Getting Started
Welcome to this hobby of ours. Get ready for memorable travel experiences to be made at minimal cost!
Have you seen the discussions about the incredible credit card offers? Do you want to try it out for yourself? You're in the right spot! I'll teach you all the important details, and before you know it, you'll be ready to start churning on your own.
What is churning credit cards?
Churning credit cards means opening lots of credit cards, mainly to get special welcome bonuses (WB). It takes hard work, commitment, time, and being responsible with money.
How is this possible?
Credit card companies want to get new customers, so they use a marketing strategy. They offer special welcome bonuses that you can get once, hoping that you'll keep using their card in the long run and they'll benefit from it.
Is this legal?
Opening multiple credit cards is not automatically against the law, as long as you don't lie or deceive anyone, which would be fraud. However, it's important to carefully read and follow the terms and conditions (T+C) set by each bank. They explain what behavior is acceptable and what consequences you might face if you don't follow their rules.
This sounds like a lot of work. I don't want to manage multiple credit cards.
If you prefer using just one card for all your daily expenses and don't want to open multiple credit cards, you can visit r/PersonalFinanceCanada on Reddit. You'll find helpful resources there that are more suitable for what you're looking for.
If you still owe money on your credit card and have to pay interest on it, please STOP reading and focus on paying off the balance first. It's important because any advantages you gain from churning won't make up for the high interest rates you'll have to pay.
Where to start
Regular Earn
Most people who use credit cards have only one card that earns rewards at a set rate, usually 1-2X. They use this card for all their purchases and occasionally redeem the rewards they earn.
Maximizing Category Multipliers
Some credit cards give you extra points for certain types of spending. For instance, you might have a card that gives you 5X when you dine out and another card that gives you 3X for recurring bills. If you're careful and organized, you can use the right card for each purchase at the appropriate store to get the most points.
Repeat WB
When we talk about churning, it means taking advantage of better earning rates. Instead of earning 1-2X from regular spending or 3-5X from elevated multipliers, with welcome bonuses (WB), you can earn points at a much higher rate, usually between 10-20X.
Cash-Back
Several banks provide cash-back credit cards that allow you to redeem your rewards either by requesting it yourself or automatically once a year. Some points programs also offer points that can be easily converted into cash, and we can include them in this category as well.
Bank In-house Loyalty Points
A lot of banks have made their own loyalty programs with their own points system. Examples include American Express Membership Rewards (MR), BMO Rewards, CIBC Aventura, HSBC Rewards, RBC Avion, Scotiabank Scene+, TD Rewards, and more. These programs have special websites where you can redeem your points for various travel bookings, including bookings made with other companies. You can also use your points to get merchandise from a catalog. Some of these points can even be transferred to other loyalty programs in the last category we mentioned.
Airline/Hotel Loyalty Points
Big airlines and hotel chains have their own loyalty programs. Usually, you earn points by using their services. For most people, it would take a long time to collect enough points to get something valuable. These programs have specific uses where you can get more value, especially compared to the other two categories. However, there's a catch: these programs are less flexible than cash rewards or the bank loyalty programs that let you redeem points for any travel booking you want.
Ways of earning rewards
There are three main ways people earn rewards with credit cards, starting from the least aggressive to the most: regular earning, maximizing category multipliers, and repeat WB.
Based on these earning methods, we have access to three main types of rewards, listed in order of increasing value but decreasing flexibility: cash-back, bank in-house loyalty programs, and airline/hotel loyalty points.
Considering these options, there are nine different ways you can choose your credit card rewards strategy. Do you prefer managing only one or two cards? Are you willing to handle multiple cards to maximize category multipliers? Or are you ready to open more credit cards than most families ever do? Do you want rewards that are easy to use like cash? Or do you want the flexibility of a bank loyalty program that works like an online travel agent? Maybe you're interested in learning about airline/hotel loyalty programs that can give you higher value and unique experiences. Perhaps you only stay in AirBnBs or other short-term rentals and don't need hotel loyalty points. Or maybe you only take road trips and have no plans to fly. Answering these questions will help you decide which credit card usage style and rewards to focus on.
