Lately I’ve been listening to a lot of Bengaluru-based rapper Hanumankind. His big break was the music video for his song Big Dawgs (and I would choose it as my MLB walkout song), which was shot in a maut kā kuām̥, the show still held at fairs across India that those of us in the US may know better as the well of death. A rather risky stunt seemed like the perfect vibe for this post.

In the world of MS and churning, what is considered risky is quite different compared to who you ask. Someone that is carefully focused on leanFIRE is likely going to be more risk averse compared to some of the younger folks coming over from the gambling and cook group worlds. 

As usual, my perspective is going to be that both extremes have a point and most of us will find ourselves somewhere in the middle. You can do quite well for yourself without pushing any limits, but you can also do really well for yourself if you go for it, regardless of whether any card issuer lets you open a card on the other side. 

Let’s talk about some of the risk involved in MS and how you can assess your own risk tolerance.

The human element of risk

If you’re doing it right, the human element of MSing and churning risk is similar to matched betting. Sure, you’re likely losing a hair of house edge, but there’s not any huge pitfall to wander into. While there is certainly some risk if you overextend yourself and end up with funds locked up in something hard to liquidate, it generally isn’t the end of the world. Things like prepaid debits can always be used for normal expenses, after all. 

I think the biggest aspect of human risk is an innocent mistake like fat fingering a payment amount or account number. Returned payments, overdrawn accounts and the like are far from ideal. Even something as simple as making sure you’ve added a card-linked offer before completing a large purchase can cover your ass. It’s certainly worth a couple extra seconds when you’re working with amounts that feel small because you move it daily but aren’t truly small. 

I’d add that you’re also responsible for understanding how MSing affects things like mortgage underwriting, because if your MS bankroll is also your down payment, it’s not going to look amazing that it’s always being transferred around. That said, I’d love to be a fly on the wall as a naive churner explains to a loan officer that they are the world’s first travel agent to focus only on a certain West Coast to Asia route. 

On calculating risk

It’s ultimately up to your individual decisions whether a financial institution wants to do business with you or not. I’m not going to wax ad nauseam on specifics, because it is highly YMMV. There are people out there that cycle even the most sensitive issuers over and over again with zero repercussions. Then there are people that are shutdown for seemingly innocuous missteps. 

It’s not just about getting shutdown by the Chases and Amexs of the world, though. Getting axed by your hub bank or a common fintech like Paypal or Venmo can be a royal pain. 

Besides getting shutdown, there’s the obvious risk of things like buyers groups not scanning your item, or a shipment of the MS precious metal du jour being stolen by organized theft rings. While you may have recourse, losing a chunk of profit from something out of your control can easily wipe out your gains. The vast majority of those transactions go through with zero issue, but it’s worth factoring that miniscule chance into your risk tolerance equation.

I think MEAB already hit the nail on the head in a much more scholarly way for weighing how much a shutdown is worth risking for you. There’s a wealth of data points out there for pretty much every bank you could be interested in hitting, so this is a real choose your own adventure. Set your goals, see how realistic those are within the boundaries (real or not) of the platforms in your toolbelt, and calculate if you’re ok with adverse action. 

The darker side of risk

There’s also a darker side that isn’t talked about as often. There are plenty of clickbait blog articles out concerning why people shouldn’t start churning – the obvious ones like don’t start if you are in debt or are bad with money. But there isn’t as much written for when you’ve moved well past beginner. But I do think there are some people that have the necessary knowledge to MS that shouldn’t be doing it. 

There’s something addictive about seeing your points balances go up by six figures daily instead of every three months. There are plenty of ways to generate float as a MSer, and if you aren’t keeping track of that amount of money that is very much the bank’s and not yours, you’re going to have a bad time. When money feels ‘unreal’ and just a tool for acquiring more points in a way that MS can sometimes make it feel, it can lead to some serious mistakes.

Finally, I encourage you to do your due diligence and understand the motivations and business models of the platforms and people you choose to work with. 

Hopefully this wasn’t too doom and gloom – I just think we should all be clear eyed about the potential risks involved in becoming a whale. You can’t win ‘em all, so learn from your mistakes and use them to make even more the next go around. 

