American Express credit cards are great for travel because you collect points that are versatile enough to be used as regular membership rewards points that can be used to converted into dollars to pay for travel spend or you can do direct conversions into programs you’re already part of like Aeroplan, SPG, or Honors. It’s the flexibility that I love but there’s that pesky $120 annual fee in the way. The good news is that there’s a way around it so that you can leverage that first year free to essentially perpetually have this credit card for free. Read on to find out how!
Update July 2016: The bonus referrals are down to 5,000 MR points unfortunately but the good news is that the refer-yourself method still works. There have been rumours that the US side has shut it down but I gave it a try again and it worked! I can’t speak for the Americans but in Canada AMEX churning is still alive and well. I think the only thing is that it’s in part nullified by the fact that if you sign up direct through AMEX (which this technique involves, you only get 20,000 + 5,000 points while signing up through other promos can get you 25,000 or 30,000 so you’re not making any additional points per say.
What is Credit Card Churning?
I started looking around online to see what people did and learned a new term: “credit card churning”.
This has to be in the point hacking 101 course I missed but basically there are people at there that are taking advantage of those bonus offers you get from signing up with credit cards. With Amex Gold Rewards in particular, you get 15,000 points after spending $500 in the first 3 months. So essentially what people are doing is signing up for these cards, collect the 15,000 in bonus points, cancelling immediately after and re-signing up either right away or more cautiously, 6 months to a year later. Okay I think this is a bit more extreme and the tiny print you should be aware of when doing this is that this can affect your credit score if you’re constantly churning credit cards.
So How Does This Apply To Me?
Great so now I know about credit card churning, what’s my next move? I don’t know if I’m crazy enough to churn credit cards every 3-4 months but what I learned from this was that it was theoretically possible to cancel a card and sign up for a card right after. Next I dug a little deeper (primarily on Flyertalk) and found out that some people that had cancelled and re-signed up was able to take advantage of the “refer a friend” option that AMEX has. The sneaky guys at Flyertalk basically said that before you cancel your card, you refer YOURSELF your next AMEX Gold Rewards Card to get 10,000 AMEX Membership Reward points. Once you get the 10,000 in the bank and you receive your new AMEX Gold Rewards card, you just need to cancel your old card and move all your points over. The result: 25,000 in free points in your account after you spend $500 in the first 3 months and another year of not paying an annual fee. Sweet.
Step By Step
1. Log into your AMEX Account
2. Click on Rewards at the top and look for “Refer a Friend”
3. Choose the card you want to refer.
4. Click on Recommend.
5. Fill out the details and then click Next and the rest should be a piece of cake.
6. You’ll receive an e-mail in your inbox. Click on the link that’s in the e-mail to take you through the online credit card application.
7. Presto you’re approved and a card will be put in the mail for you.
8. 2-3 days after you’ll see an extra 10,000 AMEX Membership Reward points in your account.
Worked like a charm. After I got the 10,000 points and activated my new card, I called AMEX to cancel my card and move the remaining Membership Rewards points from my cancelled card to my new card. Done!