Auditing Our Points, Miles, and Long Term Churning Goals

Taking a step back every once in a while and evaluating your goals is important to make sure you’re still taking the right actions to meet them.  In this case, I thought I’d take a step back from our points, miles, and credit cards to see if we’re still focusing on the right items.  The reason we started “travel hacking” in the first place was to reduce the cost of travel we were already planning on taking, but somewhere along the line we just kept accumulating more and more points than we actually needed.  Definitely a good problem to have, but probably not as efficient as we could be.

Taking a look at our current stash of points reveals that we can probably cover all of our travel needs for the next couple years, but how can we turn down all the great credit card signup bonuses that are still out there?  Are we really accumulating more points than we’re spending each year?  What’s the best strategy going forward?

Let’s take a look at these questions below.

Our Goals with Credit Card Applications

One of the nice things about writing a blog is capturing my thoughts somewhere that can be reviewed later.  In this case, I can look back at one of the very first posts I wrote back in 2014 (Churning: An Introduction) which was only a few months after we started churning cards ourselves.

The first section clearly lays out exactly why we started collecting miles: Not long after moving across the country to Seattle, we took a trip back home to hang out with friends which cost nearly $1,000 just for the flights!  Add in accommodations and anything else that goes with travel and we suddenly found ourselves with a tough decision.  Should we continue taking frequent trips back home to see friends and family or is it better to save that money towards our primary goal of financial independence?

Luckily we discovered churning, started signing up for credit cards, and selected the elusive Option 3: Do Both!

What I might not have realized at the time was just how easy it is to cover round-trip domestic flights via credit card signup bonuses!  It didn’t take long before we had far more points than we needed for our regular travel habits and decided to start adding in some extra fun trips using our stash of points, miles, and free hotel nights.  Since then, we’ve taken trips to New York, Cancun, Hawaii, Spain, and even our honeymoon to New Zealand and Fiji.

Some of these trips we would have taken even if we never discovered churning, but others we probably wouldn’t have.  Our hotel and flight choices definitely would have been different regardless as the available points and miles definitely steers those decisions pretty heavily.  With all of the excess costs that go along with taking “free” trips, I’m not sure we actually reduced our travel spending at all with our new-found power.  Instead we seem to have held the budget constant while increasing the number and quality of trips we took (not necessarily a bad thing).

Before we try to decide what the best strategy going forward is, let’s take a look at some data in regards to our current stash of points and how much turnover it experiences per year.

Our Current Stash of Miles and Points

Keeping track of all of our points and miles is actually one of the easier things in this hobby thanks to AwardWallet.  If you haven’t heard of it, think of it as Mint.com for your all of your loyalty programs.  You can provide AwardWallet with your logins for frequent flyer programs, hotel programs, credit card programs, and even most shopping programs.  Then AwardWallet automatically keeps track of how many points you have, where they are, and when most of them expire!

They even summarize the totals across program type if you want to get a high level view of where you stand.

Here’s the high level overview of where our current points break down:

  • Chase Ultimate Rewards – 260k
  • Amex Membership Rewards – 160k
  • Barclay Arrival+ Points – 24k
  • BoA Merrill+ Points – 0 (+100k incoming)
  • Alaska Miles – 100k (+30k more incoming)
  • American Miles – 185k
  • Southwest Points – 32k
  • Hilton Points – 270k
  • IHG Points – 85k
  • SPG Points – 23k
  • Hyatt Points – 23k
  • Total: ~1.2 million + 130k incoming

There’s a little more than the above listed, but the balances are mostly 5k or less.  Those points may get used if we transfer enough flexible points over to top them up to an award, but I don’t put much weight on them.

The good news with our stash of points is that a lot of them are in flexible award currencies (UR + MR) which means we have a lot of options for redemption.  We can redeem them for cash, use them to book travel directly, or transfer them to airline and hotel partners.  Having that kind of flexibility for whatever trip might come up is why these points are valued so highly.

Now let’s look at how many points we’ve earned and spent over the past couple years.

Our Current Earning and Burning Rates

In addition to tracking all of our credit card application details in an excel sheet, I also try to track all of our miles and points redemptions, so it didn’t take too much effort to put them together and see the average turnover rate in our stash.  I’ll leave out 2014 because that was when we first started about half way through the year, but we did get 12 new cards in that time frame.  Also, I’m leaving out all of the cash earned because cash is fungible and may or may not be used towards travel.

