That’s why you’re really here, isn’t it?
As you know, the banks don’t give away free airline miles and statement credits out of a sense of gratitude or concern for your financial well-being. They do it because their internal modeling shows it makes you spend more money with their cards!
The whole point of the points game is to earn more points without spending more money. As a player progresses through the game, he or she will rise through several levels of card usage and spending.
Level 1: Make everyday purchases and pay your bills with credit cards to earn points.
Bills, subscriptions, groceries, utilities. There may be a fee involved for paying with a credit card; this fee may be negligible, or it may be outweighed by the marginal point per dollar earned if you’re spending on a new card with a sign-up bonus. Always do the math.
Example 1: the management company that admins your condo or rental building charges a 2.5% fee for processing payments with credit cards. Your best card will award you 2% cash back or 2x points on this charge. Likely not worth the extra effort (unless your Points Math determines that each point is “really worth” 1.8 cents or whatever.)
Example 2: Now consider this fee when using a new card with a Sign-Up bonus worth 60,000 points/$600 after $3000 in spend. For the first 3000 spent on the card, you’re getting 20x points, or 20% return on your spend! Proceed and collect your rewards! Just remember to swap your payment method once the bonus has been collected.
Another perk of using credit cards over a debit card is protection against fraudulent charges. If your debit card number gets skimmed, good luck getting that money back from your bank. Fraudulent credit card transactions are by contrast quick and painless to reverse most of the time.
Level 2: earn credit card points fast with portals and category spend
Many rewards cards have bonus rewards categories, giving you an extra few points or cashback for certain types of spend. 2-3x points or cashback on travel or dining purchases is very common, and note that food delivery services usually count as dining. Gas bonuses are also easy to find, and more cards have added electric charging as a bonus spending category in recent years. Cards that offer bonus spend on broad categories (Bank of America counts as “Online spend” pretty much all purchases made using a phone or computer) are worth looking at. Utilities, cell phone and internet bonus categories are a feature of many small business cards (do you have a business?)
The major US airlines all have cards that reward spending on their own airlines, which can be useful if you’re loyal to one airline or airline alliance.
The Bilt card famously offers rewards on rent, although you should do the math for your situation to determine if the card deserves a place in your wallet.
Some categories may seem like money-makers at first glance, but if you Do The Math don’t add up to much over the course of a year – and here I’m talking about Chase Sapphire’s “Streaming Services” 3x category. If you spend $60 a month on 3 streaming services, that adds up to 60 x 12 x 3 = 2160 points, or about $21-27 back each year. Not nothing, but you can do better. (Hint: Many streaming services code as “cable or Internet services.”)
The SSM household spends enough to feed an army on groceries, and little time to spend actually grocery shopping. Amazon offers two credit cards with 5% cashback on all Amazon spend (including Amazon Fresh orders & Whole Foods purchases). Yes, I have them both.
Many card issuers and airlines also operate shopping reward portals. Similar to cashback portals, these portals track your browser activity for marketing purposes, and will offer bonus rewards when you click through their portal to a retailer to make a purchase. Some portals support in-store purchases if you register your credit card with the site online. Most will require you to register an account and link it to your credit card to begin earning rewards. Cashback Monitor has a comprehensive list of points-generating and cashback portals, as well as their current cashback rates for hundreds of popular retailers.
Level 3: Earn credit card points fast with sign-up bonus offers
This is the easiest way to collect credit card points and rewards fast. If you’ve got the credit score and the financial discipline to make this work, it can be a lucrative hobby. However keep in mind that all the big credit card issuers have rules (not always or evenly enforced) governing new account bonus eligibility, which are meant to discourage churners from repeatedly opening the same card and collecting repeat bonuses. Chase’s 5/24 rule is the most well-known of these rules.
Also note that every new credit account eventually shows up on your credit report, which will drop your credit score in the short term. (hint: No new accounts while you’re shopping for a mortgage or a refi loan).
SSM recommends a conservative approach to readers getting their toes wet in this game: 1. open a new card when you know you’ll use the bonus within a year, 2. Don’t open more than 2 or 3 personal cards in a year (that’s per adult in the household – the points game definitely carries a marriage dividend).
As an example of what a modest churning program can unlock for a family of 4, the SSM household has been able to book:
- deeply discounted (~75% off) economy flights for the fam to the west coast and Europe.
- multiple free flights for Grandma to come visit us from the midwest (she pays us back in babysitting).
- a week at a beach rental, 100% using points.
Solo players and DINK couples can easily nab first/business class international flights and luxurious hotel stays after a few months of churning and studying.
Level 4: Manufactured spend
Manufactured spending is essentially using your credit cards to purchase something that can be converted back into cash, which is then used to pay your credit card bill. Warning: card issuers have varying degrees of tolerance for this kind of activity, and most will shut down anybody they suspect of gaming their rewards system. Reselling high-value merchandise online or through Buying Groups is a common method (and can even become a business, with tax-exempt certification). Others include reselling discounted gift cards, precious metals, or even funding new bank deposit accounts. (Tip: Paying your own “small business” – e.g. running your new card through your square card reader – is definitely not recommended. Both your card issuer and payment processor will be very angry with you).
A brief aside to level-set: “Whales” who make a serious income off of manufactured credit card spending nearly always are managing multiple credit card and bank profiles in their family members’ names. Many will have automated bots crawling, buying, and/or drop-shipping 3rd-party merchandise. They likely will have been completely shut down by at least one major credit card issuer in the past, and several banks.
This full-time-job level of the credit card points game is beyond the scope of this blog. Just be aware that the prominent travel & points bloggers, podcasters and youtubers are generating income by shilling affiliate-linked card applications, while the anon whales are careful not to bring attention to their activities. It suffices to say: any easy and profitable gray-area “couch spend” methods are generally not discussed on the public internet (although chances are that some “bowtied” anon is willing to explain any given play, if only you’ll subscribe to their Substack).