Sign-up Credit Card Bonuses
I’ve found the best way to build up a bank of credit card points, hotel points, or airlines miles are through credit/charge card sign-up bonuses. By far, it is the fastest and simplest method to obtain the points/miles necessary to book a dream trip.
There are promotions every month for the vast number of credit/charge cards out there. Typically they’ll be anywhere from spending $500 in the first three months of having a card, all the way up to $10,000+ in spending in six months. Business credit cards typically will have even higher spending requirements to meet the bonus requirements.
For example, if Chase bank advertises that you’ll get 100,000 points as a sign-up bonus for a credit card, you would have to spend the required amount (say $5,000) in the first three months of having the card. These bonuses typically do not post right away and the terms and conditions will say like 6-8 weeks. I’ve found they post much sooner, but there is potential for delays. Further, you have to make sure you meet the spending requirements and not have any refunds that could take you below that spending threshold. I would read ALL of the terms and conditions with a card sign-up so you aren’t spending above your means to meet a sign-up bonus or you fall short and miss out on the bonus.
I have been able to plan and book vacations to Europe, Southeast Asia, Africa, and Australia based on points earned through sign-up bonuses while maintaining less than five credit cards. Another added strategy is that if you are married, or have other adult family members in your household, you can combine points with certain issuers (like Chase). Even better, after the first person opens a card, they can refer that card to others and get additional points as a reward (for example, Marriott cards with Chase offer 40,000 points per referral up to 200,000 points per year as of now). You can see how a household can build up a large amount of points with this strategy.
Again, you have to live within your means. If you have a big purchase you know is coming up, such as moving expenses, buying furniture, putting in a fence, etc., then applying for a credit card beforehand and using that card for the purchase is an express way to meet that spending bonus requirement. No vacation is worth going into debt for, so only open a card if you have the budget to pay for your purchases at the end of the month. Always pay off your card. Credit card companies rely on folks not paying as a source of revenue. A disciplined financial strategy is incredibly important.
There is also the 5/24 rule, meaning you cannot open more than 5 cards w/in a 24 month period, which is applicable for most personal credit cards. I haven’t run into this problem, but there are many in the point collection/enthusiast community that have many more cards than I have that run into this rule preventing them from opening new cards. Further, you need a good to excellent credit score for many of the cards that have big sign up bonuses. Be aware that sometimes credit card issuers will reject an application without any reason whatsoever.
In sum, everyday spending on groceries, gas, and other purchases will slowly build your point and miles collection, but the signup bonuses are where the lump sum of points are found. Referral bonuses are also another way to build up a point balance, but be aware that the IRS is now taxing referral bonuses. Thankfully, they haven’t started taxing sign-up bonuses yet.