For some, earning rewards through churning is an attractive option. For others, frequent credit applications may mean lower credit scores and credit card debt.
Credit card churning is the opening of new credit cards to secure lucrative rewards and bonus deals during the promotional period.
Credit card churning can hurt your credit scores and limit your credit options.
Credit card churning can also land you in credit card debt.
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For some, earning rewards through churning is an attractive option. For others, frequent credit applications may mean lower credit scores and credit card debt.
- Credit card churning is the opening of new credit cards to secure lucrative rewards and bonus deals during the promotional period.
- Credit card churning can hurt your credit scores and limit your credit options.
- Credit card churning can also land you in credit card debt.
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Credit Card Churning Definition: Credit card churning is the practice of hunting for credit card rewards and bonuses and opening several new credit cards to take advantage of the best deals. Having secured the rewards, the credit card “churner” closes the cards, often before incurring the annual fees.
Successful credit card churners can earn free flights, vacations, holiday accommodation, and cash this way.
Credit card issuers frown upon the practice, seeing it as a way to game the system.
Here’s a look at how credit card churning works, its pros and cons, what it takes to successfully churn credit cards, and how the practice impacts credit scores.
How Credit Card Churning Works
The theory behind credit card churning is simple. Find good promotional deals, sign up for them, redeem them by fulfilling the requirements, and quit using/closing the credit cards.
In practice, credit card churning is an effort-intensive undertaking requiring outstanding research, constant monitoring, and some creativity.
The first step is to find two or more good promotional deals. A “good” deal means an attractive reward/bonus in the currency of your preference (points, frequent flyer miles, cash-back, etc.). The rewards should also come with advantageous terms, such as the lack of a requirement to keep the cards open after you secure the bonuses, promotional annual fees, etc.
Once churners have found a few attractive deals, they apply for credit cards. Churners apply for several cards at once, or they space out their applications to cover a few months.
They secure the rewards by fulfilling the spending requirements.
Churners cancel the cards before they incur an annual fee, or stop using them.
They repeat the process over and over.
