Card/Account churning to prevent investment tinkering?

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MotoTrojan
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Card/Account churning to prevent investment tinkering?

Post by MotoTrojan » Sun Oct 21, 2018 12:44 am

Anybody else use credit-card churning and/or bank-account bonuses to make a little cash while also preventing the urge to tinker with your long-term investments via frequent rebalancing, trading, changes in AA, etc...?

I have been rock solid in not tinkering with my AA, but I do often find the urge to "play with" my money, which I recently satisfied by taking a 1% loan (credit card offer) to pick up some shares of VTI on a bad day (I don't market time, so I would have gotten the shares regardless). While I don't have any qualms with that move, there aren't many opportunities to do something like this without having bad investment practices.

I enjoy spreadsheets and moving money around, thus I decided to dive into the world of churning/bonuses today and it seems pretty straightforward. From credit cards alone, and with no more spending than I already had planned for the next 3 months, I will now have $900 cash and $600 travel credit (no restrictions on use); annualized this is a pretty great return on my time, and I haven't even gotten into the bank account offers yet...

I currently don't have a large cash emergency fund (do have other assets) as I have a tendency to get antsy and invest it over time :oops: but bank account offers of $150-$300 for 60-90 days of funds would certainly make it easier for me to keep some funds in cash.

Not much action here, but curious to hear if others get as much enjoyment playing with their money as I do mine, and open to any other advice/tips on where to find these sorts of offers. So far been exploring NerdWallet and Credit Doctor.

MotoTrojan
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Re: Card/Account churning to prevent investment tinkering?

Post by MotoTrojan » Sun Oct 21, 2018 1:12 am

$500 in bank bonuses (taxable) implemented since the post. Now up to $1400 cash and $600 cash-equivalent in travel with about an hours work :beer .

Update: Time for bed but now at >$3400 in savings, with $2100 of that via credit-cards (tax-free) and likely time to get another bank bonus before paying off the cards used to secure $15K interest free from deferred credit card payment (most of these cards have 12 months 0% APR).

Considering the money to pay them off will be sitting in an FDIC insured account, I don't see any significant risks here.

RickBoglehead
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Re: Card/Account churning to prevent investment tinkering?

Post by RickBoglehead » Sun Oct 21, 2018 7:05 am

Using loans to invest in the market is a really bad idea.

Churning cards and bank accounts will impact your credit score. It will also impact your insurance credit score, so be careful or you may find your policy renewal rate went up because you were playing games.

I rotate cards for bonuses, Citi Doublecash as my main card, Chase with different quarterly bonuses, etc. I just shifted more funds to Ally for the 1% bonus which tops any bank offer I have seen, but can't be bothered for most bank offers as hitting debit cards or ATM usage means I am not using my credit cards which give me the cashback plus warranty extension, return protection, etc.

Make sure you put a monetary value on your time.

Also, if you need distractions to not play with your portfolio, you may need professional help.

THY4373
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Re: Card/Account churning to prevent investment tinkering?

Post by THY4373 » Sun Oct 21, 2018 8:38 am

OP as noted by others here it is pretty risky to be assuming credit card debt in order to invest in thing that may lose value. Back in the mid-2000s when interest free offers were a time a dozen and it was easy to get 6% in FDIC insured accounts, I used to use balance transfer offers to fund high yield savings accounts to make some free money it was pretty easy and mostly risk free. I would have NEVER invested that money in the stock market.

Also as noted this may impact you credit score but he likely biggest impact will not be the new accounts but the balance you are running especially if it is above 70% of your total credit line on that card.

I do a lot of credit card games but not as a distraction from my investing. Basically I treat it as a highly flexible second job, which it basically is in my case.

THY4373
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Re: Card/Account churning to prevent investment tinkering?

Post by THY4373 » Sun Oct 21, 2018 8:41 am

RickBoglehead wrote:
Sun Oct 21, 2018 7:05 am
Churning cards and bank accounts will impact your credit score.
Churning bank account *may* impact your credit scores. Unless they bank/CU does a hard pull it won't and most don't. For others this can be avoided by opting out of essentially overdraft loans. But yes for some institutions a hard pull is unavoidable (mostly CUs) but these are mostly the exception rather than the rule.

danaht
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Re: Card/Account churning to prevent investment tinkering?

Post by danaht » Sun Oct 21, 2018 8:58 am

The only thing I worry about for "churning" is getting banned by the financial institutions. I churn a few credit cards a year - but I think if I took it a lot further - I could potentially get banned from opening accounts - or even worse - they could close my existing accounts. To me - playing with a little "mad money" - and investing in a few individual stocks is less risky than the other things. I just try to limit my individual stocks to a small % of my portfolio.

