Historically, I haven’t been a big fan of credit cards. That’s probably due to the fact that they led me deep into debt at an early age. I discovered credit cards in college, and used them to leverage myself to a lifestyle that I couldn’t actually afford. I abused credit cards for almost a decade, then abandoned them completely for nearly as long.

In June 2007, after almost ten years away, I re-entered the world of credit cards. At the urging of Get Rich Slowly readers (who believed I was mature enough to give it another go), I picked up a Capital One No-Hassle Cash Rewards Visa. It’s been my primary card ever since — and I haven’t had a single problem with it.

I think the difference between the old me and the new me is that I treat my credit card as a tool instead of a way to cheat the system by spending money I don’t have. Because I’m the CFO of JD Inc, because I’m the boss of my money, my credit cards are conveniences that can help me make better use of my money. But I treat them with respect, and I have rules.

• For one, I never use credit unless I have cash in the bank to cover the expense. Never.
• Similarly, I always pay my bill in full when it comes due. Always.
• Finally, I do my best to make my purchase decision before I decide how to pay. I’ve read plenty of studies that show folks who use credit spend more, so I try not to let my method of purchase influence my decisions.

So, I’ve become a happy, responsible credit card customer. But I’ve never tried to do more than that. I have lots of friends who are into travel hacking and credit card “churning”, two hobbies that allow smart folks to essentially make money off the banks. With one exception — a British Airways card I picked up in 2011 so that I could get 100,000 bonus miles — I’ve thought these activities were too “fussy” for me. Plus, I thought maybe they were risky.

Recently, I’ve changed my mind.

Beginning to See the Light

Last month, I made a trip to Florida for Camp Mustache Southeast. On the flight from Denver to Orlando, I sat next to my friend Marla, whom I first met at the Chautauqua in Ecuador and then at the very first Camp Mustache in Washington state. We talked about travel.

“I’m going to Spain with my cousin this autumn,” I said. “I also have an invitation to go to Spain in April with another group, but I can’t justify the expense.”

“Why don’t you use miles?” asked Marla. Marla’s a big travel hacker, by which I mean she knows how to accumulate miles and points to get free flights, hotels, car rentals, and more. (I have lots of other other friends who love travel hacking too, including Chris Guillebeau and Matt Kepnes.)

“Well, I’d like to use miles,” I said, “but I can’t. I used all of my United miles last winter to book two nights in Key West. I do have more than 130,000 British Airways miles but I can’t figure out how to use them.” Most of those miles — 100,000 of them — came from signing up for that credit card back in 2011! I still have them because I’ve never discovered how to redeem them for flights out of Portland.

Note: For those who are new to this stuff, one mile is roughly equal to one cent. Thus, 100 miles equals one buck. And 100,000 miles is about $1000 in value.

“J.D.!” Marla said, exasperated. “Why don’t you let me help you? You’ve heard me talk about travel hacking before. You know I’m happy to help you learn.” She shook her head. “Man, I can’t believe you.”

“Where would you start?” I asked.

“The first thing you should do is sign up for the Chase Sapphire Reserve credit card,” she said.

“Do you mean the Sapphire Preferred card?” I asked.

“No, I mean the Sapphire Reserve. It’ll give you 100,000 bonus miles plus lots of other stuff, such as free TSA Pre-Check, access to airport lounges, and more. But there’s one catch.”

“What’s that?” I asked.

“You can’t apply online. Online, you only get 50,000 miles. You have to apply in branch for 100,000 miles. Oh, and there’s a $450 annual fee. But the card also has a $300 annual travel credit, so the fee is really only $150. It’s a good deal.”

“Hm,” I said. “Maybe I should sign up.”

So I did.

90% of the Population Sucks with Money

Last Thursday, I stopped at a nearby Chase branch to speak with a banker. I told him I wanted to sign up for the Chase Sapphire Reserve. “The one with 100,000 bonus miles,” I said.

He gave me a funny look. “You’re not one of those travel hackers are you?” he asked. I played dumb.

“Travel what?” I said.

“Travel hackers. There’s a bunch of people who go around signing up for cards with big bonuses but then canceling them after they get their miles. We banks don’t like people like them,” he said with a wry smile.

“Well, that’s not me,” I said. Not yet anyhow, I thought.

The banker punched up the application on his computer. During the half-hour process, we exchanged lots of witty banter. He was truly a funny fellow. He became even funnier when he found out I make my living by writing about money.

“We banks don’t like people like you either,” he said. “I’m sure you’re a nice guy, but you pay off your bill every month. We don’t make any money on you. Fortunately, 90% of the people who use credit cards suck with money.”

“Wow. Are you serious?” I asked.

“Absolutely,” he said. “Look, your credit score is 804. That’s unusual. The average credit score is below 700. You pay off your bill every month. Like I said, 90% of people carry a balance. We’re probably not going to make any money off of you with this card, but that’s okay. You can’t win them all!”

Sidenote: Later that day, I had lunch with a friend. He told me about a colleague who hopes to open a microgym. “It’s one of those tiny places that only charges about twenty bucks per month,” he says. “It doesn’t seem like much, but he says they make tons of money. Lots of people sign one-year contracts but 90% of them never show up.” It sounded just like what my banker had said about credit cards.

Travel Hacking the Chase Sapphire

My Chase Sapphire Reserve came in the mail this morning. I immediately got online and began going through the benefits. I applied for the Global Entry program (which includes TSA Pre-Check), which the card reimburses whether I’m accepted or not. I sign up for free airport lounge access. I moved all of my recurring expenses away from my Capital One card to the Sapphire Reserve card. Lastly, I set up a spreadsheet to track my progress and to remind me when to cancel the card.

Meanwhile, I’ve begun reading the /r/churning subreddit, which documents the latest credit card offers and shares tips for making use of travel miles. (Here’s a great guide to a cheap vacation for newbies from that subreddit. Be warned, however: It’s full of jargon.)

Now that I’ve acquired my first mileage card, I’m ready for my second — but not just yet. Like most of these cards, the Chase Sapphire Reserve comes with a minimum spend. Over the first three months, I have to charge $4000 to the card in order to earn those 100,000 travel miles. This won’t be an issue, but at the same time I can’t spread my spending to other cards. I have to wait until I meet the requirement with this card, then I can look for my next one.

Meanwhile, the biggest challenge is going to be spending the points. Like I told Marla on the flight to Orlando, I haven’t figured out how to do this. I managed to convert United miles into a hotel room last winter, but I don’t know how to use my 130,000 British Airways miles for anything useful. That’s okay, though. I’m ready to learn!

Do you participate in travel hacking or credit card churning? What advice do you have for me? What pitfalls should I avoid? What steps should I take proactively? What tips and tricks can you experienced folks offer to newbies like me?