Good to see another FT'er on HN. I've earned/burned about the same volume of points as you and can attest that this hobby is awesome, with some caveats.
For the beginners out there:
1. Be sure to read as much about earning miles as redeeming them. Both sides are equally important and redeeming is actually getting much more difficult.
2. Don't let the newbie blogs lure you into hitting credit cards too hard. Banks are starting to tighten the clamps on our hobby. Be sure to learn, start slow, and then start ramping up. Banks like to see a relationship, not just a high credit score.
3. If you're dipping your toe in Manufactured Spending (MS), start small then ramp up over time. Nothing worse than getting shut down for hitting something too hard. That said, MS is a great way to meet minimum spending without using too much money.
4. Don't let headline point valuations fool you into thinking you have to fly in Biz or First to get a good value on your points. Blogs use these kinds of numbers mostly to get you to sign up for CC's. Figure out your your strategy and go that way. A person looking for a lot of domestic flights is going to have a different strategy than someone looking to travel like saryant (and myself, incidentally).
tl;dr; This hobby is amazing if you can figure it out and do the leg work. I too enjoy good champagne 35k ft in the air ;)
Also - stay organized. Every credit card should be accompanied with a spreadsheet entry with all details (un/pw, bonus, etc.), entry into Mint, auto-pay, and calendar reminders (end of free annual fee, etc.). Very easy to slip and forget, or not keep track of getting your actual bonus.
Of course - do not do this if you don't intend to pay your balance immediately. Any interest charges quickly undo the ROI.
Just got back from a completely free trip to Japan (flights, hotels). So worth it.
Banks give out airline miles to attract to credit card customers.
You can open a lot of those credit cards.
Redeeming those miles for international first/business class is a good value (some disagree but that's my use).
Really basic example: Citi routinely has 50k mile bonuses for their American Airlines cards. Round-trip business class US->Japan is 100k miles. Therefore, open two Citi AA cards and you can redeem for a free(ish) business class ticket to Tokyo.
It can get a lot more complicated but that's the gist. Understanding the alliances, the non-alliance partnerships, all the transfer arrangements. Taxes and fees. Routing rules. Flexible point currencies. Knowing how to work around deficiencies and bugs in the airlines' own systems. All that takes time to learn.
At the moment I'm sketching a trip that includes Etihad's new first class apartment, Qatar business class and Singapore's first class suite. Time in Dubai, Bali, Singapore and Tokyo. Four airline tickets, points from three airlines and multiple credit cards, banks and flexible point programs, plus numerous hotel point redemptions along the way. All told around 600k points.
To understand why this is even possible, it's good to understand the factors involved.
1. CC fees, carried balance interest, and merchant fees are extremely big business. So much so that banks and payment networks are willing to give out large bonuses to influence your buying behavior.
2. Airlines (and to a lesser extent, hotels and other brand partners) have evolved their miles and points programs into, IMO, basically an unregulated, overly complicated shadow currency. As a result of the complexity of the programs, valuation sweet spots have emerged where you get outsized value per point/mile
3. Since brand partners basically control the value of these currencies, they can sell them cheaply to financial partners. For financial partners, it's a win/win because they can offer a bonus that is perceived as high value without incurring the full cost of an equivalent cash offer. e.g. a 50k mile bonus looks just about as good as a $500 sign up bonus, but banks pay far less than $500 for 50k miles
4. A good majority of Americans will sign up for cards, use them, and regularly pay late fees, carry a balance, etc. This more than pays for the welcome bonus that card issuers offer. OTOH "travel hackers" sign up for the bonus, but use strategies to prevent incurring the costs usually associated with it.
Opening your credit cards definitely does not hurt your score nearly as much as you think it would. It can often increase your credit score. And if you're a proper churner, average age of accounts doesn't even get touched since you've got so many cards on record (closed cards continue to reflect positively on your average age of accounts for 7 years).
People that engage in churning are a bit self-conscious (source: recovering churner). Simple fact is you don't churn if you don't have to- it's not worth your time.
> Another layman question, what does this do to your credit score?
Opening new credit cards lowers your credit score- it adds weight to the single debt category(mortgage has a house backing it, a credit card doesn't), lowers the average age of credit lines (someone that has paid a home loan on time for the past 20 years is more 'reliable' than the naive 18-year old college student das company is preying upon), and, if you open too many at once, gives the impression you're desperate, insolvent.
All of this is solid advice. There are countless stories on FT of people rushing in too fast (especially with MS!) and finding themselves burned. Blacklisted by banks, holding thousands in gift cards they can't liquidate, points in programs that aren't useful for them.
It depends on the person. Generally, it dings your score anywhere from 6-12 points per application (or, more accurately, per hard inquiry). This recovers over the course of a few months and increases the score over the long term due to more available credit. If you're newer to credit in general, I've heard that it reduces your score more, possibly because the FICO algorithms don't quite know what type of risk you are yet.
I've actually found that the proportion of used/new credit has a larger effect on credit score. Don't max out your credit limits, folks.
For the beginners out there:
1. Be sure to read as much about earning miles as redeeming them. Both sides are equally important and redeeming is actually getting much more difficult.
2. Don't let the newbie blogs lure you into hitting credit cards too hard. Banks are starting to tighten the clamps on our hobby. Be sure to learn, start slow, and then start ramping up. Banks like to see a relationship, not just a high credit score.
3. If you're dipping your toe in Manufactured Spending (MS), start small then ramp up over time. Nothing worse than getting shut down for hitting something too hard. That said, MS is a great way to meet minimum spending without using too much money.
4. Don't let headline point valuations fool you into thinking you have to fly in Biz or First to get a good value on your points. Blogs use these kinds of numbers mostly to get you to sign up for CC's. Figure out your your strategy and go that way. A person looking for a lot of domestic flights is going to have a different strategy than someone looking to travel like saryant (and myself, incidentally).
tl;dr; This hobby is amazing if you can figure it out and do the leg work. I too enjoy good champagne 35k ft in the air ;)
If you have any questions, AMA! :)