Is Credit Card Churning a Smart Financial Strategy?

[00:00] it's brian preston the money guy

[00:03] all right uh this next question is from

[00:06] kevin

[00:09] kevin says what are your thoughts on

[00:11] credit card churning for sign up bonuses

[00:15] if you're a responsible user seems like

[00:18] an easy way to make a couple thousand

[00:20] dollars a year with minimal effort

[00:23] so i'm going to expand upon this

[00:25] question because this is what kevin's

[00:26] really asking hey i see this opportunity

[00:28] and i can go do this credit card thing

[00:29] where i sign up and change and sign up

[00:31] and change and transfer and change and

[00:32] transfer and change

[00:34] should i do that am i if i'm

[00:36] would a good financial mutant do that is

[00:38] that a way i should think about it or is

[00:41] there a different way i should approach

[00:42] and think through that type of decision

[00:44] making

[00:45] kevin's a financial mutant because he

[00:46] asked this question certainly this is

[00:48] the mindset i love the mindset because

[00:50] all of us it's kind of because i'm very

[00:52] similar in the fact that i remember when

[00:55] not coming from money

[00:57] reading the wealthy barber and

[00:58] millionaire next door right as i

[01:00] graduated college and i was just on fire

[01:02] to figure out how i could maximize every

[01:05] dollar that came in my control and you

[01:07] can see that in all the underpinnings of

[01:08] what our teachings and and what we've

[01:10] done

[01:11] um and i commend kevin for thinking that

[01:14] but i wanna as an older financial mutant

[01:17] i wanna i wanna i have a saying that

[01:20] immediately pops in my brain is don't

[01:22] get busy doing nothing

[01:23] because there are so many things that

[01:25] you will exert calories for

[01:28] to do and you're going to look back

[01:30] later and go

[01:31] what that was a lot of work for not much

[01:34] incremental benefit and this is the

[01:37] thing i think when you find out that

[01:38] there's this opportunity of what's

[01:40] perceived as free money

[01:42] free money with from these credit card

[01:44] companies if as long as you're keeping

[01:46] up with it you can bounce around take

[01:47] advantage of the sign up bonuses and

[01:49] there are websites that will help you do

[01:51] this treat this as a hobby um and and

[01:54] that's fine but there's a part of me i

[01:56] think of you you and i go back to the

[01:59] calories that we're talking about

[02:01] if you look at what your time is worth

[02:03] and the calories exerted to make sure

[02:05] you keep this up that you know that

[02:07] you're managing because these accounts

[02:09] as you're opening up all these accounts

[02:11] you're not going to want to run around

[02:12] and immediately start closing them

[02:14] because if you do that you'll find very

[02:15] quickly closing credit card accounts can

[02:18] have a detrimental impact on your credit

[02:20] rating so you need to be you need to

[02:22] really think about the curation of your

[02:24] credit record as well when you're

[02:27] opening up all these credit cards and

[02:29] you don't want to you're not trying to

[02:30] set some guinness world record of having

[02:33] all these accounts like there are people

[02:34] that are doing that type of stuff

[02:36] because i just think it's more you're

[02:38] creating more opportunity for you to

[02:40] screw something up because what if all

[02:41] of a sudden you didn't pay attention to

[02:43] all the disclosures they're sending that

[02:45] credit card that you set up to get a few

[02:47] thousand miles or rewards they start

[02:50] charging you 95 a year

[02:52] for annual fees

[02:53] and they they charge you the annual fee

[02:56] you're not running that credit card

[02:57] because you use that four years ago so

[02:59] you could go on this trip for free and

[03:01] get a hotel

[03:02] well you didn't you didn't have that on

[03:04] auto pay

[03:05] and they they charge you interest then

[03:07] they ding your credit card because

[03:09] there's just a lot of things that can

[03:11] slip through the cracks even for a

[03:12] financial mutant that i would tell you

[03:14] to be careful of this siren song because

[03:17] this is your your you've got your boat

[03:19] headed towards the destination of

[03:21] becoming a financial mutant and creating

[03:23] incredible success but you hear this

[03:25] awesome sound from these mermaids that

[03:28] are you know trying to take you off

[03:30] track and get you trapped in something

[03:32] this is a siren song i would focus on

[03:35] don't get busy doing nothing use your

[03:37] financial mutant skills to figure out if

