I recently attended a Travel Hacking meetup in the Seattle area and met a lot of interesting people who share the common interest of traveling with miles and points, mostly earned from credit cards. After brief introductions, it didn’t take long before the discussion on various manufactured spend (MS) techniques got started, and that’s honestly the reason a lot of people probably attend in the first place. In theory, most people have already mastered the basics of signing up for new cards and want the latest and greatest techniques to earn even more miles on top. In practice, it seemed like a lot of attendees focused far more on the MS part and less on the maximizing signup bonuses part. I’m not sure where this disconnect comes from, but I have this sneaking suspicion in the back of mind mind that people aren’t spending their time in the churning game efficiently.
One of the attendees of the meetup had quite literally just started in the whole travel hacking game. Just started as in applied for their very first rewards credit card within the past week! Everybody had to start sometime, and a targeted 60k AA offer isn’t a bad way to kick it off.
What struck me as odd is that when this person asked for any tips to help with getting started, others jumped in with where to buy Visa Gift Cards and which prepaid cards (Serve, Bluebird, etc.) they should start looking into! What?!?
Somewhere along the line, a bunch of people seem to have equated earning miles with MS and forgot about the much lower hanging fruit available. Credit card signup bonuses are far and away the most lucrative AND easiest way to earn huge chunks of valuable miles and the effort to do so can be extremely minimal!
I’m not talking about signing up for numerous cards at the same time and scrambling to meet the minimum spends, I’m talking about signing up for 1 card at a time, meeting the minimum spend with your everyday spending (everybody has some), then repeating as desired.
In fact, it’s possible for someone to never generate a dime of MS on their cards and still earn enough points to take international business class trips for almost no money out of pocket.
A Sample Annual Card Plan
The average annual expenditures in the US for 2014 was $53,495 according to the bureau of labor statistics. If we subtract out some of the things such as mortgages/rent, car payments, and various insurances (some insurance premiums can be paid with credit cards for no fee) that can’t normally be paid with credit cards, we end up with a total of around $27,000. That’s $2,250 per month in everyday spending that can be put directly on credit cards and used to meet minimum spend requirements!
With most credit card minimum spends in the $1,000-4,000 range, there’s a ton of opportunity for this average household to earn miles without jumping through any crazy hoops involved with MS!
Let’s look at a sample set of cards someone just starting out can grab in their first year of churning:
- Citi AA Platinum Select – 50,000 AA miles after spending $3,000 (annual fee waived)
- Chase Sapphire Preferred (ref link) – 50,000 UR points (+5k for adding an AU) after spending $4,000 (annual fee waived)
- BoA Alaska Airlines – 25,000 AS miles + $100 after spending $1,000 ($75 annual fee not waived)
- Barclaycard Arrival+ – $400+ towards any travel after spending $3,000 (annual fee waived)
- Chase IHG Rewards Club – 60,000 IHG points + $50 for spending $1,000 (annual fee waived) (if that link doesn’t work, just start a booking on IHG’s website and it should appear)
- Citi TY Premier – 40,000 TY Points after spending $3,000 (annual fee waived) (Signup bonus has been 50k in the past!)
- BoA Alaska Airlines (again)- 25,000 AS miles + $100 after spending $1,000 ($75 annual fee not waived)
- Amex Hilton Surpass – 85,000 Hilton points after spending $3,000 ($75 annual fee not waived)
- Capital One Venture Card – $400 towards travel after spending $3,000 (annual fee waived)
This is just a sample set quickly thrown together, but hopefully you get the idea that there are a TON of different cards out there with large signup bonuses. I’ve been aggressively signing up for cards since I started (23 in the past 20 months), but there are still a lot of cards I haven’t touched yet and shouldn’t have any problem getting. Even as different banks crack down on approvals (Chase most recently), there are still other banks happily approving new cards.
Here’s a breakdown of the rewards if you follow the sample plan above:
- $22,000 in total required minimum spend (that leaves a $5k buffer for the average household!)
