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Speaker 1: Joel Larsguard, host of How to Money Sunday's twelve to

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Speaker 1: two PM.

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Speaker 2: His address is at how to Money Joel. Good Morning, Joel,

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Speaker 2: Morning Bill. Oh yeah, we got a lot to cover today. Now.

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Speaker 1: Credit cards to earn extra awards, which I am a

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Speaker 1: huge fan of.

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Speaker 2: Should you actually churn them?

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Speaker 1: Should you take all the extras at the beginning to

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Speaker 1: get you on and then you cancel and go to

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Speaker 1: the next one?

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Speaker 2: Does that make sense? Yeah?

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Speaker 3: So that is the practice known as churning, and it's

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Speaker 3: something that should you do it?

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Speaker 2: It depends on a number of factors.

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Speaker 3: And I think we should probably start off with the

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Speaker 3: reality that most people don't handle credit cards. Well, something

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Speaker 3: like fifty to sixty percent of people have like a

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Speaker 3: recurring balance on their credit card every single month, and

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Speaker 3: I think a lot of people in that position they

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Speaker 3: sometimes think about, or they'll think about their rewards that

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Speaker 3: they're getting from their credit cards, where there's the sign

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Speaker 3: up bonus, the two percent cash back, the travel awards

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Speaker 3: from the spending they're doing, and maybe they minimize the

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Speaker 3: downside of that credit card and the twenty two percent

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Speaker 3: interest rate they're paying on the balance because they're like

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Speaker 3: it's Okay, I'm getting these other benefits, and the truth

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Speaker 3: is it's not even close to okay. Like if you

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Speaker 3: don't if you don't pay your balance off on time

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Speaker 3: and in full, credit cards just are not for you,

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Speaker 3: at least at this point in time. When we're talking

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Speaker 3: about churning. This is when people are saying they're trying

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Speaker 3: to game the system, and the credit card companies are

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Speaker 3: you know, their best customers are the ones who do

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Speaker 3: have those recurring balances, and the churners are saying, we're

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Speaker 3: not going to have a balance. In fact, what we're

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Speaker 3: going to do is exploit the system for all it's worth.

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Speaker 3: We're going to sign up for as many credit cards

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Speaker 3: as we humanly can that's humanly possible in order to

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Speaker 3: get all of those sign up bonuses, reap a ridiculous

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Speaker 3: number of points, and you know, many hundreds of dollars

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Speaker 3: in sign up bonuses, and then we're just going to

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Speaker 3: sit back and uh and use those those sweet perks

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Speaker 3: that you've given us, and we're never going to carry

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Speaker 3: a balance. And those are the customers that the credit

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Speaker 3: card companies really hate.

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Speaker 1: Let me ask, doesn't that destroy your credit if you

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Speaker 1: all of a sudden sign up for twelve cards.

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Speaker 3: That's a good question, and that it is possible it

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Speaker 3: can harm your credit, especially in the short term if

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Speaker 3: you sign up for a bunch of cards in a

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Speaker 3: short period of time and you have all these new

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Speaker 3: lines of credit that don't have much history to them, Yes,

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Speaker 3: it can hurt your credit. But on the flip side

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Speaker 3: of it, people who are really smart about the churning

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Speaker 3: practice and they're kind of doing it methodically and over time,

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Speaker 3: ultimately many of them have really high credit scores because

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Speaker 3: what they have is a ton of available credit and

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Speaker 3: they're not using much of that credit, which is one

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Speaker 3: of the biggest metrics that the credit score the credit

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Speaker 3: bureau's factor in. So if you have twelve or fifteen

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Speaker 3: or twenty five credit cards with fifteen, twenty, thirty thousand

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Speaker 3: dollars credit limits and you're using essentially none of that

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Speaker 3: credit limit, it looks like your hand and credit incredibly

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Speaker 3: well to the credit bureaus. So yeah, maybe in the

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Speaker 3: short term it can be a credit ding, but ultimately,

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Speaker 3: for people who do it well, it can be a

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Speaker 3: credit boost.

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Speaker 2: Huh.

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Speaker 1: And the in credit card companies haven't been able to

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Speaker 1: figure that out. There are no algorithms that put all

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Speaker 1: that together.

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Speaker 3: God so that you would think there is I would

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Speaker 3: say Chase is probably the best at cracking down on this,

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Speaker 3: but ultimately it's really hard for them to figure out

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Speaker 3: who are the churners and who's not And if they

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Speaker 3: cut some people off, well, was that person actually going

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Speaker 3: to eventually use that card? Well? And are cutting off

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Speaker 3: some of our potentially best clients and customers. Chase essentially

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Speaker 3: has a rule that's like the five and twenty four rule.

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Speaker 3: If you open up more than five credit cards in

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Speaker 3: a twenty four month period, they're going to deny you

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Speaker 3: for a credit card. And so that's kind of how

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Speaker 3: they've been able to crack down on it and say, like, man, whoever,

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Speaker 3: if you're one of those people who's opened up a

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Speaker 3: ton of new credit cards, we just don't want you

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Speaker 3: as a customer.

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Speaker 1: You know, I use a Chase card and because it

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Speaker 1: has the best best points for travel and I pay

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Speaker 1: money for it. I have that the one the reserve

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Speaker 1: card that gives you a zillion points that I pay

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Speaker 1: money for the card itself. And for me, it's all

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Speaker 1: about upgrades, that's it. It's all about upgrades. Uh, it's

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Speaker 1: me sitting in business class because I've upgraded, and you know,

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Speaker 1: you sit in business class first, and people in coach

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Speaker 1: go past you, and as they go past me, I turn,

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Speaker 1: I look at the bed and I go.