Here are some other things to consider:
Airlines have limited seats available for booking with loyalty points. Unlike regular seats that can be in the hundreds, award seats are limited. They can be claimed quickly, and once they're gone, the airline won't release more. For example, it's usually best to book with an airline loyalty program 300-360 days before your trip. Can your work or commitments accommodate such long-term planning? If you're more flexible, you may find seats available between 14-300 days prior to travel. This is usually what's left after the initial release. You may not get your preferred travel day or week, but there's usually some availability. As you get closer to the travel date, some airlines may release additional unsold seats as reward seats, like T-14 for Lufthansa. Are you comfortable with last-minute planning? Are you willing to book backup plans and be committed to following through?
Consider your home airport and the destinations you want to visit, and see which airlines or airline alliances serve those locations. For example, if you want to go to the Maldives, among Star Alliance members, it's served by Air India, Austrian, Singapore, and Turkish. Among oneworld members, it's served by British Airways, SriLankan, and Qatar. Among SkyTeam members, it's served by (Aeroflot), China Eastern, ITA Airways, Saudi Arabian, and Virgin Atlantic. There are also non-alliance carriers like Condor, Edelweiss, Emirates, Etihad, Eurowings, and more. Similarly, if you don't live near an Air Canada hub or one of their alliance members, you may need to plan additional flights to reach your desired reward redemption. You might have to book a revenue flight and make sure you won't miss your reward redemption by flying in the day before and booking a hotel. For example, if you're targeting an international flight operated by a Star Alliance member but Air Canada doesn't serve your home airport, you won't be able to combine that flight with your reward redemption. If you're flying to a well-serviced destination, this step may be less important, like in Western Europe. Take into account these costs and whether it fits your comfort zone to determine if reward flights are suitable for you.
Choose a strategy
Now that you have a basic understanding of credit card rewards, it's time to decide how you want to proceed. If you're mainly interested in earning rewards regularly or maximizing multipliers, the rest of this information may not be relevant to you. You might find it helpful to visit r/PersonalFinanceCanada for further guidance.
If you're ready to continue with churning and want to invest time in learning redemption strategies, you'll need to make some choices. Cash-back rewards are relatively straightforward, and some bank loyalty points can be easily converted using methods like the refundable hotel trick (RHT). Alternatively, if you want to keep some flexibility, you can briefly learn about bank loyalty programs, which can usually be summarized on a single page.
However, if you're aiming to get the most value out of your credit card rewards, especially for premium flights or luxury hotels, you'll need to develop a deep understanding of at least a few major airline and hotel loyalty programs. Here are some accessible options for Canadians:
Aeroplan | Air Canada
Asia Miles | Cathay Pacific
Etihad Guest | Etihad Airways
Executive Club | British Airways
Flying Blue | Air France/KLM
KrisFlyer | Singapore Airlines
SkyMiles | Delta Air Lines
WestJet Dollars | WestJet
Bonvoy | Marriott
These programs offer opportunities for maximizing rewards, but keep in mind that they require more knowledge and effort to navigate effectively.
Choose a card
Once you have a good understanding of the loyalty program you're interested in, you can figure out how many points you need to collect in order to book your desired travel. To do this, you'll either need to earn points that can be transferred to the airline or hotel loyalty program, or you can target credit cards that directly earn those points.
Here are the transferable currencies you can consider:
American Express Membership Rewards
HSBC Rewards
Marriott Bonvoy
RBC Avion Rewards
And here are the programs where you can earn points directly:
Air Canada Aeroplan
British Airways Executive Club
Cathay Pacific Asia Miles
Air France/KLM Flying Blue
WestJet Rewards
American Express MR can be transferred at the following ratios:
Air Canada Aeroplan 1:1
British Airways Executive Club 1:1
Air France/KLM Flying Blue 1:0.75
Cathay Pacific Asia Miles 1:0.75
Delta Skymiles 1:0.75
Etihad Guest 1:0.75
Hilton Honors 1:1
Marriott Bonvoy 1:1.2
HSBC Rewards can be transferred at the following ratios:
Cathay Pacific Asia Miles 25:8
Singapore Airlines KrisFlyer 25:9
British Airways Executive Club 25:10
RBC Avion Rewards (while holding an Avion Credit Card) can be transferred at the following ratios:
British Airways Executive Club 1:1
Cathay Pacific Asia Miles 1:1
American Airlines AAdvantage 1:0.7
Westjet Rewards 100:1
Throughout the year, the banks may offer transfer bonuses ranging from 10% to 50%, but it's not predictable when these bonuses will be available. You'll need to regularly check for any ongoing transfer bonuses.
