However, I always have a lot of topics on the back burner, and tonight I want to briefly address one question that a lot of readers asked in response to my end of year reflections: how do I keep from getting in trouble with my credit card issuers, given the amount of manufactured spend I put on my credit cards?
While it's not an exact science, I've used one and only one technique since I got into the travel hacking game: seasoning credit cards. Using this ridiculously simple technique I have never had a single card shut down or a single "hostile" conversation with a credit card company representative — although I periodically do trigger fraud alerts, which can normally be resolved through a text message or automated phone call.
I have a friend in town whom I've been gradually introducing to the travel hacking game, and since he flies to Poland once or twice a year, I suggested he sign up for the Chase United MileagePlus Explorer Card when it had a 55,000 mile signup bonus (after adding an authorized user), so he could redeem award tickets on LOT, a Star Alliance member (this was pre-United devaluation, of course).
Once he received his card, on a walk over to our friendly neighborhood CVS I explained that credit card companies don't like to see sudden, large transactions on newly issued credit cards, since that's the kind of behavior that desperate people and crooks exhibit – people trying to get as much cash off a line of credit as quickly as possible.
When we got to the store, he promptly picked up 2 Vanilla Reload Network reload cards and attempted to load them both with $500.
What do you think? The transaction was frozen and he had to spend 15 minutes of his (and my) afternoon on the phone with Chase Card Services explaining why his first transaction on his brand new card was for over $1,000.
How to Season
So while it's no great secret — and I'll be the first to admit that it's superstition, not science — here's what I do to season a new credit card, reducing (in my mind) the likelihood of fraud alerts and frozen transactions down the road:
- When I first get a new credit card, I buy a single $500 Vanilla Reload Network card (or whatever I need to buy at the moment);
- Then, I wait. And wait. And wait;
- I wait until that first transactions has cleared from pending to posted;
- Then I buy another $500 card;
- And wait. And wait. And wait;
- I wait until that second transaction has cleared from pending to posted;
- Only then will I buy 2 cards at once;
- And wait. And wait. And wait...
You get the idea. The concern of the credit card companies is not "perk abuse" or anything like that. The concern the credit card companies have is the risk of chargebacks: if an identity thief gets a credit card in your name, you will naturally refuse to pay for any purchases made with that card. Your pattern of activity should have as its goal proving to your credit card company that it's you making those purchases, and that you intend to pay for them.
If I've signed up for a credit card exclusively for the signup bonus then I can typically meet any minimum spending requirement within a week or two using this technique.
If it's a card that I plan to put spending on long-term, then sure, this technique means I only manufacture $7,000 or so the first month that I have the card. But that's a small price to pay, in my opinion, for a smooth and uninterrupted relationship with my credit card providers.