Credit Card Churning: What is it and Should You be Doing it


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The term credit card churning is relatively new, but the process has been around for years. So, what is credit card churning? It’s the practice of repeatedly opening and closing a credit card to earn its signup bonus over and over. Churners amass tons of reward points or airline miles from credit cards that they have no intention of continuing to use or even keep open. You’ve probably seen ads or even received offers in your email or mailbox from credit cards that offer valuable points, miles, or cash back to new account holders. Most also require you to charge a certain amount of money to the card within a certain period in order to receive the new card bonus.

Is Credit Card Churning a Good Idea?

There are some advantages to opening accounts just for the rewards and bonuses.   A few important things to keep in mind are that you will need to track when you opened your card, if there is an annual fee, and when you need to meet any required spending limits. You should also be prepared to pay all your statements in full each month.

Most open and closers,  close their account immediately after earning the sign-up bonus and before any annual fees or increased interest rates would be incurred. Following this process, you could rack up a significant amount of reward points, cash back and airline miles.

What to Watch Out for.

As tempting as earning bonus after bonus sounds, there are some scenarios that you may want to think twice about before opening new credit accounts.

  • If you don’t have the best credit you may not qualify for the best reward cards. You usually need to have excellent credit to qualify.
  • If you think you will be applying for a mortgage or other large loan in the next year or 2 you should consider putting your churning activities on hold. Lenders will be looking at the number of inquiries on your credit report and those inquires could lower your score. This could make it harder to get approved for a loan regardless if your accounts are in good standing.
  • You don’t have enough cash to spend to meet the spending requirements. Many cards require you to spend a few thousand dollars within several months of opening the accounts. If your current spending habits are lower than the requirement then you’ll have to spend more money that you don’t have just to get the bonus. This could cause you to pay interest or even obtain some debt.
  • Churning is not for the unorganized or inexperienced. If you don’t think you’ll be able to track your cards annual fees, due dates, spending limits, etc. then churning may not be for you. Once you damage your credit with late payments it can take time and be difficult to repair.
  • Many credit card companies are starting to disprove of this behavior. Some companies have recently started cracking down on this behavior by adding language to its credit card applications that include the right to freeze its welcome bonuses and close your account if it determines you are abusing or misusing their offers.

Credit card churning can be a great perk for those who are easily able to manage the process and have excellent credit, but they still won’t go unscathed. Your credit will still be affected since your activity could signal the credit reporting models to think your behavior is a sign of financial distress. Too many accounts opened in a short period of time can drop your credit score by a significant amount. Additionally, credit scores are also affected when you frequently open and close lines of credit, reducing the average age of your accounts.

As more and more people are taking advantage of credit card churning, it’s days may soon be numbered as credit card companies start paying more attention. If you are currently a churner or thinking about getting started make sure you are keeping an eye on your credit, paying your balances in full, and avoiding those annual fees.

Laura Berendsohn
Washington Branch Manager, Assistant Vice President