Once you have the points details figured out, the next step is to get credit cards that will help you earn those points. You can start by exploring the Top Credit Card Offers page for recommendations and options.
Apply for cards
Now comes the exciting part—collecting the points. This process can vary from a month to a few years, depending on how big and exciting your trip is planned to be.
If you've followed the steps mentioned earlier, this part should be straightforward. There are only a few cards that will earn each type of loyalty currency. Now it's time to do some basic math to figure out the return you'll get with each card, considering its current rewards and any additional offers from third-party sites that can boost your return.
Applying for many cards is usually not a problem as long as you have a decent credit score. But wait, you might wonder about the impact of churning on your credit score. Well, the temporary drop in your score due to the hard credit inquiry (10%) is not permanent. It usually returns to its normal level after a few months. In fact, opening new accounts can even improve your score by lowering your credit utilization ratio (30%) and adding more on-time payments to your payment history (35%).
Your credit score is made up of five factors: Payment History (35%—timely payments), Utilization Ratio (30%—how much of your available credit you've used), Length of Credit History (15%—how long you've had credit, although getting new accounts does lower the average age of your credit), Type of Credit (10%—mortgages, credit cards, charge cards), and Credit Inquiries (10%—recent credit applications).
You'll need to learn about the application rules specific to each bank and any restrictions that could prevent you from obtaining the bonus. You can also strategize your applications by checking which banks check each credit bureau (TransUnion and Equifax) to balance the inquiries across both bureaus.
It's important to remember that if you're not officially eligible for a welcome bonus according to the card's terms and conditions, you should not call the bank to inquire about it. Doing so may end your chances of getting the bonus and could impact others in the community as well.
Before you visit the bank's website, check the Top Credit Card Offers page to find the best method for applying. If the card selection suggests a referral as the best option, you can visit the r/churningcanada monthly referral threads to give a community member a surprise referral without any cost to you, and sometimes even gain a net benefit.
Always have a plan to meet the minimum spending requirements for a card, and make sure you don't overspend. Remember, the countdown for meeting the spending requirement starts as soon as your card is approved, not when you receive or activate it.
Once you receive your cards in the mail, spend up to the required amount and then lock the card, putting it aside in what we churners call the "sock drawer." With most in-house points such as Scene+, HSBC Rewards, and Amex MR, your points will usually appear in your account the day after the spending transaction posts. For cards associated with airline and hotel loyalty programs, your points will automatically transfer to the loyalty program within 1-3 business days after your statement is issued.
In some cases, it might take longer than the stated period for your points to appear in your account. Just be patient and wait for them to show up
Redeem your points
Now that you have collected all your points, you'll need to transfer them to the airline partners you want to use, but only if you have collected transferrable points. Make sure that the information on your frequent flyer program matches exactly with the information on your credit card. It's important to avoid any discrepancies as they can cause issues.
Keep in mind that most card issuers don't allow transferring points from one person's credit card account to another person's loyalty account, regardless of their relationship or reason. You can only transfer points to your own loyalty accounts. However, some loyalty programs offer tools like Aeroplan Family Sharing or Avios Household Pooling that allow you to pool or transfer points within a specific group.
When it comes to redeeming your points, you'll notice that not every flight or hotel room is available for booking using rewards. This is where the concept of award availability comes into play, and it can be quite challenging to navigate. You'll need to pay attention to how different flight segments can be combined, the rules for each program, and the specific release dates for award flights. This requires independent research and exploration beyond the scope of this guide. You can start by visiting r/awardtravel on Reddit, which is a helpful resource for award travel information.
Good luck with your redemptions, and enjoy all the benefits that this hobby has to offer!
Other Details to Note
How to 'cash out' my points?
