Churning Basics

Now that we’ve established what churning is, there are some things we need to know about churning before we can actually start churning. This post is going to be long but I’m doing this so I don’t have to break it into two parts so that next week we can actually start on a plan to start earning points.

Canada has 3 major credit cards, Mastercard, Visa, and American Express. The latter being the most valuable in terms of churning, but usually the least accepted.

Why is AMEX the best for churning?

AMEX’s rewards program is called Membership Rewards (MR). The nice thing about MR is that they transfer very easily to programs that we can book flights through, the best one for Canadians being Aeroplan. Here is the full list of MR transfer partners:

Aeroplan – 1:1

Alitalia – 4:3

AsiaMiles – 4:3

British Airways Executive Club – 1:1

Delta SkyMiles – 4:3

Etihad Guest – 4:3

First, let’s talk about Aeroplan. Aeroplan is the most popular choice for travel redemptions in Canada as it caters to Canadians and are partners with Air Canada (until 2020 at least). Since Aeroplan is partnered with Air Canada and Air Canada is a member of the Star Alliance Group, Aeroplan allows you to book on all Star Alliance partners.

Here is a list of all the Star Alliance members. As you can see, there are some very high end airlines in the alliance, ANA, EVA, Lufthsana, Singapore are the ones that should stand out as they all have excellent service from economy to their first class product.

Aeroplan uses a standard redemption chart based on where you are going to determine how many points your flight will cost. Here is a link to Aeroplan’s redemption chart. If you scroll down you can see which countries are included in what regions. One way flights are simply half of the listed amount of points needed. That is nice because it gives you the option is you find a cheap one way flight to pay cash then use points the other way.

The second most popular option is to transfer your MR to Avios, British Airways rewards program. British Airways is a member of the oneworld Alliance. The list of oneworld members can be found here. As you can see they too have some very high end airlines. Cathay Pacific, JAL, Qatar, Qantas should stand out as all have very good business and first class products.

British Airways calculates the amount of points neede for redemptions based on distance traveled. This can sometimes make their redemptions better than Aeroplan depending on where you’re going. This takes some effort on your part to look at where you’re going, how far it is, and which program is the cheapest/has the airline you wish to travel on. Here is the Avios redemption chart.

MR also transfer to Etihad, which is famous for their Etihad Apartment which is literally an apartment on a plane. It’s nice that MR transfer to Etihad as this is often a once in a lifetime experience lots of churners dream of.

AMEX MR can be collected easily which makes them the most attractive. They have sign up bonuses from 25,000 to 75,000, we will talk about these next week. For now, let’s focus on why they’re the best.

The best part about AMEX is that they are one of the only issuers that rewards you for referrals. Referral bonuses range from 5,000 to 25,000 per referral. The thing that makes this even better is that you can self-refer. You can refer yourself to another product to get both the referral bonus AND the welcome bonus on the card you just referred yourself to. That’s pretty sweet and an easy way to accumulate a lot of points very quickly!

What is a minimum spend?

A minimum spend is an amount of money that you must spend on your credit card to receive a certain amount of points. Most cards have a minimum spend of $1,000-5,000 in the first 90 days since application or approval. It is very important that you meet this amount because the whole point of churning is to get welcome bonuses and without getting the minimum spend we won’t get the welcome bonuses. For those worried about meeting the minimum spend, don’t be, throughout this series I’ll be sharing tips and tricks on how to meet the minimum spend. Note: the annual fee does NOT count towards the minimum spend but any authorized users you have on the account, their spend does count towards the minimum spend.

When do I cancel my card?

If you find that you enjoy the card, it’s benefits or other things, sometimes it is worth keeping but that choice is up to each individual. If you are simply wanting the welcome bonus only then it is recommended that you keep the card for a minimum of 3 months. Most churners keep the card for 6 months before cancelling to at least have some length of membership established with the issuer.

When can I reapply for a card?

Again, this is very variable and depends how risky you want to be. I would never apply any earlier than 3 months after cancelling a card. One method you can follow is the 6/ method. Keep the card for 6 months, reapply after 3 months. It is the method I follow and has not failed me yet.

If I don’t have a business can I still get a business card?

Yes you can, but yo need to decide where you draw the ethical line. Myself, I as a RMT am my own business so I have no ethical dilemmas with this issue. That being said, AMEX will issue you a business card by you just using your name as the business. Some banks are a little bit more strict when it comes to this. Most people who do this choose “consulting” or some other description of themselves being their own business. Like I said, you decide where to draw the ethical line.

If I cancel my card will I lose my points?

This depends on the program. The general rule is if the points are from the issuer then yes you will and if they aren’t then you won’t. What does that mean? AMEX gives you Membership Rewards points, their own program. If you cancel and do not have an active AMEX at the time of cancellation, you will lose your points. When cancelling an AMEX, always make sure you have another AMEX active as your points will be transferred to that account. When I cancel a card I always make sure to mention to the rep that I would like them transferred to my other AMEX. With cards like the MBNA Alaska Airlines World Elite MasterCard, you will not lose your points. MBNA is the issuer but you accumulate Alaska Airlines Miles in your Alaska Airlines account. See how the points are not from the issuer here but are from Alaska Airlines? That’s the difference to be aware of.

What is the difference between a charge card and a credit card?

A charge card requires you to pay off your balance in full each month. But you don’t have a preset limit. Instead, purchases are approved based on your spending and payment history, financial resources and credit record. As long as you pay your card in full each month, there’s no interest rate or minimum payment. Any balance left on a charge card after the payment due date will be charged interest usually at over 30%. So, pay your balance in full each month. A credit card has a preset limit that you must stay under and a minimum payment that is due each month. Interest is much lower than charge cards and you don’t have to pay the full amount each month (you will be charged interest on any balance remaining, though.)

What charge cards are available?

As far as I know, American Express is the only Canadian issuer with charge cards. They are the American Express Business Platinum, American Express Personal Platinum, American Express Business Gold, and the American Express Personal Gold. See the One Year Churning Plan to learn more about those cards.

If you have any other questions, please comment below or on our Facebook page and I will be happy to answer them for you.

Next week, I will get you on a one year plan to earn over 550,000 Membership Rewards which equals 550,000 Aeroplan miles. That’s enough points to go around the world in first class twice or 3 times in business class or 5 times in economy class. I’ll also share some of my favourite non-AMEX cards with you and some tricks to lessen the annual fee on some cards. Stay tuned!

Never stop adventuring!