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Speaker 2: Hey, I'm sleeping to night. How about you love that?

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Speaker 3: Absolutely?

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Speaker 2: Yeah, they do, all right. Now.

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Speaker 1: The way it works is Joel sends me the topics

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Speaker 1: that we talk about, and here's one that I looked

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Speaker 1: at and I went, wow, that's interesting. It's almost counterintuitive,

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Speaker 1: and that is the more money you have, the more

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Speaker 1: money you have, Joel.

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Speaker 2: That's very deep, I must tell you. Is that what

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Speaker 2: I said in the email? I hope that's that?

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Speaker 3: What as I said, Okay, what I was getting at,

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Speaker 3: And what is I think true for a lot of people,

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Speaker 3: and this is kind of counterintuitive, is that when you

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Speaker 3: have more money, handling that money becomes more complicated, and

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Speaker 3: for a lot of people, actually managing money becomes more difficult.

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Speaker 3: It becomes harder because the options increase, the complexity increases.

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Speaker 3: And there is something about having a dedicated goal paying

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Speaker 3: off some credit card debt and building up a little

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Speaker 3: savings that I think most people like. It's they're like

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Speaker 3: finite simple goals. And when the goals become more long

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Speaker 3: term in nature and more ambiguous in nature, I'm kind

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Speaker 3: of saving for retirements or I'm trying to build up

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Speaker 3: a stash for my kids to pay for college. Like

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Speaker 3: when those goals become bigger, harder to define, and longer term,

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Speaker 3: people actually their ability to make progress can sometimes erode

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Speaker 3: because they're not able to stick with I guess some

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Speaker 3: of the tools and the methodology that got them there

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Speaker 3: in the first place, like tracking their spending and sticking

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Speaker 3: to a budget and kind of calculating things. Once their

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Speaker 3: income goes up, oftentimes it becomes a lot harder for

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Speaker 3: them to kind of stay in line.

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Speaker 1: Yeah, and just by the way, I'm a big fan

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Speaker 1: of this because I have.

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Speaker 2: A wealth manager. Now I've done that.

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Speaker 1: For example, my kids five twenty nine plan for college.

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Speaker 1: I funded that the day my kids were born is

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Speaker 1: when I started that. And as that money increased, I told,

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Speaker 1: you know, I gave the money to a professional to manage,

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Speaker 1: and I said, I'll make the money, I'll fund it.

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Speaker 1: You figure out how it's going to be invested and

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Speaker 1: how we're going to deal with it.

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Speaker 2: Because this is what you do.

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Speaker 1: I don't, And you know, as and there was a

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Speaker 1: time where I just barely made the point where I

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Speaker 1: could have used the money person, and I went and

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Speaker 1: did it, because again, my job was to make the money,

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Speaker 1: and I do that, okay, and your job is to

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Speaker 1: make it happen, and I, well, I'm very very conservative

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Speaker 1: with my money.

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Speaker 2: But I just didn't want to take the time.

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Speaker 1: It takes time to actually figure out what a good

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Speaker 1: investment policy is.

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Speaker 3: You're right, and it takes And I don't think hiring

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Speaker 3: someone excuses your need to have some knowledge that you

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Speaker 3: can ask good questions. And I think the further along

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Speaker 3: you get in your financial life and the more goals

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Speaker 3: you've been able to achieve, the more likely it is

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Speaker 3: that you should hire someone to come alongside in particular

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Speaker 3: help you with some of those those bigger questions that

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Speaker 3: you have, but also some of that coaching, right, and

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Speaker 3: some of that kind of helping you stay in the

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Speaker 3: game and continue to make the smart moves so that

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Speaker 3: you don't feel like you're going it alone and you're

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Speaker 3: unable to do that. So I do think, yeah, as

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Speaker 3: people more money, sounds like it's going to be a

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Speaker 3: good thing, right, I've got more options at my disposal.

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Speaker 3: But then sometimes as individuals, especially if we're not well

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Speaker 3: versed in personal finance, we have so many options and

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Speaker 3: we don't really know which direction to go in. And

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Speaker 3: I think that is when a professional can be of

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Speaker 3: a lot of help.

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Speaker 2: In your life.

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Speaker 1: Yeah, and a professional can also come up with a budget,

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Speaker 1: can do the analysis and do all of it, which

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Speaker 1: a lot of us are horrible at.

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Speaker 3: And sometimes, again, like I said, with some of those

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Speaker 3: goals get really amorphous or long term, it's really easy

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Speaker 3: for us to be like, I'm doing great, I'm cruising,

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Speaker 3: and we start to kind of round things off and

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Speaker 3: we're guestimating. And when you're rounding things off and you're

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Speaker 3: guestimating and you're not precise, that means that money's going

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Speaker 3: to flow through the cracks. And hey, guess what, You've

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Speaker 3: got more money and it can flow through the cracks.

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Speaker 3: But the if that money then does flow through the cracks,

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Speaker 3: you're not going to achieve those greater goals that you have.

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Speaker 3: And so, whether it's financial independence at an earlier age,

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Speaker 3: whether it is max in that five twenty nine account

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Speaker 3: for your kid's future, like you're just going to make

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Speaker 3: progress a lot more slowly than you otherwise would and

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Speaker 3: it may sense. And that's where having somebody in your

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Speaker 3: corner could be the right move.

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Speaker 2: All right, Joel. Thanks This Sunday twelve to two How

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Speaker 2: to money. You have a good one. Earn some money

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Speaker 2: and don't lose it, or whatever the hell you do,

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Speaker 2: will do. Thanks Bill, all right, take care,