The Golden Age of Credit Cards

I want to tell you, dear middle class reader, about my experience in recent months cycling credit cards to farm the sign-up bonuses. Right now is the best time I’ve ever seen to do this, better even than 2016, the last time offers were enticing.

We should say up front, that yes, gaming credit card rewards is a little pathetic, but it’s not dishonest, it’s not theft, and their money is still green.

The basic approach is simple. You go to NerdWallet or similar sites and find the cards that have both a sign up offer, usually $200 or $300, and no annual fee. You get these cards, and then you enter a period of very careful budgeting. I’ll do a post on budgeting one day, but basically you lay out fixed expenses, your allotment for your variable expenses, and then record every single dollar you spend. You must go nuts on budgeting to make sure you don’t fall into the trap of overspending. Do this every month, update your spreadsheet every day or so, keep receipts or trawl your online accounts for each transaction.

The idea here is to be the mouse who eats the cheese in the trap, without setting it off. The credit card companies seek to lure you in with the $200 offer, and then keep you with their ‘gameified’ points programs after that. A lot of people will get excited, spend too much, and then get stuck paying interest. You have to be completely dispassionate here, spend no more than you otherwise would. This is where the Dave Ramsey style, every-dollar budgeting comes in. It focuses the mind and cause one to spend less.

I like to use the resulting points to pay credit card statements, but you can usually take them as cash too. In either case, use the modest windfall to bolster your emergency fund, or buy stocks/crypto. As middle class wage-serfs, our goal is to always be increasing our savings rate. We want high risk crypto and stocks; returns are proportional to volatility. Hold them for years, hold them indefinitely. When we increase our frivolous consumption of non-durables, we feed the system, when we build wealth, we gain optionality and confidence. Wealth can include relatively liquid durables, anything you can sell at auction or consignment that doesn’t get worn out, and has a potential to appreciate.

Anyway, you’ll not get rich gaming credit card offers, but a couple grand a year never hurts. Also, once you’ve milked a batch of cards, you may want to wait before canceling them, if you intend to open more in the future.