Credit card churning is an advanced strategy that requires significant organization and attention to take full advantage of it. That being said, you shouldn’t use this if you’re a beginner because it could easily leave you overwhelmed, confused, and in significant debt. 

If you’re just getting started, check out our other guide instead: How To Use A Credit Card To Build Credit.

With that out of the way, credit card churning makes opening a new credit card profitable by taking advantage of introductory offers before closing the cards. If you have good credit, there’s no shortage of incentives to earn from opening a new credit card. 

What Is Credit Card Churning?

Credit card churning is a tactic used by advanced credit card users to capitalize on a credit card’s introductory offers. The rewards for opening a new credit card include airline miles, redeemable points, or even cashback. There are also extra perks to sweeten the deal. 

A skilled credit card churner looks for multiple cards offering the rewards they want. They apply for those cards and when approved, they fulfill the spending requirements to earn the reward. Once they get the credit card bonus, they close the card or downgrade it.

Wash, rinse, and repeat. 

If you’re really good at this, you’re basically getting rewards for free because you’re paying off any balances before the billing period ends. So you’re not paying any interest, you’re not paying an annual fee, and you’re rewarded for spending on purchases you were already going to make. 

It sounds tantalizing, but there are drawbacks to using this method of reward hunting. It requires airtight organization, tracking, and discipline to make credit card churning work. If you nail down a solid strategy and maintain control of your spending, this could be the start of something good. 

Pros of Credit Card Churning

Several benefits come with credit card churning, which is why it’s become such a popular strategy for credit card aficionados. With a bit of effort and a solid spreadsheet, you might be able to rack up some serious rewards for things you’re already spending money on. 

The entire point behind churning is to earn credit card rewards without paying interest or fees. If you have the organizational skills to pay your balances off ahead of the billing date, meet all of the spending requirements, and avoid annual fees like the plague then this might be for you.

Free* Rewards

The rewards aren’t exactly free. You’ll need to meet specific stipulations first. 

For example, the Amex Everyday Credit Card offers a welcome bonus of 10,000 membership rewards points when you spend $2,000 in the first six months. No annual fee. Plus you earn more points when you shop within certain categories.  

Typically, higher rewards come with higher annual fees. For example, applicants with excellent credit can get the Capital One Venture X card which offers a welcome bonus of–

• 75,000 travel miles
• $300 annual travel credit
• $100 towards TSA PreCheck
• 10,000-mile anniversary bonus (worth $100 towards travel)

The downside is a whopping annual fee of $395. It’s important to do a cost-benefit analysis of any card you’re considering beforehand to make the best decisions regarding the rewards and any associated fees. 

Waived Annual Fees

To attract new customers, many credit card issuers will waive the annual fee for the first year. When this is combined with an attractive promotional offer, it’s a great deal. That means you’ll get to use all of the benefits that come with being a cardholder without the extra cost. 

If you don’t find the card valuable enough to hold onto, be sure to close the card or downgrade to a credit card option with no annual fee before your 12th billing cycle arrives.

0% APR Offers

Another big perk of churning cards is the 0% APR offers. This is the most helpful when transferring a balance from a high-interest card, but there are also 0% APR offers on purchases too. 

These offers typically last 12-21 months. After the no-interest period ends, any remaining balance gets hit with the standard interest rate for that card. 

Partnership Benefits 

Many times, credit card issuers will team up with other companies to offer premier rewards for new account holders. You’ll find this most often with travel rewards credit cards. 

A credit card issuer like Amex or Citibank might partner with an airline or a hotel to offer rewards specifically for booking with them. For customers, this means extra benefits like the use of an airport lounge, free checked bags, discounted hotel stays, or flight upgrades.

Disadvantages of Credit Card Churning

The internet is full of stories from travelers who got free flights, hotel stays, thousands in cash back, and more credit card bonuses that would make anyone want to try this. However, we have to look at the whole picture and that includes the disadvantages of credit card churning. 

Requires Airtight Organization

To avoid the annual fees and monthly interest that accumulate when you lose track of a credit card, you’ll need to stay organized. This means you’ll likely need to establish:

• A living spreadsheet compiling balances, spending requirements, annual fees, payment dates, credit utilization, etc. for each card. 
• Calendar alerts for all important dates (payment dates, end of the promotional period, annual fee assessment dates). 
• Setting up automated alerts and auto payments for each credit card. 

Keeping up with multiple cards is time-consuming. If you’re not organized, it could mean missed payments, missed promotions, and costly fees. That cuts into any rewards you might receive.  