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jeffyscott
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Re: Card/Account churning to prevent investment tinkering?

Post by jeffyscott » Sun Oct 21, 2018 9:51 am

RickBoglehead wrote:
Sun Oct 21, 2018 7:05 am
Churning cards and bank accounts will impact your credit score. It will also impact your insurance credit score, so be careful or you may find your policy renewal rate went up because you were playing games.
Well, when our insurance rates went up due to this, it inspired me to shop and end up with lower rate than before.

After years of churning, maybe 4-6 cards per year each, both my spouse and I have very high credit scores and our insurance rates are still low. While in the meantime, we've not paid airfare for years and have had dozens of free nights in hotels. We probably get about 10% back on spending between the sign up bonuses and the regular ongoing rebates.

It's not a distraction from our portfolio, though.
press on, regardless - John C. Bogle

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jeffyscott
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Re: Card/Account churning to prevent investment tinkering?

Post by jeffyscott » Sun Oct 21, 2018 9:55 am

danaht wrote:
Sun Oct 21, 2018 8:58 am
The only thing I worry about for "churning" is getting banned by the financial institutions.
Is that so for brokerage accounts too? I don't do that or plan to do so, but I wonder about those who do. Is it really possible that one day some brokerage would tell a churner, "No, not only will we not give you a bonus, we don't want your money here at all"?
press on, regardless - John C. Bogle

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Earl Lemongrab
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Re: Card/Account churning to prevent investment tinkering?

Post by Earl Lemongrab » Sun Oct 21, 2018 1:13 pm

I like the brokerage bonuses, and go low-level on the credit cards. But that doesn't have anything to do with an urge to do something else. I set up my portfolio and investing plan years ago. I have only made a few changes since, one related to change in the fund lineup in the Megacorp 401(k) and new stock/bond ratios due to progress towards goals. Managing my portfolio as it exists is enough of a chore.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

MotoTrojan
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Re: Card/Account churning to prevent investment tinkering?

Post by MotoTrojan » Sun Oct 21, 2018 4:55 pm

Appreciate the thoughts. Again, I have cash (earning some of these bonuses) to back everything up, the 1% included. Without this I still wasn't tinkering with the portfolio; you can have an itch and not scratch it :). I am also well under 30% utilization on all cards, and well under 10% overall.

Guess I'm unique in enjoying this sort of thing (moving money around, developing/implementing plans). Figured those that frequent this forum would as well. My IPS is very clear and simple beyond this.

Will be interesting to monitor my credit score (750 as of writing this) but I don't anticipate much more than 2-3 cards/year after this initial rush, and given my history and low utilization I don't see any major risks.

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birdog
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Re: Card/Account churning to prevent investment tinkering?

Post by birdog » Mon Oct 22, 2018 3:03 am

I was slow to adopt travel rewards but below is the article that spurred me to action. I’ve enjoyed thousands in bonuses in less than a year of credit card churning and my credit score has actually increased. I agree that it provides an outlet for tinkering while allowing your core portfolio to remain unmolested.

https://www.madfientist.com/other-portfolio/

MotoTrojan
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Re: Card/Account churning to prevent investment tinkering?

Post by MotoTrojan » Mon Oct 22, 2018 11:05 am

birdog wrote:
Mon Oct 22, 2018 3:03 am
I was slow to adopt travel rewards but below is the article that spurred me to action. I’ve enjoyed thousands in bonuses in less than a year of credit card churning and my credit score has actually increased. I agree that it provides an outlet for tinkering while allowing your core portfolio to remain unmolested.

https://www.madfientist.com/other-portfolio/
Love it. Exactly how I feel.

Fruition15
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Re: Card/Account churning to prevent investment tinkering?

Post by Fruition15 » Mon Oct 22, 2018 3:53 pm

MotoTrojan wrote:
Sun Oct 21, 2018 12:44 am
Not much action here, but curious to hear if others get as much enjoyment playing with their money as I do mine, and open to any other advice/tips on where to find these sorts of offers. So far been exploring NerdWallet and Credit Doctor.
For sure. I'm not one to turn down free money. I've made a little over $2k this year from bank bonuses, and another $600 from credit card bonuses. Doctor of Credit is my go-to bonus site. When I tell my friends about these bonuses they always say they are worried about the impact to their credit scores. I tell them that in my experience an inquiry has very little effect. It's more about your payment history, the length of that history, and the amount of debt you have.

fujiters
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Re: Card/Account churning to prevent investment tinkering?

