Opening, Closing and Re-Opening Credit Cards for Airline Miles
I’m sure you know someone like this:
“Credit cards are great! I use mine for everything and pay it off each month. I flew to Tahiti last March with the airline miles I earned and I get $500 cash back from my Discover card at the end of the year. I know some people can’t handle credit cards, but they can be used to your benefit if you do it right!”
Admittedly, I am not one of these people. Maybe someday I will be, but I don’t trust myself to pay everything off and not spend more than I would otherwise.
One of my coworkers is, only she takes it to a whole new level. Every few months, she will open an American Airlines or Continental credit card that offers 20,000-40,000 airline miles for signing up. She’ll make the required number of purchases with the card and keep it open long enough to get the miles. As soon as the miles are transferred to her frequent flier account…bam!, she closes the card. She then has her husband do the same thing.
After waiting a few months, she calls the credit card company and applies for the exact same card. Makes her purchases, gets the miles, closes the card. Repeat.
She now has enough miles for her and her husband to fly to the Caribbean every six months for the next three years.
Crazy? I’m not so sure. The only drawback I see is that it might affect their credit scores by opening and closing cards so often. But since only 10% of your FICO score is determined by new credit, it shouldn’t affect it too much.
It’s really tempting to open a card for both my husband and myself and use the points to fly us somewhere for our fifth anniversary next year, but I think I’ll stay away for now. I can’t believe I’m quoting Dave Ramsey here again, but, “When you play with snakes, you’ll get bitten.” And I can’t afford to take any chances.
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Great blog. Just discovered it from the carnival of personal finance. I’ll be adding it to my blog roll.
This article is espically interesting as my wife (who loves her points) has tried this strategy and it only works to a limited extent now as credit card companies are getting smart about this. But sounds like an easy way to pay for a hoiliday.
Andy.
That’s true, my coworker mentioned that one of the cards she uses has caught on to this and has started telling her it’s for new card members only.
Thanks for reading!
Hi financegirl,
I like the way you write ..Its really different and interesting … keep the momentum going ..I hope this will really going to help me in future.. Banks and other providers of credit to households have been competing vigorously to expand or protect their market share. In the process, lending standards have been progressively eroded so that lenders are now engaging in practices that would have been regarded as out of the question five or ten years ago.
brilliant. .