve Financial Independence Faster
I have investment accounts all over the place. To keep track of all of them in one place I use Personal Capital. It combines all of my accounts, shows me where I may be overpaying in fees, and provides beautiful charts showing my overall asset allocation and performance.
I use Personal Capital to track my Roth and Traditional TSP, Vanguard IRAs, banking accounts, SDP, and my Betterment taxable account, all in one place. It's free, secure and presents me with a one-stop dashboard so I can see all my money on one site.
Read my full review of Personal Capital and see how easy it can be to manage your investments in one place. Trust me, once you try it, you'll love it.
P.S. - If you have over $100,000 of assets and a 401k, you really need to run the Personal Capital 401k Fee Analyzer.
The best way I know to achieve financial independence is to keep your investments simple, diversified, automatic, and low-cost. Costs eat into your returns like you wouldn't believe! A 1% difference in expense ratios can mean $100,000s lost to fees over a lifetime of investing.
Even if you're a DIY (do-it-yourself) investor like I am, you need to check out Betterment. You can read my full review here, but the bottom line is for only $250 per $100,000 invested (0.25% expense ratio) you get simple, diversified, and automated investing. In addition every account now gets free Tax Loss Harvesting+ features, which should increase returns for the average investor more than the minuscule management fee.
If you're not a DIY investor or are just getting started with investing, then you definitely need to check out Betterment. It's what I recommend to my family and friends who aren't strong investors or don't care to learn about asset allocations, diversification, or rebalancing.