What is Credit Card Churning? How it Works

Credit Cards rewards are always alluring. While some provide easy access to cash for spending, some allow users to lay up sign-up bonuses as dust. The bonuses come either as cash, free card gifts, miles, and points, helping users pay for certain expenses, buy Litecoin, and get more advantages.

However, as a way of getting as many advantages as possible, people get involved in what is called Credit Card Churning.

Churning of Credit Cards means going for more credit cards just to get welcome bonuses. Just like a two-edged sword, churning a credit card has its benefits and pitfalls which are expedient you have at your fingertip.

Reading this article will help you learn more about Credit Card Churning and how it works. You will also know how rewarding and detrimental it can be to your finance.

Navigate through the table of contents below to get an overview of all the points made.

What is Credit Card Churning?

Churning credit cards deal with the application of new credit cards with the intention of getting rewards in form of miles or points as sign-up bonuses. You can get a quite number of miles or points or a hefty sum of cash within a short period just by opening many cards.

Credit card churning can be done in two ways: first, you can apply for the same type of credit card over and over again and once they are approved, you take all the welcome bonuses and cancel the card before the next annual fee is due.

Secondly, you can go for multiple card application at same time. Here, you can apply for multiple new credit cards at the same time, and repeat the same multi-application process every few months.

With this credit card churning guide, you can earn several large welcome bonuses every few months that will enable you to build up huge amounts of miles, points, and cashback easily. Keep in mind, this process will favor you more if you know how to use credit cards wisely.

You may also be interested in knowing How credit card companies make their money

How Does Credit Card Churning Works

Many credit card issuers give enticing credit card sign-up incentives to motivate customers to register for cards and spend a large amount on them shortly after the account is opened.

Depending on the card, you can receive incentives such as cash money, airline miles, or points. These can be used for transactions if they fulfill the minimum payment criteria under a given timeframe—often within three months after opening the credit card.

In order to earn many of these sign-up bonuses—and to rack up many useful rewards, use the credit card for the following:

  • Identify two or more credit cards that offer attractive sign-up bonuses in the form of your preferred rewards (for example, cashback, airline miles, or points) and don’t impose a requirement to use the card again or keep the account open for a certain period of time after you get the bonus.
  • Apply for the credit cards, either simultaneously or in succession with only a short period of time in between applications (usually less than three months).
  • Meet the investment criteria for the cards to earn the bonuses.
  • Avoid using or canceling your cards until you pay annual costs.
  • Repeat the following procedure to make use of further sign-up incentives.

What are the Pros and Cons of churning credit cards for miles?

Credit card churning is a high-risk, high-reward proposition with numerous potential pros and cons whether well executed or not.

Here we’ll look at some of the pros and cons that may likely probe up when you churn credit cards.

Pros of Credit Card Churning

Below are some of the pros:

#1. Getting large welcome bonuses:

This is the major aim of churning credit cards. You get large rewards in form of cash, free gift cards, miles, or points just by signing up. And interestingly, the bonuses can be spent anywhere and anyhow you want.

#2. Credit Score improvement

Although credit card churning may sound negative for your credit score, it may be just the reverse.

One of the rules for credit card churning is never to carry a monthly balance on any credit card. You use your credit card during the month to pay for your regular bills and only pay it in full until the bill is due.

You will repeat this step before you meet the investment criteria to obtain the incentive benefits. On the other hand, you can you can get over 800 Credit Score once you apply the righ hack.

#3. Get Rewards Faster

Credit card churning also lets you earn rewards for a given card faster than you would through everyday use of that card. 

#4. You can Cancel credit cards easily

To cancel any credit card you churned is free and easy. There is no requirement or fees attached to the cancelation of cards.

#5. Increases Savings

With the bonuses, you can save money on sort of things. And with the cash bonuses, you can pay off debts or handle unforeseen circumstances.

Cons of Churning Credit Cards

Credit card churning can be a fun and profitable hobby and at same time be determental in so many ways. Here are the primary pitfalls:

#1. It can Consume Time:

Churning credit cards could wastes time, especially if you have to keep track of multiple credit card due dates and requirements for earning various bonuses.

#2. Affects your Credit score Negatively

Constant applying for credit cards will have a minimal impact on your credit score. Also, your score can e lowered if you spend much trying to get bonuses without being able to pay off your credit card balance.

#3. Credit Cards can be Disapproved

Your credit card application may be denied, especially if you apply for too many credit cards between 1-2 years.

#4. Annual Fees

Many credit card perks come with annual payments—sometimes very large. Perhaps the charge is discounted for the first year, so you’re going to be on the hook to pay it afterward.

If you fail to cancel a card that you do not intend to use the charge will reduce the value of the sign-up bonus that you got for the card.

#5. Churnable credit cards can damage your credit

Every time you apply for a credit card, the lender makes a hard inquiry into your credit report. Inquiries make up 10 percent of your credit score, and while a single one will typically only reduce your score by five points, you may see a more significant negative impact on your credit if you incur several in a short period of time.

Opening new accounts can also lower your average credit age—a factor that’s 15 percent of your credit score.

#6. It can increase your debt

Each card you sign up for will require you to meet a spending minimum to earn the welcome bonus.

If you take out several credit cards, but can’t afford the spending minimums, you could end up with more debt than you can repay, rendering moot any rewards you may have earned.

The table below summaries te pros and cons of Credit Cards Churning:

Getting Large Welcome BonusesIt can consume Time
Credit Score ImprovementAffects your Credit Score Negatively
Get Rewards FasterCredit Cards can be Disapproved
You can Cancel Credit Cards EasilyInvolves Annual Fees
Increases SavingsChurnable Credit Cards can damage your Credit
 It can increase your debt

How can I successfully Churn Credit Card?

The guidelines are easy hacks on how to churn credit cards successfully.

#1. Scout for new credit cards:

Don’t believe that the deal you see on the card issuer’s website is the only one you can find at the moment. Card issuers also change their offerings, often offering generous limited-time deals to draw new buyers or unique incentives to keep current customers.

If you are interested in a credit card, visit the credit card review pages, check your mail for tailored deals, or log in to your current account to discover the latest credit card offers.

#2. Don’t open too many Cards at a time

It’s advisable you apply for a new credit card after 3-6 months to avoid damage to your credit score.

#3. Go through the Credit Card Terms

This is another thing you must do before going for any of the churnable credit cards. Doing this will help you understand the requirements and fees to pay.

#4. Make payments on time

Ensure you make your payment on time to avoid late fees which might ding your credit score. Once that happens, you might find it hard to get approved for rewards credit cards in the future. You’ll also want to pay on time to avoid forfeiting your rewards.

#5. Pay your balance in full every month

Paying the balance of the account in full within the grace period allows you to avoid paying interest charges on your balance.8 If you cannot afford to pay off your full balance at the end of each month, reassess your credit card bill; interest charges may outweigh the benefits of the bonuses you earn.

#6. Set targets for rewards.

Have an idea of what you want to spend your credit rewards on—a vacation or a family holiday visit.

Bottom Line

Credit card churning often involves opening credit cards to receive sign-up bonuses and then stopping or canceling their use.

You can earn rewards that include earning more rewards, faster, more rewards, and at the same time, damaging your credit score or incurring debt.

So it’s paramount that you make sure that you can keep track of your multiple cards if you want to practice credit card churning.


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