Post by fujiters » Mon Oct 22, 2018 11:50 pm

I try to always be working on a minimum spend for a credit card bonus. In the early years (2014), it occupied more of my attention and netted ~$3000/year in bonuses. The banks, Chase in particular, have started implementing more anti-churning measures though, so I've been going at a slower pace of ~$1000/year in sign up bonuses. I expect the trend to continue.

There's just not enough to churning to keep me from noticing my investments though. I've embraced TLH as an acceptable way of "tinkering". Information gathering is pretty time consuming, so most of my hankering for action has been consumed by education. It hasn't stopped action completely though (and I think it's acceptable to act based on updated knowledge--but only after sitting on my hands for about a year, at minimum). I ended up moving to a globally weighted portfolio (I started with a typical US heavy equity position). I'm starting to become tempted to value tilt.
“The purpose of the margin of safety is to render the forecast unnecessary.” -Benjamin Graham

MotoTrojan
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Re: Card/Account churning to prevent investment tinkering?

Post by MotoTrojan » Tue Oct 23, 2018 12:20 am

fujiters wrote:
Mon Oct 22, 2018 11:50 pm
I try to always be working on a minimum spend for a credit card bonus. In the early years (2014), it occupied more of my attention and netted ~$3000/year in bonuses. The banks, Chase in particular, have started implementing more anti-churning measures though, so I've been going at a slower pace of ~$1000/year in sign up bonuses. I expect the trend to continue.

There's just not enough to churning to keep me from noticing my investments though. I've embraced TLH as an acceptable way of "tinkering". Information gathering is pretty time consuming, so most of my hankering for action has been consumed by education. It hasn't stopped action completely though (and I think it's acceptable to act based on updated knowledge--but only after sitting on my hands for about a year, at minimum). I ended up moving to a globally weighted portfolio (I started with a typical US heavy equity position). I'm starting to become tempted to value tilt.
I also allow myself some TLH if over $500. As account has grown I plan to update to $750 or $1000. I do value tilt (small) but am not allowing myself to change AA much except adding bonds if a large windfall occurs. Next IPS re-evaluation is in 3 years but likewise adding bonds would be only change.

You doing bank bonuses? Those are taxable but seem lucrative too.

Chase certainly does seem to be cracking down. They called today to say one of my approved cards had to be shelved a day after applying (and receiving instant approval); at least they let me pick which I got to keep, but I’ve never heard of that happening.

fujiters
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Re: Card/Account churning to prevent investment tinkering?

Post by fujiters » Tue Oct 23, 2018 1:28 am

MotoTrojan wrote:
Tue Oct 23, 2018 12:20 am
fujiters wrote:
Mon Oct 22, 2018 11:50 pm
I try to always be working on a minimum spend for a credit card bonus. In the early years (2014), it occupied more of my attention and netted ~$3000/year in bonuses. The banks, Chase in particular, have started implementing more anti-churning measures though, so I've been going at a slower pace of ~$1000/year in sign up bonuses. I expect the trend to continue.

There's just not enough to churning to keep me from noticing my investments though. I've embraced TLH as an acceptable way of "tinkering". Information gathering is pretty time consuming, so most of my hankering for action has been consumed by education. It hasn't stopped action completely though (and I think it's acceptable to act based on updated knowledge--but only after sitting on my hands for about a year, at minimum). I ended up moving to a globally weighted portfolio (I started with a typical US heavy equity position). I'm starting to become tempted to value tilt.
I also allow myself some TLH if over $500. As account has grown I plan to update to $750 or $1000. I do value tilt (small) but am not allowing myself to change AA much except adding bonds if a large windfall occurs. Next IPS re-evaluation is in 3 years but likewise adding bonds would be only change.

You doing bank bonuses? Those are taxable but seem lucrative too.

Chase certainly does seem to be cracking down. They called today to say one of my approved cards had to be shelved a day after applying (and receiving instant approval); at least they let me pick which I got to keep, but I’ve never heard of that happening.
Not as often (about 1-2 per year). I find them slightly more work for less money (mostly because they're taxable), but I was doing the Insight/NetSpend cards for 5% interest (Insight stopped offering savings and NetSpend lowered the amount you could have per account to $1000). Doing the 1% Ally bonus now, and recently hit the $200 Capital One bonus.
“The purpose of the margin of safety is to render the forecast unnecessary.” -Benjamin Graham

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