- 105,000 airline miles (53k AA and 52k AS)
- 155,000 hotel points (61k IHG and 94k Hilton)
- 112,000 flexible points (59k UR and 43k TYP)
- $920 Travel Cash ($460 Venture and $460+ Arrival+)
- $25 Cash Cash ($250 cash bonuses – $225 in annual fees)
- Total “Points” = 466,500 (cash = 1 point per cent)
That’s almost half a million miles/points/cash worth at least $5,000 just for putting regular everyday spending on whatever card you signed up for most recently! On spending of $22,000, that’s over 20% back on everything in the form of travel.
With this particular set of points, you can get a single person a very comfortable international trip or an entire family flown across the country and everything in between for almost no out of pocket cost! With higher average spending and/or a second person in the household to help apply for cards, you can build up to a comfortable international trip for the whole family!
All of this without even learning what manufactured spending is! Even with the best MS techniques beyond signup bonuses, we’re talking about earning 22-44k points for the same $22k in spend. Maybe upwards of 100k if you really maximize bonus categories, but it’s also going to cost you a good amount in fees along the way. For the average person, it’s probably even not worth the effort.
To use us as an example, we signed up for 23 cards together last year with a minimum spend total of $43,250 and earned well over $10,000 worth of points/miles/cash in the process. All without buying a single Visa gift card or messing around with money orders.
Disclaimer: The set of cards above is purely a sample and probably isn’t optimal for most people. I recommend starting with a destination or trip in mind and then focusing on the cards that will help you achieve the trip. Some of the ones above are winners for almost any trip, but others like the hotel cards are very dependent on the destination. In addition, grabbing the Ameriprise Platinum card and/or Citi Prestige is probably a good idea to get Global Entry and lounge access along with free airline credits that can be turned into cash (sort of), but I didn’t want to scare anyone off with high annual fees (waived on the Plat), even though the benefits more than make up for them.
When MS Starts to Make Sense
For starters, I would never recommend someone getting started to jump right into any kind of MS unless they have extremely low everyday expenses. And I mean extremely low, even just spending $1,000 per month would allow you to stick to signup bonuses for the most part. I would recommend they start slow with new applications, get comfortable tracking everything, and meet a couple minimum spends naturally before venturing outwards.
It might even make sense to book a small trip, even if it’s just across the country to see family or friends, because a big part of being successful is actually finding ways to redeem miles efficiently. Once that new person has come full circle with earning/redeeming and is comfortable with the process, then and only then, should they start to venture outwards in the ever-changing world of MS.
At that point, by all means look for creative ways to increase your spend on cards while actually spending little or no money. Start experimenting with what places will allow you to buy prepaid debit cards and in what quantity while trying various products to unload them by either paying bills or moving it right back into your bank account. MS can be time-intensive and the rewards won’t come close to the signup bonuses unless you find ways to really scale it up, but it is possible.
It’s possible at some point in the future that it will be difficult to get approved for any new credit cards (unlikely for most), and MS will be your only avenue to quench your ever-growing travel thirst in a cost-efficient way, but until that point, don’t lose sight of the low-hanging fruit that is credit card signup bonuses.
Am I crazy, or did everyone forget that MS isn’t necessary somewhere along the line?
My theory isn’t that people forgot, it’s just that it isn’t exciting to talk about regular churning once you figure out the basics. The process isn’t hard. Sign up for a new credit card, put spending on the card, and then redeem the earnings for “free” travel.
In fact, the process is so easy that everyone wants to take it to the next level by finding ways to get more cards or increase their spending via MS to earn even more miles and points. This is perfectly fine, but I think newcomers get lost in the noise of new and closing MS methods before they figure out the basic process the more seasoned people have mastered already.
It’s possible some people selfishly want to keep it this way intentionally to increase the barrier of entry and reduce the number of people participating. Honestly, I don’t think it will make much of a difference whether or not the information is out there. Actively opening and closing credit cards seems to only appeal to a certain type of person and to actually pull it off well takes a level of organization that some have no interest in even pursuing.
Regardless of where you are now, it’s perfectly fine to simply get the occasional new credit card and build your way up to your next big trip by using your everyday spending. MS can speed up the process, comes with increased effort and risk, but is entirely unnecessary if your travel goals aren’t too crazy.