Every Sunday morning, Danny Guo spends some time on his favorite hobby: Updating a decade-old spreadsheet that details his personal finances, credit card spending, and rewards.
On it, the 31-year-old tracks not only how much he is spending and on what, but how much cash back or rewards points he will receive for each purchase. He also plans which card to use in the coming week for each purchase he and his wife make.
It might seem like a lot of work to the average credit card holder, but it's paid off handsomely. Guo is a seasoned veteran at churning, the practice of opening credit cards in order to earn welcome bonuses and other rewards. While the average American has one to six credit cards, Guo has opened 80 in the past decade, according to credit card documents reviewed by Fortune. He's not managing all of those at one time; 50 are closed, and he uses just a handful of the remaining 30 each month for various expenditures. (Though opening many credit cards in a short amount of time can hurt a credit score, Guo maintained his by always making his payments on time and keeping his credit utilization rate low.)
Between sign-up bonuses, cash-back rewards, travel credits, and other rewards, Guo, a senior engineering manager at Credit Karma, estimates his hobby has earned him $32,000 over the past decade.
"It's better to save an extra dollar in spending than earn an extra dollar in income, because your income is taxed," Guo tells Fortune. Credit card rewards are typically not. "I’ve earned $32,000 in rewards, but that’s equal to a $40,000 or $50,000 bonus at work."
Maximizing hidden rewards
Guo got his first credit card in college, creating the spreadsheet to track his spending shortly after. Doing so prompted him to start maximizing the cards he was using for each expense. Some cards, for example, offer better rewards for groceries or gas; others give cardholders more miles or points for travel.
The software engineer has always enjoyed tracking and optimizing different aspects of his life, including his workouts, the time he spends on certain websites, and, of course, his personal finances.
His passion includes finding the "hidden" rewards that many cardholders may not realize are even available. For example, one of his cards offers a free two-year extended warranty on tech equipment like laptops. Another card's sign up bonus was a voucher for a free two-day stay at any hotel, which Guo used for a room in Paris with a view of the Eiffel Tower, which he otherwise couldn't afford. According to his spreadsheet, he's received sign-up bonuses ranging from $25 to $1,400 (most range from $100 to $500).
His biggest coup: When he planned a two-week trip to Europe with his parents and sister a few years ago, he suggested they open specific credit cards a year in advance; by the time of their trip, they had collectively earned enough points to pay for all of their flights and hotels.
Sites like Reddit taught him the tricks of the trade; he supplemented information on those forums with his own research on bank and card issuer websites. He puts every expense he can on a card, including his rent when his landlord allowed it, to get the most rewards he can.
"It’s a fun thing for me to do on a Sunday morning, to think about what credit card to get next," he says. "I enjoy saving money, and if I think about what that savings can do if I invest it over a long horizon; that $32,000 could turn into an even more significant amount of money in retirement. That’s very motivating."
A risky game
While optimizing his credit cards rewards is fun, churning isn't without its own risks. Perhaps the most crucial one to avoid, says Rich Franks, head of Lightbox at Credit Karma: Overspending.
"If you’re paying a late fee, or if you’re revolving a balance, that can more than offset the benefits," says Franks. "If you slip up...it could impact your credit as well. And that can cost you many, many thousands of dollars" over your lifetime.
Guo, who learned about credit cards and how to use them responsibly from his parents, has avoided overspending by treating his credit cards as debit cards to get the most rewards points; he's never carried a balance or owed interest payments. He also has the time, passion, and organization (he keeps the physical credit cards in a trading card binder) to manage dozens of cards—and earned a tech salary right out of college, which doesn't hurt.
"I was very privileged to have my parents to learn from," says Guo, noting he was added as an authorized user to one of their cards, which helped him get a card of his own in college. "It’s hard to break into the credit world, so I was very lucky to get a leg up in that regard."
Churning can also have negative effects on a cardholder's credit if they're not careful, says Franks. Every application requires a hard credit pull, which can bring down a credit score. Issuers may look negatively at someone who has applied for multiple cards in a short time span; opening a bunch of accounts in quick succession could indicate someone with risky financial habits. This could affect not only future credit card applications, but applications for other credit products as well, like a mortgage or car loan.
But despite opening (and closing) so many cards, Guo's credit remains in the "Excellent" category, according to the financial documents. He opened the cards every few months over the course of a decade, giving his score time to rebound from the credit pulls. "I know that my credit score could be higher if I didn't apply for cards so often," he said, explaining that if he had something big coming up, like buying a house, he'd stop applying for cards well before that happened to get his score as high as possible.
And then there's the security aspect. Having various cards with multiple companies can put you at greater risk of fraud. "Watch those accounts to make sure you’re not getting skimmed, make sure you’re not having statements go to an old address when you move," says Franks. "There’s a lot of risk for things to go wrong. You could lose the plastic."
'It doesn't take much work'
Financial institutions have also started to crack down on churning, denying more applicants and offering less generous rewards in some cases. There are unwritten rules to applying to credit cards.
"I do get declined pretty frequently now," says Guo. "The golden age of getting credit card sign up bonuses has kind of passed."
Now, his focus is on maximizing his average rate of return or the points he receives for each purchase. He spends around 20 minutes updating his spreadsheet each week and checking which card is offering the most back on rotating categories. That's the easiest way most people can get into the credit cards rewards game, he says: Most don't need 80 cards, but it's smart to opt for the one card that offers the best cash back or points on the holder's most frequent expenses.
"This isn’t for everyone, but if you can use it in a good way, it doesn’t take much work to meaningfully make a decent amount of credit card rewards," he says. "If you can use credit responsibly and are in a fortunate position to do so, things like credit cards can be really helpful tools."
