Full Transcript
[00:00] Hey everybody, welcome back to the credit card churning playlist. This is going to be the second step in the playlist, so if you haven't already watched step one of finding the best bonus offers, I would suggest you to watch that first.
[00:13] Step two is going to be about meeting the requirements for the sign-up bonus, and there's a variety of different ways that churners do this. Today we're going to be going over seven of those methods, plus at the end I'll go through an example using some of these methods.
[00:26] So method number one, using normal spend. This one is the easiest way to reach the sign-up bonus, and it's just to spend money on whatever is a natural expense. So if someone needs to buy food or gas, they just put that spending on the card that they're going after a sign-up bonus with.
[00:44] This is the easiest method, and if a churner is able to reach the minimum spend requirements using just natural spend, that's probably what they'll do. But oftentimes, just natural spending isn't enough to meet those requirements, which brings us to method two.
[00:59] prepaying expenses. Perhaps someone won't spend enough in three months to meet the requirements. So one thing they can do is prepay expenses from future months. Oftentimes things like car insurance
[01:11] or home insurance allow people to prepay months in advance, which allows a person to take future expenses they would have needed to pay and get the spending right now. Many utility services let people overpay their account right now and then future utilities come out of that overpayment
[01:26] amount, allowing a person to spend money on future utility expenses right now. And one last example is subscription fees. Some people have subscriptions that they pay every month, but which can be prepaid for a full year in advance. So these are just three examples of things that will be spent
[01:41] on anyways in the future, but can be paid for right now, which can be used to meet sign-up requirements. The third method is the buddy system. The buddy system is essentially having somebody use your card to pay for expenses and then they just send you the money back. For example, if
[01:57] somebody lives with their parents and their parents cover groceries, they might have their parents use their credit card to buy the groceries and then just pay them back. This is essentially a way of getting normal spend from other people to count towards your spending requirements. But there's a
[02:12] couple of bonus points I want to mention. Firstly, there's always a risk when another person has access to the user's credit card. So, Turner should only do this with trusted individuals who won't use their cards for nefarious purposes and who are sure to repay them after the fact.
[02:27] And one other point, if a turner doesn't want to give that person their primary credit card, they can usually add them as an authorized user and get another credit card shipped to them. That way, the owner of the credit card still is able to keep theirs on them
[02:39] while the other person uses the credit card. Method number four, timing the opening of a new credit card to big expenses. So there's often specific times where people are spending more money than usual.
[02:51] They might have travel plans that require flights and hotel bookings. It might be around Christmas when they're buying presents for a lot of people. Or it might just be some other big expense that occurs occasionally. And so what turners sometimes do is wait to open a credit card until one of these big expenses is coming up.
[03:07] I was personally able to get a $1,000 sign-up bonus by opening the card when I was about to pay my college tuition. and so it wasn't an often occurring expense but I knew I had a few thousand dollars in tuition
[03:20] costs coming up and so I opened the card and then later paid my tuition with the credit card. A couple big cautions here though. One, any big purchase that is made on the credit card must be able to be paid off immediately. Turners should not be buying things that they can't pay
[03:36] for and so in my case I already had the money for my tuition in my bank account and I knew I could just pay it off the next day I wouldn have done this at all if I didn have the money to cover that purchase And number two is sometimes there will be transaction costs So luckily for me the transaction cost to use a credit card was only 1
[03:55] which I was happy to spend to reach the sign-up bonus, especially because my card gave me 1% back anyways. But sometimes transaction costs may be 2% or more, and so this has to be accounted for as well.
[04:07] But overall, planning a credit card opening around big expenses is a great way to reach the sign-up bonus. And one of the biggest expenses people have every year is method number five, paying taxes with a credit card.
[04:20] Now, a lot of people don't know that the IRS allows taxes to be paid with a credit card, and there are a few different ways to do it. Now, one of the few concerns here is that there is a small processing fee, about 2%,
[04:32] but oftentimes this processing fee is so small that it's clearly worth it for the sign-up bonus. And so some people wait until it's about time when taxes are due, and then they'll open a credit card and pay the taxes with that,
[04:44] immediately getting thousands of dollars closer to the spend requirement. But that isn't the only method that works, because people are also able to make prepayments towards their taxes. And so even if it isn't close to tax day, it's possible to pay those taxes in advance, just like what we talked with prepayments.