Something that I’ve always found interesting is that there’s not a ton of mainstream info in this hobby on the underlying mechanisms of the American financial system that power the whole thing (or if there is, I’ve missed it).

After all, there’s a reason why people not living in the US jump through all of the hoops necessary to get a P.O. box and open cards – the rewards earning rates are available here because of something that is uniquely American.

Don’t worry – I’m not here to tell you that you’re morally bankrupt for participating in the system as if this is a WSJ editorial, and that would be hypocritical of me. I’m just laying out how these fees and rates power what we do. 

Credit card interest rates are an important part of the equation – enough that you have the ideological odd couple of Bernie Sanders and Josh Hawley co-sponsoring a bill to cap credit card interest at 10%. But let’s be honest – none of us here are paying interest, so I’m here to talk about something that also has bipartisan support to cap – interchange fees. 

Interchange fees are one of those things that are only really discussed if you are a restaurant patron going to visit somewhere with a non-cash payment fee, a small business owner, or a “small business owner”.

The dictionary says that an interchange fee is a fee paid between banks for the acceptance of card-based transactions typically paid by the merchant’s bank to the customer’s bank, which on its own doesn’t sound very sexy.

In the EU, interchange is capped at 0.3% for credit cards and 0.2% for debit cards, which is why, for better or worse, rewards programs are weaker there. The average interchange in the US is ~2%, but can vary quite a bit depending on the card used, the payment network, the merchant category code, whether the transaction is in person or online, even the size of the merchant itself. 

I assume you can see where I’m going with this – a system that doesn’t have uniformity is ripe for arbitrage opportunities. That is why we’re starting to see fintechs that decided to split interchange with customers to incentivize high spend on their cards. 

For me, the most interesting part of the whole thing (I also don’t fully understand it, because I don’t work in payment systems, but I’m doing my best) is the variable of payment networks. 

Certain networks charge much higher interchange compared to others, which is the crux of the Senate bill intended to force banks to allow merchants the ability to choose from at least two non-issuing bank related networks. In theory, they would choose a network that charged a lower interchange fee, and in return banks would need to lower rewards paid to make up the shortfall in fees.

While the uneven system presents opportunities for MS plays to flourish, it also means that plays can be killed without any need for shutdowns or other traditional ways for the train to run off the track. Changing a payment rail overnight can lead to many churners shedding a tear a few days later when their rewards earned post and they found out they were hit by the ‘ol switch-a-roo.

This is just the tip of the iceberg when it comes to interchange, but it’s an interesting one to delve deeper into as you try to scale up. If you have no idea what I was talking about, this would be a great topic to read up on. 

And if anyone happens to work at the large company behind that aforementioned play – please convince them to switch back to the high-interchange rail. 

One of the fun things about emojis (well, words too I guess) is that they mean different things in different communities and cultures. In our community, one of the most dreaded emojis is the spoon. The spoon emoji represents someone unreasonably asking to be spoon fed the answer to a question – whether it be glaringly obvious, a closely guarded secret, or otherwise.

Getting hit with spoon emojis is a scarlet letter on your question, indicating you’ve committed a faux pas. Sometimes the spoon is very much warranted, others it may not be, and that range is generally related to how much effort you’ve put into finding the answer before sourcing it from the community.

Ultimately, this self-moderation is a natural consequence of the community moving away from public forums like /r/churning and Flyertalk and into private communities during the shift from niche interest to somewhat mainstream.

Let’s face it – times have changed in the world of churning and MS. Gone are the days of the pudding guy hitting lifetime AA gold. Instead, Brian Kelly is a frequent guest on network morning shows talking about booking with points. It was already trending that way towards the end of the 2010s, but the pandemic exponentially increased interest when everyone was stuck at home and looking for a side hustle to hedge against economic uncertainty. 

Some of the aforementioned private communities are just smaller groups without any financial consideration, but most of the good ones have a monthly or annual fee necessary to join. There’s a vocal minority that thinks paying that fee entitles them to instant gratification on any MS questions they have. 

I understand the viewpoint to a degree, because in some cases, the price of admission is quite high. However, you’re not paying for the answers – you’re paying for the ability to learn and absorb through discussion and past context to ask the right questions that will be answered. 