There are different ways to cash out certain types of points. Here's a step-by-step guide:
Visit websites like expedia.ca, booking.com, or hotels.com.
Look for a hotel booking, preferably a commercial hotel, that is fully refundable and several weeks in the future.
Use a credit card that has "travel" points stored within it to make the booking.
Wait for the transaction to be processed (If you have a CIBC Aventura Card, skip to the next step as you need to redeem while the transaction is pending).
Follow your bank's instructions to redeem your points against the travel transaction you just made.
Wait for the redemption to be processed.
Return to the travel website (expedia.ca, etc.) and cancel the refundable booking.
Enjoy the cash that you receive.
Note: This trick doesn't work with most bank travel portals, airline points, or hotel points.
About Marriott Bonvoy
I didn't include Marriott Bonvoy's transfer ratios to partners in the guide because they are not very favorable. When you transfer Marriott Bonvoy Points to airline partners, you'll only get 1 Airline point for every 3 Marriott Bonvoy Points transferred. However, there is a bonus of 5,000 Airline points if you transfer in increments of 60,000 Marriott Bonvoy Points for certain airlines. This makes the effective ratio 2.4:1.
The full list of participating transfer partners can be found here: https://www.marriott.com/loyalty/redeem/travel/points-to-miles.mi
All about Credit Scores
-coming soon-
Frequently Asked Questions
How is this not a real-life infinite money glitch?
It kind of is, but with strings attached. See, cash back cards often only offer $200-300 in welcome bonuses, while bonuses offered by travel credit cards can offer anywhere from $500-$2500 in value.
A major part of this valuation is having to put in the work to find award availability, which may not necessarily suit your schedule perfectly, requiring you to be flexible.
Also, don't forget that you need to spend substantial sums of money in order to be able to get those bonuses, and as iterated in Step 1, it would be a poor decision to go in debt over earning points!
How do the banks tolerate paying out such high bonuses?
Well, for one, they are powered by the former non-churner you, who would spend $100,000 or even more for a measly $1,500 in rewards that you could only redeem for economy tickets for you and your significant other. While you're doing that, the financial institutions that issue your cards pocket anywhere from 2-4% in total, and since they only have to pay out a portion of that, they are laughing all the way to the bank (quite literally).
You've also got competition between financial institutions, which are always trying to woo other customers over to their bank, and chances are, if a prospective customer finds a credit card of a certain bank to be good, they'll be more inclined to move more banking products over.
What are some ways I can get done with my minimum spend quicker?
You could buy me the dream trip of my life in cash... but seriously, that's an excellent question!
You can check out my page on Minimum Spend Opportunities or the three methods listed below.
3 major ways to hit your expenses more effectively/quickly:
Purchase Gift Cards - this can be in the form of Store Gift Cards (where you will spend the money on the card at that store only) or Open Loop Prepaid Gift Cards (where you can spend the money on the card anywhere, and typically comes with a fee)
Paying eligible Bill Expenses with a fee - this is typically utility bills, taxes, and other expenses that normally cannot be paid with a credit card. The major providers available are Paysimply, Chexy and Plastiq (which does not accept AmEx cards)
Last but not least... Manufactured Spending, effectively using your credit cards to make purchases of "something" that can be easily converted into cash at a minimal fee or no fee at all, and thus pocketing points in the process. The specific methods will require your work in finding out, and should be a closely guarded secret, as once many people get their hands on it, the method will go through the tragedy of the commons and be shut down or heavily reduced in value.
Don't the annual fees eat into my returns?
You will have to factor in net return for the cards that charge annual fees. Would you prefer a card with no AF that will net you $200 in rewards or a card with $250 AF but earns $700 in rewards?
I've collected 50k points in X program. How do I best make use of these?
You're doing this wrong. You need to have an exit strategy before you collect the points. You may come across an "awesome deal" but later find out you can't actually use the points for any of your goals.
I'm still not convinced, my basic credit card must be the best way to pay! Or, this can't be legal...
Churning is fully legal, and of course, you can take all the time you require to ponder this hobby of ours. Just wait until a friend invites you to a first class trip, and you'll be going down the rabbit hole in no time.