[05:00] Now we're getting into the good stuff. method number six paying a mortgage payment rent or auto loan payments with a credit card now most people think that you can't pay for housing or auto loans with a credit card and
[05:13] usually this is true but there is a resource that allows you to pay these big expenses with a credit card it's called plastique it works by charging your credit card and then sending a payment on your behalf in the form of a check ach or wire and so this can be used to pay a variety of bills
[05:28] that typically can't be paid with a credit card, like rent, mortgages, or car payments. It's a 100% legit and legal way of getting a bunch of spend towards the bonus. Now, there is two downsides.
[05:41] The first of which is that there's usually about a 2.9% fee, and so this isn't something to be used regularly to get credit card points, but if a person is going for a credit card sign-up bonus that requires spend, then it's usually well worth a 2.9% fee to reach those requirements,
[05:57] especially because they're probably also getting 1-2% back on the card itself. Now there is occasionally promotions where this fee is lower, but even at 2.9%, this is a great option for getting spend requirements if the bonus is large enough to make it worthwhile.
[06:11] The only other downside to note is that it does take a little bit longer to make the payments, so it's typically going to take a couple of days to do a payment by ACH, and it can take up to 11 days to do a payment by a paper check. But for churners who are working towards a big bonus,
[06:24] this can still be a great option to get thousands of dollars in extra spend on bills that otherwise couldn't be paid for with a credit card. So far, these have all been examples of natural spend, but now we're going to go over two different methods that allow people to reach the sign-up
[06:38] bonuses without spending anything at all. It's called manufactured spending, and the idea is to have spending on things that can be converted back into cash, which can pay off the expense.
[06:50] Now, one thing I want to note before going into these two methods, it is very important for churners to go into their credit card settings and turn off cash advances. Because sometimes these methods can trigger a cash advance instead of a spend.
[07:03] And if this happens, not only will it not count towards the spend requirement, but it also will come with increased fees. However, if a churner turns off the cash advance option, they're usually fine to go ahead with these two methods.
[07:16] The first way churners manufacture spend is by funding new bank accounts. When someone opens a bank account, they have different options of how to fund that account. And oftentimes, one of those options is by credit card. Now the interesting thing about funding a new bank account is that in many situations this funding will count as spend not as a cash advance So if someone finds a new bank account that can be funded up to with a credit card and this
[07:42] payment comes across as spending for their credit card then they will have just came $1,000 closer to the signup bonus and they can then use the $1,000 that were used to fund the account to pay off that spending. Let's go over an
[07:55] example now. So I'm going to type in the words Doctor of Credit, Credit Card Funding and I'm going to click this first article, Bank Accounts that can be funded with a credit card. This is going to bring me to the Doctor of Credit page
[08:07] where I can scroll through and look at different bank accounts. So I'm going to click on one, the Affinity Federal Credit Union Bank and I see that you can fund up to a thousand dollars with a credit card and many different credit cards
[08:20] like Bank of America, Capital One, and Chase counted as a purchase not as a a cash advance. If I was churning, this is exactly what I would be looking for. A bank that allows a decent amount of credit card funding and data points showing that multiple
[08:33] different credit cards counted it as a purchase and not as a cash advance. And again, I would have my cash advance limit on my credit card set to zero, so I wouldn't actually end up paying the cash advance, but I want to save time and energy.
[08:46] Once I have a bank that looks interesting to me, I'm going to go back to Google and search the bank name with the words Doctor of Credit behind it. I'm going to scroll here and see Affinity Federal Credit Union
[08:58] by Doctor of Credit and it is a little dated posted in 2022 but we're still going to click into it. Now towards the top of this page there's going to be a lot of useful information. Most importantly I see the availability is nationwide
[09:11] so anybody can open an account. Looks like you just have to make a five dollar donation. I also see that this is a soft pull instead of a hard pull which is good because a hard pull will affect your credit, but a soft pull won't.
[09:24] And I also see that there's no monthly fee, which is really nice. And the last thing I want to note is that Doctor of Credit can be a great resource, but it's always best to call the bank directly and confirm these details. And so that's what a turner has to research before they go forward with this method.
[09:40] Is credit card funding allowed? Does it code as a payment instead of a cash advance? Are they eligible to open an account? Will it code as a soft inquiry instead of a hard inquiry? And what are the fees with this account?