2015 Stats:

  • 24 New Credit Cards
  • 695,000 miles/points earned from credit card signup bonuses + 6 free hotel nights
  • 75,000 miles/points earned from bank signup bonuses
  • ~150,000 miles/points + 4 free hotel nights earned from regular spending, shopping portals, hotel promotions, etc.
  • ~600,000 miles/points redeemed towards travel (+10 free hotel nights redeemed)
  • Total: ~920,000 earned vs. ~600,000 burned

2016 Stats:

  • 13 New Credit Cards
  • 645,000 miles/points earned from credit card signup bonuses
  • ~215,000 miles/points earned from regular spending, shopping portals, hotel promotions, etc.
  • ~760,000 miles/points redeemed towards travel (+57,500 TYP cashed out for $575)
  • Total: ~860,000 earned vs. ~820,000 burned

2017 Stats (so far):

  • 7 New Credit Cards
  • 295,000 points/miles earned from credit card signup bonuses
  • ~115,000 points/miles redeemed towards travel
  • Total: 295,000 earned vs. ~115,000 burned

As you can see, our rate of getting new credit cards slowed in 2016 but thanks to a bunch of 100k bonuses, our earnings didn’t dip that heavily.  I think the rate slowed down mostly due to us trying to maximize the category bonuses that were available to us, which then reduced the amount we could put towards new signup bonuses (in general, we don’t do any MS).  This year, we’ve picked up the pace a little through the first third of the year by mostly ignoring category bonuses and focusing on signup bonuses instead.

Regardless, you can see by the earning and burning pattern in addition to the large stash of points we currently have that we’re not balanced.  More points are coming in than going out which means we can either continue to hoard or adjust our strategy a bit.

Best Strategy Going Forward?

Given our current rate of earning and spending points, our current stash, and ability to travel, here’s what I see as our possible options:

  1. Change nothing, continue to out-earn our rate of spend and just hoard the points
    • Good: Earning miles and points may be harder in the future and we will probably use them all eventually
    • Good: Can probably find a way to cash a lot of them out later if desired
    • Good: Having a large variety of points and miles makes booking trips easier
    • Bad: All of the points and miles sitting there will potentially devalue
    • Bad: Points that aren’t cashed out can’t be invested and start growing in value (lost opportunity)
  2. Slow down the rate of earning
    • We could stop signing up for new cards (lots of lost opportunity)
    • We could focus more on earning cash back instead of points and miles
  3. Increase the rate of spending
    • We could try to fit more trips into each year
    • We could try to bump up the quality of trips by booking higher classes of service and/or nicer hotels on our travels
    • We could start cashing out points at regular intervals to stop the points/miles stash from growing even larger

First, let’s talk about converting points to cash.  I’m often tempted when looking at our large points balances to just cash a lot of them out and throw them in investments so they can grow.  Right now it feels like I have cash just sitting in a 0% interest account, but unfortunately cashing them out is a one-way transaction.  Once I pull them out of the rewards program, I can’t simply shove cash back in if I find a high value use of them in the future.  This has left me keeping the points in their respective programs so far, except when I’m forced to do something with them like in the case where I closed my Citi Prestige card.  In that case, I was able to cash them out in the form of a “mortgage payment”.

Aside from cashing points out, the other option is to simply spend more of them on travel.  Our current travel plans usually end up with us taking a longer international trip about once a year and then several (6+) domestic trips to see friends and family or simply explore new cities.  As you can see above, we’ve found that an average of ~700k points per year is enough to fulfill both of those needs, often in style.  Our vacation time is the primary limiting factor between us traveling more, but even if we weren’t tied down to jobs, I couldn’t see us traveling every single month just to travel.

Travel seems like more fun when you let yourself build a little anticipation and excitement beforehand, plan out a balance of activities and relaxation time, actually take the trip, then relax at home and reminisce a little before taking off on the next adventure.  This is the same reason we aren’t trying to cram in short weekend trips every time we get the opportunity, it’s just not worth the mental and logistical effort, even if we can take the trip for almost $0 cost.

Instead of planning more trips, we could just book higher levels of service to burn points, but that just doesn’t seem to be worth the up-charge in most cases.  We do seek out business class and pay the premium for long-haul flights over the ocean, but it’s certainly not a necessity and will fly economy if the schedule works out better.  Paying a premium for business or first class on domestic flights just seems like overkill, even if we do have the miles to make it happen.

Currently, I don’t see any reason to slow down our pace of getting new cards because there are still a lot of lucrative opportunities out there.  In reality, they are only lucrative if we actually spend the miles and points earned, but so far no points have gone to waste.  They all have future potential that we’ll be able to cash out or use eventually.  As more banks restrict new applications for people like us, there is no guarantee this gravy train will last forever, but people have also been saying that same thing since we started a few years ago…  (reminds me that there are also always people saying the stock market is about to crash…).  The game will change and the market will eventually crash, but a flexible strategy that can adapt will always come out ahead regardless, so strike while the iron is hot!