Messing Up Is Expensive

If you’ve managed multiples of anything, you know it’s easy to miss something due to an oversight. This gets expensive when you’re talking about credit cards. If you’re juggling multiple cards and miss a payment by one day it results in late fees that average about $34. 

Late payments will also put a dent in your credit score. That makes it more expensive for you to borrow money for important purchases like a mortgage or auto loan for the next two years.

Annual Fees

Most times, the cards with the best promotional rewards often have the highest annual fees. You might be able to catch one where the first year is free, but after that, it automatically renews for the full price. 

The point of churning credit cards is to avoid those fees and take home the rewards. If you forget to cancel the card or downgrade before the annual fee hits, it’s even more expensive. Depending on the type of card you get, you could be paying a few hundred dollars.

Risk to Your Credit Score

Taking on a little risk to earn hefty rewards is ideal, but there’s a bigger risk to your credit score. Although it’s only about 10% of the overall calculation, the number of new credit applications on your credit report could create a dip in your credit score. We’ll talk more about this later.

Experienced churners typically apply for multiple credit cards at once. To the credit bureaus and future lenders, this looks like a sign of desperation that usually foretells financial troubles. There’s also typically an increase in your credit utilization rate before paying off your balances. 

To combat this, these super consumers space out their bulk credit applications by at least six months or more. Plus they take other measures to keep their credit scores in the excellent range and minimize the damage. 

Potential for Increased Debt and No Reward

Without significant self-control and discipline, it’s easy to get carried away with the huge spending requirements attached to promotional offers. You know your income and personal finance habits better than anyone else. If you can’t afford it, don’t commit to spending it. 

If you’re not great with using credit cards responsibly or are less than meticulous with organization, this strategy has the potential to put you in more credit card debt. Plus, If you miss the minimum spending requirement, even by a small amount, you won’t get the signup bonus. 

How Credit Card Churning Affects Your Credit

There are a few ways that credit card churning affects your credit and most of them aren’t great. Let’s start with the good part. When you open multiple credit cards at once, you may notice a small hit to your credit score from the hard credit inquiries, but this is typically minimal. 

Once your new credit limits show on your credit report, you’ll see a few points added because you’ve increased your available credit, which lowers your credit utilization. You’ll lower your utilization again when you pay off your balances, which means another credit score increase.

Credit card churning often means spending to hit balances on multiple cards at once. This can damage any earlier improvement you noticed. The addition of the new credit accounts will also lower your average age of accounts, which contributes to 15% of your overall credit score. 

This also comes into play when you close those new accounts. As mentioned earlier, the confusion of managing multiple credit cards can also create missed payments. That affects the largest part of your credit score, which is your payment history (35%). 

How Banks Treat Credit Card Churning

Although churning has the potential to be lucrative, credit card companies have gotten wise to cardholders learning to game the system. As such, some credit card issuers have created intricate tracking systems and introduced (published or unpublished) rules on handling churners.

Banks are always in favor of long-term relationships, as opposed to enticing bonus hunters who are here today and gone in six months. It’s just good business sense. It’s not illegal to do, but it is frowned upon because it defeats the bank’s goal behind creating the promotion. 

Chase

Chase’s rule to discourage card churning is the 5/24 rule. It’s unpublished, but it prohibits customers who’ve opened more than five credit card accounts within 24 months from opening a new Chase credit card. This applies to cards from any credit card issuer.

American Express

American Express has a once per person, per lifetime rule for their credit card offers. This restricts consumers to only taking advantage of one welcome bonus within their lifetime. American Express Customers may also be denied if they have more than five credit cards.

Citibank

Citibank follows an 8/65/90 rule. This means you can only do one credit application every eight days with no more than two within 65 days. Business owners are limited to one business credit card application every 90 days.

Bank of America

Bank of America has a 2/3/4 rule for card churners. You can only be approved for two cards every rolling two months, three cards every rolling 12 months, and four cards within 24 months. Most of their cards also block new bonuses if you received one in the past 24 months.

Is Credit Card Churning Worth It?

Credit card churning has tons of success stories scattered throughout the internet. It promises to help you travel and dine on the credit card company’s dime. 

However, it comes at the expense of your relationship with banks, risking debt, and your credit score. If you’re able to exert excellent discipline and organization skills with your credit and spending then this might be worth it for you. 

If you have doubts in those areas, you may want to reconsider your quest for credit card bonuses. 

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