He gets most of his points for sign-up bonuses. He doesn't say the exact number, but it looks like he registered for at least four cards in the span of a year. Applying for a lot of credit in a short amount of time is a great way to hurt his credit score! I wish he'd write a follow-up about what happened to his credit after this experiment.
The US fetish with credit scores mystifies me. (I've lived in the US for 15 years.) Especially with the economy in its current state, why would you want credit at the moment?
Renting a house/apartment is basically credit because you are agreeing to pay the total rent over a 12 month term and as such landlords want a credit score.
In hot rental markets like San Francisco a better credit score can win you the application over the next person with a lower score. A poor score can even prevent you from renting even if you have monthly income to cover the rent.
Because credit cards are free if you pay them off. And you get benefits which, my friend, are also free.
- Miles/Cashback.
- Free international travelers insurance.
- Free car insurance.
- Free 1 year warranty on most electronic goods above a maximum 1 year warranty from the manufacturer effectively doubling your warranty.
- Concierge if you have a really good score.
- Discounts on car rental.
- Free access to airport lounges (high credit score + relatively frequent flying).
- Purchase price protection: If you bought an item recently and someone else is selling it for cheaper, get your invoice + ad together and get a refund for the difference (up to a limit).
(not an exhaustive list)
There is no need to be in debt to have a good credit score. Also, the higher your credit score the less interest you have to pay if you ever decide to get into debt (house/student/car).
TL;DR
Having credit available doesn't mean you have to use it and it comes with a lot of free perks.
I don't think the kind of hit you'd take from this kind of credit card game would have sufficient impact on your credit score to diminish those benefits.
If you do need to borrow money, having a good credit score allows you to get better interest on loans in the U.S.
I think the question you're really wondering about, though, is why someone would borrow a significant amount of money given the state of the economy. I don't have good answers to that question.
If you have a relatively stable income, when the economy is at its lowest ebb is the best time to borrow money and invest. You'll have less competition for the money and less competition for the investments you buy. Finally, the stated policy of the Federal reserve is to inflate the currency. This damages savers and rewards borrowers. The smart thing to do right now is to borrow and invest in things that provide a real return over the pitifully low interest rate.
If I have something that is:
a) currently cheap
b) likely to go down in value
c) exchangeable for things of real, lasting value
and I was prepared to let you borrow it from me, would you?
Interest rates are low.
Inflation is high (don't believe the govt statistics, look at your cost of living increases)
Things of real value are currently low
Your two risk factors are:
1) loss of ability to service debt
2) loss of value for the thing you exchange the debt for
As long as the thing you buy covers the interest rate and/or you have reasonably assured income (nothing is certain) then the loss in value shouldn't matter, unless we're talking speculation in something. But if you can buy into a real company earning over it's cost of capital, or real estate that is providing income over it's expenses, then you should, by all rights, be home and hosed.
Sure, it involves risk. But so does the zero case of sitting still and hoping things will get better.
