Credit card hacking 101

Rewards credit cards can be a great way to hustle extra money for travel or just life in general. Today's credit card companies are offering bigger and bigger incentives for opening and keeping accounts and I personally am very happy to cash in.

If you are carrying credit card debt or have trouble controlling your spending, I do not recommend you credit card hack. For this approach to be beneficial for you, you need to pay off your balance every month.

None of these cards have paid to be in this article. These are strictly my own views about what cards are helpful.

Level 1: Maximizing your every day cash back
For me this isn't even really hacking, just a little optimization of what you are already doing. You already buy groceries and gas so you might as well get rewards. You want to pay for everything you buy with a credit card including gas, groceries, utilities. If it can be paid for with a credit card use one. Can you pay your mortgage with a credit card? Probably not but it's worth checking.

You pay off this credit card at the end of every month and reap rewards in return.

To get the most reward for your every day spending, there are two approaches:

1. Choose one card that has a good reward percentage and use it for everything. This is the easiest way because you don't have to think about it. You can are on auto-pilot and it's easy to see how much you've spent and you pay one bill every month. From what I have seen the card with the highest cash back rate for everything is the Citi Double Cash Card offering 2% back on everything you buy (1% when purchased, 1% when paid). If you have something offering more than 2% on everything, leave a comment and let me know!
2. You can use several cards based on which ones offer the highest cash back and use them based on which category you are spending in. This approach is more complicated but you also get more cash back. For example, some cards will offer a 1% rate on everything but 2-5% on specific items like restaurants, gas or travel. This is what I am usually doing. I have 3-4 cards and rotate them based on what I'm buying with my default being the Citi Double Cash. For example, on Amazon purchases, I use the Chase Amazon card which offers me 5% back as a prime member in Amazon credit. 

Level 2: Chasing sing up bonuses

Here's where you're staring really to credit card hack. Credit card companies will often offer a one-time bonus for signing for a new account. These bonuses are often worth $500 and I have personally gotten a few worth around $1,000.

I get offers in the mail all the time for sign up bonuses of 100 or 200 dollars, honestly, these aren't worth my time. I can only keep track of so many cards so I focus on where I will get the most benefit while doing only 2 or 3 signs ups per year. A lot of the cards with higher offers are focused on travel, which is fine with me. 

So if you aren't getting the offers in the mail, where can you find the top offers? First, most offers cycle. Cards will have a standard offer and then for a few months they will have a higher offer. Usually you will want to look for and wait for the higher temporary offer and sign up then because you can normally only get the offer once or once every two years for the same card. When you have done this a while you will get a good sense of what a good offer is but for a lot of cards the standard sign up offer is 30,000-40,000 points and a good offer is 50,000+.

You can find offers in several places, I recommend:

• The Points Guy - he updates every month with the best offers available. 
• Nerd Wallet
• Flyer talk forums - travel focused of course
• Reddit forum on churning
• Directly on bank websites - the main companies like chase, citi, capitol one will have their top offers on their websites. If you have a specific card in mind you can check on it specifically.
• Your mail - I said I usually ignore offers in the mail but occasionally you will get a good one. So it doesn't hurt to check.

Other than the value of the offer, there are some a few other things you will want to consider when deciding which offers to pursue:

• Is there an annual fee? And if there is, is the offer high enough that it's worth it? Usually for me the answer is no. 
• If there is an annual fee, often it is waived the first year. You want to check for this and you need to keep track of when you get the charge and need to cancel the card in order not to be charged.
• What is the required spend to get a bonus? The signup offer will be contingent on spending a minimum amount on the new card within a specified time of signing up. The minimum spend can be anywhere between 1,000 and 5,000 dollars. Usually you have three months to use the card for this amount of spending. This is important information and can be hard to find after the account is opened, so take note of the requirements when you sign up.
• How good does your credit need to be and do you meet the requirement? You don't want to apply for a bunch of cards that you aren't approved for because the inquiries will lower your credit score. Proceed with caution.
• Have you applied for this card already and already gotten this bonus? Or applied for too many other cards recently? Usually in the fine print it will say how frequently you can receive a bonus for the same card. It's normally every two years but American Express is usually once per lifetime (although I did get the same bonus twice from them once when they sent me a targeted offer in the mail...YMMV) and Chase doesn't allow you to apply for more than 5 new cards from any company in two years (get those Chase cards first!).

A lot of friends have asked me if credit card hacking damages your credit score, in my experience, it doesn't if you do it right. I have been doing it several years and still have an excellent credit score. A few tips you want to keep in mind:

• Don't apply for new cards before you plan to get a new mortgage, I would suggest not hacking for a year beforehand, possibly longer to be on the safe side.
• Don't apply for more cards than you can keep track of. You will need to keep track of when you got the card, what the minimum spend is, the deadline for meeting it and when the annual fee kicks in. Plus make sure you make the payments for the cards on time! After all of that, you have make sure you use your points before cancelling!
• Don't apply for cards if you don't have good enough credit to be approved.

Now, how do you want to use your points? See a case study I wrote on how we credit card hacked our trip to Spain and France including flights, accommodation and car rental. Or you can read about how we credit card hacked our wedding, sooo many points!