[03:39] there's a side hustle or a way you can

[03:41] better yourself

[03:43] in your own career go make more money

[03:45] invest more money in things that will

[03:47] actually earn you eight to ten percent a

[03:49] year and not just you know nibble around

[03:51] the edges now

[03:53] i'll leave a little bit because

[03:56] i would focus on getting a core card

[03:59] um i would focus on you know maybe if

[04:01] there's something that fits into your

[04:03] hobbies and other activities that

[04:04] benefits you but i would not be chasing

[04:06] having 26 cards in under my control yeah

[04:09] it's you know it's interesting brian you

[04:10] you just hit on something i was on the

[04:12] phone with buddy yesterday we're about

[04:13] to go on a trip and i was like oh i was

[04:15] like hey i was gonna i was gonna go to

[04:17] the atm because i needed cash for this

[04:18] trip and but i got an email from costco

[04:21] that said my you know you get your

[04:22] annual rewards thing right yeah i got

[04:24] mine and i was like i'm just gonna go to

[04:25] costco and i'm gonna go ahead and redeem

[04:27] this thing and that will save me a trip

[04:28] day 18 was like he said costco just

[04:30] gives you money it's like well yeah you

[04:31] know i've got the car and he's like you

[04:33] spend that much at colorado no i don't

[04:34] spend that much at costco but i use this

[04:36] for

[04:37] eating out or filling the blank or

[04:38] something like he's like wait what and

[04:40] so i walked them through the three or

[04:41] four cards that i use

[04:44] and it was like very concise and very

[04:45] well i use this one for when i travel

[04:47] and i use this one on amazon and i use

[04:49] this one for eating out and it was

[04:50] simple that doesn't take me a whole lot

[04:52] of energy or effort and those dollars

[04:54] those rewards do just kind of build up

[04:57] if i were trying to implement this

[04:58] strategy where i'm like signing up for

[05:00] all these new ones and

[05:01] i just don't know that the

[05:03] benefit would be worth it i don't i

[05:05] don't know that you call it the cost to

[05:06] fund ratio right yeah i don't know that

[05:08] the the utility i would derive from that

[05:12] would justify the additional time that

[05:15] it would take to do that but you have to

[05:17] make that assessment for yourself you

[05:19] have to determine okay what is my time

[05:22] actually worth and is doing this a good

[05:24] use of my time or exactly i said could

[05:25] that time be better deployed so towards

[05:28] some other activity well realize these

[05:30] credit card companies are brilliant i

[05:31] mean the way they make you churn through

[05:34] different categories by different

[05:35] quarters does anybody really know what

[05:38] what's going on i think the only thing i

[05:40] remember is that the fourth quarter of

[05:42] every year discover card is good for

[05:43] amazon that's it i don't know any of the

[05:46] other categories so i think bo just hit

[05:48] on something that's very powerful

[05:50] i like having a core card that gives you

[05:52] two percent back on everything and then

[05:55] he mentioned like the costco card is

[05:57] great because it gives you four percent

[05:59] back on like gas yep even if you're not

[06:01] buying it at costco that's right um and

[06:03] then you know they use it for travel and

[06:05] there's three percent backgrounds

[06:07] on restaurants and travel i think and

[06:09] then two percent one it's it's a really

[06:11] good card

[06:12] in in some ca

[06:14] respects and

[06:15] like bo said it's consistent

[06:18] you don't have to waste any calories

[06:20] trying to figure out what's the best

[06:22] category or card to use

[06:25] focus on that because you're going to

[06:26] figure out that you think you're so

[06:28] smart and get cute with these credit

[06:30] card companies by getting all these

[06:31] initial rewards

[06:33] they are smarter than us that's right

[06:35] they have whole departments trying to

[06:38] sell this stuff to you um and i just

[06:40] don't want you to get trapped in

[06:42] something of unintended consequences

[06:44] when maybe you just need a few good core

[06:47] cards that you by the way are paying off

[06:49] monthly you guys know we give you access

[06:51] to credit card

[06:53] use credit card debt is no go

[06:56] you can't if you can't if you're running

[06:58] credit card debt you need to cut them up

[06:59] get rid of them go t-total status on

[07:01] them but if you are a responsible

[07:04] financial mutant

[07:05] use the benefits of some of the core

[07:07] cards don't get cute with it because

[07:09] they will it will catch up with you in

[07:10] the long term