So that leaves us with focusing on cash back and/or just continuing to accumulate points and miles that will eventually be used.  The present value of miles and points goes down if it will take years to actually spend them, but it should be marginal enough that determining which signup bonus to go after should be easy.  $500 probably beats 50,000 miles that will take a while to use, but I’d still take 50,000 miles with a long timeline than $300 for the same effort.  In between will be more of a gut judgement, but its a decision where both answers have us coming out ahead anyway so it certainly won’t keep me up at night.

For now, I have a strong suspicion that the 100k in Merrill+ points that will be entering out accounts soon will just be cashed out for $1000 instead of optimized towards $2,000 in flights, but I guess we’ll see what comes up.  The Ultimate Rewards will stay untouched for now as we always have been able to find travel uses for them, but the Membership Rewards are getting a little stale.  If anything, there might be a Schwab Platinum card in our future that will let us cash them out at 1.25 cents each, but for now they are safe.

What Would You Do In Our Situation?

Travel more?  Cash it all out?  Stop signing up for cards and just put everything on our 2.5% cashback card?  Let me know what you think in the comments below

For now I’ll resist the urge to just cash everything out and put it in VTSAX, but I can’t promise I’ll be able to resist forever!  The good news is that our travel should remain very cheap for years to come, especially if we’re able to continue finding lucrative credit card offers to apply for.  Even if we’re not being optimal, there’s really nothing to complain about here.  This is the ultimate first-world problem, so we’ll take what we can get and be happy.  Hopefully walking through my thought process was helpful to you in some way. 🙂


18 thoughts on “Auditing Our Points, Miles, and Long Term Churning Goals

  1. You guys have done an amazing job of churning and using all those travel rewards! I would love to start churning travel cards but I get such limited vacation time that I can rarely eek out a long weekend after all the familial visiting is taken care of.

    Can you use the points for cruises? I’ve never been on a cruise but if I had a surplus of points I might try one to change things up a bit. Honestly, I would probably hoard the miles and still sign up for the cards even if there wasn’t a definite plan to use them. Better to have them than not.

    1. Cruises are awesome! One of the reasons we haven’t taken one in the past couple years is because it’s not easy to use points for them, but they are one of our favorite ways to relax on vacation.

      Some flexible currencies can be used towards cruises if you book through the bank’s travel portal (I know this works with UR, not sure about others) at the standard rate. Cruises can be expensive and you’re redeeming at a fixed price per point, so don’t expect any outsized value, but it can be done. If cruises are your main goal, then focusing on cash signup bonuses may be better overall.

      Thanks for reading!

  2. Good analysis. My thoughts are that people overdramatize point devaluation and it shouldn’t be a factor in any decision making within the next few years. How often do award charts change? In the past couple years there have been more bad changes than good, but really not that significant (especially if you fly economy which I do) and they seem pretty random/unpredictable. And I don’t feel that there is any “market inflation” on miles year over year within a 3-5 year time frame – I only got into churning/track hacking a few years ago though so I’d be happy to hear from veterans.

    So that said, here are the questions I ask myself:
    1) do I have enough miles for any trips in the 6 months?
    2) do I have a nice stash of miles for impulsive/last minute trips? (e.g. 1 roundtrip to Europe since my parents live there)
    3) if Yes to both above, then do I feel like dealing with min spend, researching the best CC deals (cause gotta always do at least a little app-o-rama :D), possible calls with banks, etc? Since I travel a lot for fun, often I just can’t logistically deal with new CC’s so I’ll wait.

    Of course there are always other factors, like you mentioned, especially when it comes to the point value. If you aren’t going to use the 100k BoA pts any time soon or pts have very few redemption options of any worth, then probably wouldn’t want to miss out on the opportunity cost of investing $1,000. I would set the rule though never to cash out pts if you don’t get at least a 1:1 conversion.

    Ultimately, though, you don’t really have that many types of points where you can make a decision to cash out or not (just MR, UR, and BoA right?) and MR doesn’t even offer a 1:1 transfer right? Like you said, Chase UR are too valuable, so I guess that just leaves the 100k BoA…I’d cash out haha

    1. I agree that devaluations are overblown in most cases. Some people live to travel in crazy first class, but for us mostly economy flyers the points haven’t shifted much since we started a few years ago.

      I like the questions you listed and I ask myself similar questions. Always having enough for a full flights+hotel trip is nice for peace of mind. I feel like we have the card applications down to a science and just take one at a time in most cases until the minimum spend is met, then apply for the next good one.