[09:52] If there is fees with the account, it doesn't necessarily mean that the churner can't open the account, but these fees have to be factored in. And oftentimes, the bank account must be open at least six months to avoid early closure fees.
[10:04] But if everything looks good like this one does, then the churner could go ahead, open the account, and fund it with their credit card, and then use that money in the account to pay off the credit card, essentially getting closer to the spend requirement without actually spending any money.
[10:19] And one last note, this can be a really viable strategy if you're doing bank account churning, which is an even more profitable strategy than credit card churning, in which I'm also going to have videos on going step by step. So bank account churning and credit card churning can work really well together.
[10:34] Finally, let's talk about one of the most controversial ways that credit card churners generate spend without actually spending money at all. And that is by buying gift cards, which are then converted back into cash.
[10:46] Now, there's a lot of details to this, but the general idea is that a churner will go to a store, like a grocery store, buy a Visa or MasterCard gift card, and then convert that gift card back into cash.
[10:58] The most common way of converting the gift cards back into cash is by purchasing money orders. Many stores, like Walmart, allow people to purchase money orders with gift cards. And so, churners will spend money on a gift card and then use that gift card to buy a
[11:12] money order which they will then deposit into their bank account and use to pay off that initial spend This allows the churner to rack up thousands of dollars in spend without actually spending anything at the end of the day Now if this
[11:25] seems like a gray area, it kind of is. There's nothing illegal about this, but credit card companies definitely know about it and don't like this strategy. And so it can occur where a churner will get their card closed if they try to exploit this too heavily. But for the most part, this only
[11:40] happens with a large amount in gift cards. Typically, if a churner gets a couple $500 gift cards a month and uses them to fund one money order towards their bank account every month, this usually won't raise any red flags. It's only when they start doing very large amounts that they
[11:54] can run into issues. Now, one last caution about this method. There's a slight possibility of a credit card company closing the account if someone does this with too much money, but there's also the risk of liquidation issues. There's been a decrease in ways to liquidate gift cards back
[12:08] into cash, and so there is always the small risk of being stuck with a gift card that can't be converted back into cash. But this is one of the most controversial ways that churners generate lots of spend without actually spending anything at all. I hope you guys found this video helpful.
[12:22] What I want to do now is go over a brief example of a credit card with a high sign-up bonus, and show how the spend requirement might seem unrealistic at first, but it's actually possible for a churner to do. Let's take the Chase Sapphire Reserve, which is offering a 125,000 point bonus
[12:37] right now. And for those of you who are unaware, that can be redeemed for $1,250 cash back, or up to $3,500 when used for free travel by transferring out to travel partners.
[12:51] Now most people wouldn't even try to go after this bonus because they wouldn't think that they can reach the $6,000 spend requirement in just three months. But a turner that knows the tips in this video could actually get that bonus. Let's say they spend just $500 a month in natural
[13:07] spend on dining, gas, entertainment, and other spending activities. Using method one, they put this spend on their new credit card, and they get $1,500 in spending in the first three months.
[13:21] But they're still $4,500 short of the sign-up bonus, so how are they going to reach it? Well, they're aware of method two, so they know that they can prepay their expenses. And so they spend
[13:33] $500 prepaying future expenses like utilities. They're also aware of Method 3, the buddy system, so they have a family member or friend use their card for grocery shopping every month for three
[13:45] months, and they get an extra $300 a month doing this, or $900 over the course of three months. They also time their expenses with Method 4, and so they chose to open the card when they knew they
[13:58] had a car upgrade coming soon, and so they spent $1,000 on the car upgrade. They also opened the card around tax season, or they paid estimated taxes, and so they spent $1,500 on taxes with their credit card.
[14:14] Of course, they also needed to pay their rent during these three months, so they used method six and utilized Plastique to pay their rent with their credit card, adding $1,500 in spend every month.
[14:26] They also decided to open a new bank account during this three months, and so they had their initial funding of $1,000 going towards their spending as well. And just to be safe, they did a $500 gift card every month
[14:39] with a money order going back into their account, adding another $1,500 to their spend. And so while a $6,000 spend initially seemed impossible, they actually ended up with over double that.
[14:51] They had $12,400 come across as spend on their credit card, easily reaching the bonus requirement.