Zooming back out – anyone that was booking award flights a decade ago can tell you how different things are. Sweet spots are becoming an endangered species, in favor of dynamic charts that are tied to inflated cash prices. Gone are the days where groups could fly together on LH F, snail mail for your houseplants led to readily available CX and QR J, and many more. 

There are blogs all over the place telling you exactly when to look to book all of the world’s most popular products, as well as a myriad of tools that will automatically monitor award space for you. Competition is just getting more and more difficult.

At the same time, this large increase in popularity of churning has led to many other arbitration opportunities. Between crypto, legal sportsbooks, and the proliferation of fintechs, there’s been plenty of opportunities for hawkeyed MSers to make cash, even in a more crowded environment.

In my opinion, the relative increase of calling out spoonfeeding is warranted. As great as plentiful award space is, the potentially life changing MS profits that have been available the last 5 years was more consequential. Not only does a new person hitting a play put additional strain on the play, but it increases the likelihood of someone ignoring the cardinal rule of churning – don’t call the bank. 

That being said, I do remember being inexperienced myself, and I’ve been lucky to have a network of smart people who have helped me get to where I am today. 

My advice for folks that are still learning – do your best to answer your own questions via reading old posts and questions before asking. If you can show that you did your best before running into the inevitable quirks present on some of our favorite platforms, many people will have no issue helping you cross the finish line.

As for the more experienced folks, don’t encourage spoonfeeding, but remember where you came from, too. Unless you have been around for a very long time, you probably got spooned a play or two here and there. This game runs on relationships and helping someone out with a complicated problem they’ve tried to solve already can easily become a win-win. 

There is a healthy dose of skepticism towards gambling from a significant chunk of the MS community. At face value, it’s valid. For an audience that is generally financially literate and highly organized, the implied variance of gambling is unappealing.

However, I’d challenge that and say that MSers actually have a ton to learn from advantage player gamblers. In fact, some of the smartest MSers I know came to churning as a spinoff of the gambling world. There’s enough parallels between chasing +EV wagers and squeezing an extra .1% or .2% of margin out of a play to make that prior experience advantageous.

First off – sportsbooks and casinos are much better at identifying patterns related to unprofitable customers compared to the big banks and award programs. There’s a reason why Hollywood makes movies about gamblers trying to outwit the pit boss and avoid getting walked – it’s a real thing that actually happens. 

As for sportsbooks – try actually winning consistently over a period of time without getting your account nuked by paltry limits. The folks in charge of ensuring the house stays profitable are very good at it.

If you can keep your accounts with high RTP (return to player) gameplay alive for the long term, you’re better prepared to avoid tripping on the many KYC landmines that exist on the MS side of things.

There’s also crossover in sign-up bonuses between credit cards and sportsbooks and casinos – the requirements to meet the common risk-free bet/deposit credit bonuses are similar to meeting a spend threshold on a credit card. And just like MSers knocking out a big SUB in a day, the only risk that a savvy gambler experiences on these promos is human error – entering the wrong wager.

Gambling promos even ebb and flow in similar ways to churning. A few years ago in the golden age of legal sportsbooks in the US, there was a never-ending spigot of free money as all of the market entrants fought each other over user acquisition. All of this competition led to a lot of arbitrage opportunities, especially since some of these promos functioned differently in practice compared to the offer terms.

That being said, you should educate yourself before jumping in on any gambling platform. While there are plenty of opportunities to add gambling as an important tool in your MS belt, you shouldn’t take it from me. I’m not your accountant, your bookie, your financial advisor, etc. etc. 

Even if you never end up wagering a dime, there are gambling principles that can be applied to your MS strategy. If nothing else, understanding concepts like basic blackjack strategy to reduce house edge can be extremely helpful. 

Good luck out there, my friends.

There are two primary schools of thought for how to use points you earn through churning and MS (unless you thrive in the chaotic evil sector and use your points for luggage and gift cards) – travel and cash back.

Those that found this hobby through the Redventures/Boarding Area content machine, reddit etc are probably more interested in traveling for free. Meanwhile, those that landed here from FIRE blogs and other personal finance adjacent spaces were seeking an additional income stream.

