Stacking Sign Up bonuses for unlimited free travel

Over the past 6 years, I’ve earned and redeemed over 2 Million points across various bank ecosystems, airline and hotel credit cards to not only elevate my travels but also create as little impact to my cash balances as possible with rising inflation. I also want to highlight that my credit score has been consistently improving contrary to what most may think and I never carry a balance on my personal credit cards – paying everything off in full.

Rising travel costs

Flights are more expensive today than they’ve ever been. Airbnb – which used to be a staple for me in college – costs more than a hotel would today in any major city.

With cost of living rising, I’ve been proactively taking advantage of instances where I know I incur unavoidable costs like taxes, insurance, groceries, maintenance, gas as well as maximizing discretional spending at restaurants, shopping, etc… .

This article will cover how to plan, strategize and apply for a plethora of credit cards to cover organic upcoming expenses with the premise of paying them off on time and avoiding debt at all costs. This ultimately generates enough points and miles to apply towards future travel while also helping you improve your credit score in the long run if done correctly.

Rethinking redemption strategy

Here is an average summary of how much it costs to go on a vacation:

If you had to cover a week of vacation for 2 adults, your average cost would be just shy of $4000. The best possible cashback card say 5%, would require atleast $80,000 of spend (not counting any signing bonuses).

A common mistake I see many people make is using the bank’s travel portal to redeem their points at as low as 1CPP – 1.5CPP depending on the card they have. The Chase Sapphire Preferred is the most commonly held Sapphire card and if you just use the Chase portal, you’d need to redeem 320,000 UR Points which, considering a 3X per $ spent blended earn rate, would mean you’d have to spend over $100,000 to restock.

However, if you could leverage points earning cards, categorizing your points to be used to cover hotels, flights and maybe even car rentals (not always the best redemption), you’d get a better ROI on each point.

For example, if you earned 90,000 points on a card like the American Express Gold by signing up and hitting the spend requirement, they could be transferred to Qatar Airways and redeemed for roundtrip economy tickets between mainland US and India ($1500 atleast) or a one-way business ($3500 atleast) which would give you a 1.6CPP – 4.11 CPP value – more than double the cashback or the travel portal.

Identifying your expenses

One of the biggest financial mistakes people make, or rather skip altogether, is to create a budget. Regardless of income level, if you do not have a budget, you do not know where and how much you are spending. A budget provides clarity and helps you breakdown as well as categorize your largest to smallest expense outside of just what your rent/mortgage amount is.

I recommend finding a template online or leveraging your existing bank’s resources to create your budget which helps you take stock of all your expenses the prior year – so you identify key moments where you have increased levels of spending and periods of low spending – there will be a pattern.

Timing Card Applications

For me, my most expensive times of the year are early Q1 and early Q3 – as these are two periods where I have fixed costs I incur. Thanks to my budget, I know what to expect hence I target cards with high spend requirements for large sign up bonuses as they are organically easier to hit. I keep in mind my Chase 5/24 status and depending on business and personal expenses – sign up for the appropriate card types.

For the remaining times of the year, I either leverage my existing cards, or sign up for cards with a smaller spend requirement and appropriate sign up bonus. In doing so, I average atleast 4-5 new credit cards per year. I downgrade/close ones that have a sign up bonus cooldown (bonus eligibility once every 24-48 months) or ones that have high annual fees which I no longer need after year 1.

I try to keep a certain limit on cards at any given time only using the recently opened ones consistently to meet spend requirements, paying them off and then moving onto the next one.

Impact to credit scores

For those who are constantly worried about the negative impact of opening multiple credit cards in a year, it is important to understand how a credit score is calculated.

A new account opening accounts for only 10% of the total score. 15% impact comes from the average length of credit history. That’s why, anytime you apply for and open a new account, you see a temporary drop in your credit score.

I recommend your first five credit cards should be your keeper cards – i.e. no annual fee cards you never close – and you want to keep their applications as close as possible within a two year window. Once you have those in place, as the years go by, they will mostly impact your credit score as they record payment history, length of credit history, and amounts owed (which is hopefully 0-5% during a statement cycle and then paid off).

New cards help you record more payments per month – so if you have 10 cards always paid on time, you’re recording 120 payments in a year – which positively impacts your score.

Personal Example

Here is a screenshot of my personal credit score graph from Credit Karma which shows the impact of opening new cards.

Based on my budget, I opened three cards approaching end of Q4 FY23 to cover my early Q1 expenses followed by four more cards – all with varying spend levels to cover early Q3 expenses. In doing so, I earned over 600K points across various ecosystems (from 7 cards) and my credit score went from a ~790 high to a ~772 low and is now higher than the first application approaching the end of Q2 FY24. I leveraged my partner’s referrals earning them over 100K points with no additional spend.

I do want to highlight, your personal credit journey is different than mine and no two credit profiles will ever be the same but this highlights a real case impact of opening new lines of credit, paying them all off on time and rinse-repeat. What works for me, may not work for you and vice-versa. I also want to note, my expenses are different than yours – so please follow what fits YOUR BUDGET.

Summary

To conclude, unless you are planning on making a big purchase leveraging debt like a car or house, you can open credit cards every so often – based on your ORGANIC spending habits and financial situation. It is typically recommended to not open new lines of credit atleast 6 months prior to financing a home or auto loan – but if you have an extensive credit history with a strong credit mix and payment history, it really doesn’t matter.

So do not be afraid to leverage all the benefits credit cards offer as travel is getting more expensive, groceries are getting pricier and why not optimize your financial lifestyle in a way that best fits your needs – as long as you do it the right way.