Why you shouldn’t sign up for every credit card sign up bonus you hear about

I think the credit card and travel hacking game can be dangerous for a variety of reasons. One of the most dangerous can also be one the most subtle. For lack of a better term, I’ll call it “internet peer pressure.” Even if you don’t overspend to meet credit card sign up bonuses and pay off your balances monthly, there exists an inherent pressure from the blogosphere to be signing up for every single credit card sign up bonus that comes around. When I started this game, I always felt I HAD to have the newest, best credit card sign up bonuses out there. It starts off simply, but like I said, it’s very subtle. I think a lot of travel credit card enthusiasts go through phases along these lines:

Four Phases of Travel Credit Card Enthusiasts

Phase 1: Hmm, should I dip my toe into this credit card rewards thing?

In Phase 1, you’re still not convinced that applying for credit cards regularly won’t hurt your credit. You dip your toe into the pool by getting a card, probably a Chase Sapphire Preferred because you’ve heard about it ad nauseum. For some people, you’ll take one trip with those points, but for others…

Phase 2: Establishing a credit card application rhythm

If you continue on, you start getting a good handle on how often you can apply for credit cards, and fall into a predictable rhythm of adding one, two, or more new cards every couple months. Maybe you double or triple the number of trips you take in a year, and you really get into the swing of earning miles and points regularly through sign up bonuses. Now lots of people stop at Phase 1, but I think for most people in Phase 2 you end up at…

Phase 3: You really want to sign up for more credit cards but there are no good signup bonuses left so you just chase that next bonus

I think I hit Phase 3 about 2-3 years into the game. I had exhausted most of the “great” sign up bonuses but I felt like I had to still sign up for new cards every three months so I started applying for good, not great sign up bonuses. I’d convince myself mentally that I “needed” these cards even though I had no uses for the miles or they belonged to obscure programs. Hopefully for those who enter Phase 3, like myself, they enter Phase 4:

Phase 4: You realize that you should only be earning the miles that you plan to spend, and that almost everyone in this space is trying to sell you credit cards

Have a plan for your miles and points. Earn the miles you plan to spend. Once I finally burned that into my brain, I stopped chasing sign up bonuses. I then coupled this with my realization of the fact that all the “buzz” about every single new and “amazing” credit card sign up bonus out there results at least in some part from people who are trying to sell you said credit card.

Understanding the internet’s role in making you want to sign up for new credit cards

I’m not trying to be critical here, though I’m not trying to defend anyone either. But I’ll just speak for myself, even my blog and social media, which receives no compensations from banks for credit card conversions, contributes to the “buzz” behind cards. That’s because when my friend tells me they just bought a $1500 dollar snowblower my automatic reaction is “you should have signed up for a new credit card.” 

Of course, this just perpetuates the notion that all spend should be going towards meeting credit card sign up bonus minimums. And if you’re in Phase 2, that’s almost definitely correct!

BUT. You get to a point where all of a sudden you are chasing points in programs that you don’t have a plan for. So, you may be earning more points, but if you don’t use them, maybe you should have just used them for regular spend on one of the cards you already have.

Factor in the fact that the minority of the community, at least on the blogs, warns you to consider how “lifecycle effects” (copyright Free-quent Flyer) has changed your travel habits. My wife and I flew internationally 5 times a year before our first child, now our goal is 2 international trips a year.

Whenever a new credit card comes out, everyone gets excited, and rightfully so! I really wanted the Hilton Aspire card and I really want the new Iberia card. But the reality is I haven’t redeemed a single Hilton point or Avios (Avio?) for over two years). So as much as I want shiny new cards, it’s tough to say I can actually use those miles and points. 

Whenever a new card comes out, 90% of blogs will write about it, travel hacking Twitter will blow up, and if it’s big enough, even your mom will ask you about it. It’s tough not to buckle under that kind of pressure, especially when the bonus is legitimately good. But I do my best to remember to ask myself: Am I thinking about my actual spending (of miles) habits when I fall for the buzz for new credit cards?

Orphaned Points – My Hall of Shame

I reached Phase 3 right around lifecycle effects dictated a restriction on my travel. So, I have a personal hall of shame, orphaned points I need to get rid of. I thought it’d be fun to share my sources of shame and how I plan to get rid of them.

Radisson Rewards (~140,000 points)

Earned via: Club Carlson credit card sign ups back in the day

Reason for shame: Still haven’t used a single point. Had a stay booked right before the extra free night expired but we ended up canceling. 

Plan for use: Since I plan on starting to book two rooms in the foreseeable future, we should use this on our next domestic vacation.

Alaska Airlines (~150,000 miles)

Earned via: a couple of BofA Alaska Airlines cards plus some old Virgin America Points

Reason for shame: Alaska Airlines felt like a great idea. We love Seattle, we love flying Cathay to Hong Kong, and hey maybe we could even fly Emirates. But it turns out when we had kids we actually realized we don’t like traveling without them! (Except for once or twice). I also didn’t book using AS for our last trip to Hong Kong because I wanted the flexibility to change dates and times from AA. 

Plan for use: No active plans. 🙁 May just burn them on domestic AA flights.

Merrill Edge Points (~50,000 points)

Earned via: Merril Edge+ BofA card sign up bonus

Reason for shame: I guess I’m not ashamed of this, but I am reminding myself I need to use these points for my next flights

Plan for use: My next domestic flights

Final Thoughts

Remember, you don’t need to sign up for every credit card sign up bonus! Be sure to evaluate your miles and points needs and make your decisions accordingly. If you travel all the time, this probably applies less to you, but if you’ve got a growing family like mine, make sure you at least consider exercising discipline in your overall strategy.

Also, I’m sure some of you have orphaned points and your own hall of shame, so I’d love to hear about them in the comments!

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