      As for cashing out, most airline and hotel programs have some kind of gift card or shopping option than can theoretically turn into cash, but it’s usually below 1 cent per point which is awful value. As for MR, the Charles Schwab card lets you redeem them directly into cash at 1.25 cents per point which isn’t bad. As you said, the Merrill points definitely look like the easiest if I’m desperate to cash out something lol.

      Cheers!

  3. Another thoughtful post 🙂

    For us (2) it’s pretty easy. We primarily fly Southwest, so we “convert” most other airline miles to cash. I am about to convert most MR to cash as well with the Schwab. I would rather have the money in my brokerage, than MR with Amex.

    1. May I ask how you convert most of your airline miles? Is it legally through gift cards or something that may be against the terms and conditions…

      Anyway, Schwab is definitely the way to go if you want to cash out MR!

  4. how did you meet the min spend to earn the bonuses on all those cards? maybe a follow up story to explain that? typical 5k spend per card x your 24 cards is a lot of spend!

    1. We’re pretty open about our spending and meet pretty much everything with just regular purchases. We try to just chain signup bonuses back to back so that a new card arrives in the mail around the same time we finish the minimum spend on the last one. No manufactured spend required!

      Also, average minimum spend per card is far less than $5k, probably closer to $2k. Actually, I can just check since I have a separate column for minimum spend in the excel sheet I use to track our cards. 56 cards with a total minimum spend of $103,510 = average of $1,848 per card. Hey, I was pretty close!

      Spread that over 3 years like we did and the average family in America should be able to meet the same minimum spends with regular everyday purchases. It just requires staying really organized! We do spend a little more than the average household, so there is a buffer there:
      http://moneymetagame.com/fi/reviewing-our-2015-expenses/
      http://moneymetagame.com/fi/reviewing-our-2016-expenses/

  5. Share your points with family and friends. I’m flying friends to Cuba round trip, my sister and mom round trip to New Zealand and Fiji. I’ve flown friends from out of the country to visit. Very few countries have such lucrative credit card sign up bonuses. They’re happy, I’m happy. Go for it.

    1. Great idea! We’ve definitely tried to share the love when it comes to travel perks like lounge passes, companion fares, and other auxiliary benefits we couldn’t use ourselves, but just gifting flights is also an option.

  6. Great post! This inspired me to do the same type of analysis on our points/miles earned. I’ll need to sit down and pour over all my spreadsheets to figure out where we stand. This hobby is definitely somewhat addicting.

    I personally always thought we would just fly economy since I valued quantity of travel (i.e. visiting Europe multiple times a year) over quality of travel (i.e. business class). However, over the past several months that strategy/philosophy has shifted for me. I only receive so much PTO per year that I’ve become more interested in quality as well as experiences that I couldn’t afford otherwise. This also has to do with the fact that for the most part our earn rate has exceeded our burn rate so we have plenty of points banked and will hopefully continue to earn more.

    1. Thanks!

      Sounds like you’ve gone over a lot of the same questions we have. When points start accumulating it’s amazing how some of your initial assumptions go out the window! PTO is definitely a major factor for most people’s travel plans (ours as well), so you’re not alone in thinking quality over quantity might make more sense. Hopefully it remains possible to continue out-earning our travel needs!

  7. This is awesome. Sorry if it’s stated somewhere, but in dollar terms what would your costs and (time) expenses be?

    Would I be correct in saying the two of you combined are earning ~$15,000 a year in dollar terms from doing this churning? How many hours of work is it per month? Is it stressful/a hassle at all to manage?

    Trying to figure the hourly rate and if I should copy your strategy.

    1. Hey Breck,

      Estimating the time effort is tough, but we’ve definitely been cash positive since we started so there’s no cost there. For every annual fee we’ve paid, there was a travel credit, cash signup bonus, or something else to offset it and then some. It certainly took more effort in the beginning, but at this point we have the credit card cycle down to a science.

      I’d estimate we spend ~1-3 hours per month with the credit card earning and tracking part, then additional time when we want to actually book a trip depending on the complexity. That time would normally be spent on Expedia or similar websites anyway, so I wouldn’t count is as a factor of churning.

      Your estimate of ~$15k is probably a good representation of the value. For 2016, I have us down for $1,900 in cash profit and ~$18k worth of travel booked (if paying retail). 2015 was similar ($1k/$24k), but a higher travel value because of the honeymoon outlier. This doesn’t include points that aren’t used yet though, so maybe a little higher?

      It’s a little bit of a hassle to get up and running, but the value gained is well worth it. With a conservative 3 hours spent a month for $15k annual benefit, the hourly return works out to ~$400/hour I suppose

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