For those that stick with it and gain some experience, I’d guess that both groups gravitate towards using points for travel. Regardless of how much MR and UR are worth cashed out, it’s really hard to go back to turning right on the jet bridge once you’ve experienced lie flat business class, especially long haul.

But for those that scale up and move beyond just chasing a SUB every few months, there’s just no way to realistically use all your points for travel (unless you are a family of 6 willing to pay Delta’s ask for long haul J).

I’ve found that the group targeting travel can occasionally be condescending towards the cashback group on the grounds that chasing cashback isn’t as much fun as travel (which is maybe true in a vacuum, but there’s so many reasons people don’t travel) and the return isn’t the same as chasing outsize redemption value.

I hate to break it to everyone that thinks they’re playing the game better because they primarily redeem for travel – it’s all the exact same thing.

I won’t bother rehashing the same argument against using cents per point as a metric outside of noting that your ANA F flight via VS isn’t 20cpp because ANA is charging $20k unless you were going to pay that price anyway, and nobody that would do that is reading this post. Assigning a realistic value of what you’d pay cash for that same flight – say $1,500 or $2,000 – still yields a respectable 1.5 or 2cpp.

The real reason I’m saying it’s all the same is because it is – there is a very real opportunity cost associated with using points, and there are plenty of scenarios where you should book with cash instead of points, even if you have them readily available.

The Opportunity Cost of Using Points

Let’s start with the concept of marooned points and closed wall ecosystems. Unless it is a very unpopular program, all airline and hotel points have value. There are many places online where you can find a market for the entirety of what Awardwallet says you have stashed away.

It’s tempting to say you are making booking decisions based on it not being a flexible currency, but you always have the ability to turn those miles into money.

Here’s my real life example – I recently spent 200k AS miles to fly me and P2 to Australia in business class on Singapore Airlines. An intermediate churner would say that’s a great redemption, because AS miles can’t be cashed out in a straightforward way and you’re using a non flexible currency.

While I’d agree that it was a great redemption because it fit our exact plans and saved us a 19 hour slog in economy, there was an opportunity cost associated with using points, and it wasn’t cheap. Now that MR to HA to AS transfers are dead, AS miles are more scarce, and those 200k miles had a value not too far from what SQ was asking for one person on the route. We did not get this for free – we got it for half off.

I’m not saying not to use your points for travel – being able to travel around the world to do the things I’m passionate about has changed my life so much for the better. I’m just arguing that the team travel folks may have something to learn from everyone pursuing cashback.

On the other side of the coin, you should consider how buying points and certs and using points as a cash equivalent could make sense over other options.

Here’s a couple examples:

• You want to stay at the Waldorf Astoria in Cabo San Lucas, and you’ve found 3 nights with standard availability. It costs 150k Hilton points per night, and the cash price is $1500 per night, yielding a high 1cpp for Hilton. By transferring ~225k points from Amex at a 2:1 transfer rate, you’re getting a very solid 2cpp. You’re all set, right?
  • Here’s another idea. The going rate for a close-in Hilton free night certificate is around $450. You could spend around $1,350 and get the same stay. And how many MR would you need to cash out to get that $1,350? Only 100k if you’re bargaining right.
• You want to fly round trip to Amsterdam from the US on KLM, and you got lucky and found 50k saver fares for business class via Flying Blue (albeit with $350 total of carrier imposed surcharges). You have an Amex Business Platinum with 150k MRs to book. That’s a no brainer right?
  • It turns out this fare is on sale for $2,000 cash. Instead of transferring 100k MRs to Flying Blue and paying the $350 of surcharges, you could instead elect to use the Business Platinum’s 35% rebate on MR bookings for premium cabin fares and pay an effective cash rate of $1,300. This would save you money on the surcharges and allow you to pocket a nice stash of miles from the paid fare.

Again, I blow a ton of points on travel without thinking about it. All I’m advocating for is some more understanding of why cashing out often makes sense, even if it’s less sexy than transferring for a saver fare. And that the deeper you get, the closer you may find yourself to choosing to pay cash.