Banks give out airline miles to attract to credit card customers.
You can open a lot of those credit cards.
Redeeming those miles for international first/business class is a good value (some disagree but that's my use).
Really basic example: Citi routinely has 50k mile bonuses for their American Airlines cards. Round-trip business class US->Japan is 100k miles. Therefore, open two Citi AA cards and you can redeem for a free(ish) business class ticket to Tokyo.
It can get a lot more complicated but that's the gist. Understanding the alliances, the non-alliance partnerships, all the transfer arrangements. Taxes and fees. Routing rules. Flexible point currencies. Knowing how to work around deficiencies and bugs in the airlines' own systems. All that takes time to learn.
At the moment I'm sketching a trip that includes Etihad's new first class apartment, Qatar business class and Singapore's first class suite. Time in Dubai, Bali, Singapore and Tokyo. Four airline tickets, points from three airlines and multiple credit cards, banks and flexible point programs, plus numerous hotel point redemptions along the way. All told around 600k points.
To understand why this is even possible, it's good to understand the factors involved.
1. CC fees, carried balance interest, and merchant fees are extremely big business. So much so that banks and payment networks are willing to give out large bonuses to influence your buying behavior.
2. Airlines (and to a lesser extent, hotels and other brand partners) have evolved their miles and points programs into, IMO, basically an unregulated, overly complicated shadow currency. As a result of the complexity of the programs, valuation sweet spots have emerged where you get outsized value per point/mile
3. Since brand partners basically control the value of these currencies, they can sell them cheaply to financial partners. For financial partners, it's a win/win because they can offer a bonus that is perceived as high value without incurring the full cost of an equivalent cash offer. e.g. a 50k mile bonus looks just about as good as a $500 sign up bonus, but banks pay far less than $500 for 50k miles
4. A good majority of Americans will sign up for cards, use them, and regularly pay late fees, carry a balance, etc. This more than pays for the welcome bonus that card issuers offer. OTOH "travel hackers" sign up for the bonus, but use strategies to prevent incurring the costs usually associated with it.
Opening your credit cards definitely does not hurt your score nearly as much as you think it would. It can often increase your credit score. And if you're a proper churner, average age of accounts doesn't even get touched since you've got so many cards on record (closed cards continue to reflect positively on your average age of accounts for 7 years).
People that engage in churning are a bit self-conscious (source: recovering churner). Simple fact is you don't churn if you don't have to- it's not worth your time.
> Another layman question, what does this do to your credit score?
Opening new credit cards lowers your credit score- it adds weight to the single debt category(mortgage has a house backing it, a credit card doesn't), lowers the average age of credit lines (someone that has paid a home loan on time for the past 20 years is more 'reliable' than the naive 18-year old college student das company is preying upon), and, if you open too many at once, gives the impression you're desperate, insolvent.
