What’s in your wallet? For travelers who sign up for credit cards left and right and strategically compile bonus points and miles in order to see the world for next to nothing, answering that question takes some time.
The Wall Street Journal profiled some of these plastic strategists—travelers who are accustomed to collecting 25,000, 50,000, even 100,000 bonus frequent-flier miles by opening up new credit cards and meeting minimum spending requirements with the cards. For consumers crazed with amassing points and miles that’ll be traded in for free hotel stays and first-class round-the-world flights, playing this game involves juggling dozens of credit cards.
It’s possible to wind up responsible for fees and land deeply in credit card debt through the use of just one credit card, of course. So the risks go up exponentially as the number of credit cards opened increases. But these are risks that certain travel-happy consumers are willing to deal with.
Rick Draper, who works for a bank in Detroit, is one such traveler. He keeps five credit cards in his wallet at any given time, and has three dozen or so more cards at home, ready to use if swiping them will yield better payoffs in terms of miles or points. The mass of points compiled by Draper has allowed him to fly himself and a guest in first class to Buenos Aires, $4,500 worth of free hotels during the trip, and even free top-notch lodging for his family on a vacation in Disney World.
One question travelers like Draper hear all the time is: Doesn’t constantly opening and closing credit card accounts damage your credit score? Indeed, it does. But perhaps not as badly as most people think. Kenneth Lin, from CreditKarma.com, says he himself opens and closes at least one card per year in order to snag bonus miles and cancel the account before annual fees are assessed and that turning over 10 cards in a short period of time is likely to push a good credit score into an average or poor one. But opening and closing one or two per year isn’t going to do much damage:
“You take a five-point [credit] hit but pick up 25,000 bonus miles, and that’s a good trade off.”
Beyond the impact on credit scores, keeping dozens of credit card accounts is especially dangerous for consumers who have trouble controlling their spending. If you aren’t anal about paying off your balance in full on time every month, then it’s a pretty awful idea to play the credit card game. Chances are, whatever “free” trips you’d be awarded will wind up falling short of the fees and interest you’ll face while paying off the cards.