Credit Card Churning: Everything You Should Know

What is credit card churning?

Typically, credit card companies offer a welcome bonus of either cash back or rewards (points or miles) to new cardholders for applying for a credit card. While you must usually spend a certain amount of money with the new card in a designated period (such as $1,000 in the first three months), these bonuses can be a big advantage for certain cards.

Credit card churning is when someone frequently applies for new credit cards, not necessarily to use or even keep, but instead just to take advantage of sign-up or welcome bonuses (often in the form of cash or miles/points). They will get multiple cards at the same time, then repeat the process several times each year with different cards.

While many credit card issuers have put practices in place to limit churning, it’s still possible.

How does credit card churning work?

To earn the signup and welcome bonuses credit card issuers use to entice new cardholders, credit card churning entails:

1. Finding credit cards that offer attractive or significant signup bonuses in the form of your preferred rewards (cash back, points, miles), that don’t have a requirement to use the card again or keep the account open for a certain period after receiving the bonus.

2. Applying for credit cards. Typically, this happens at once, or within a short period (usually three months or fewer) to avoid a severe impact on your credit score.

3. Meet spending requirements for the cards.

4. Receive the bonus.

Then, card churners will typically either stop using the cards or cancel them before incurring any fees. They then repeat the process to take advantage of more sign-up bonuses.

Pros and cons of credit card churning

While signing up for several cards allows you to earn more cashback or rewards and earn them faster than you would with just one card, each time you apply for a credit card, it triggers a hard inquiry which can damage your credit score. Opening new accounts can also decrease your average credit age.

Plus, if you’ve applied for too many cards in a very short period, card issuers may deny your application, even if you have great credit.

Also, know that each card you sign up for has a spending requirement to earn the welcome bonus, so if you take out several cards and can’t afford the spending minimums, you may end up with more credit card debt than you can repay. This, plus any fees you incur with the card, can eat into the bonus rewards you earn.

Additionally, because many card issuers have practices in place to prevent this act, it can be difficult to find cards that allow you to take advantage of churning.

How to do credit card churning

Knowing the pros and cons, if credit card churning is still a practice you want to take advantage of, follow these guidelines to help maximize rewards and minimize negative impact:

1. Look for a credit card offer

Sometimes, the welcome offer you see on a card issuer’s website isn’t the best one you can get. Issuers often change their offers, sometimes making them even better for a limited time to attract new customers or retain existing customers. If you’re interested in a card, check card comparison websites for help finding the best offer.

Also, keep an eye out in your mail or email for targeted offers.

Compare: Best Credit Cards

2. Avoid opening multiple cards quickly

To minimize the damage to your credit score, wait three to six months between card applications.

Related: How Long to Wait Between Credit Card Applications?

3. Consider the fees

If you have to pay an annual fee or other fees for a card, you’ll be cutting into how much you’re earning with the welcome bonus. Consider applying for no-fee cards, or cancel the card before incurring the fee.

Or, if you plan to keep the card with a fee, make sure the benefits of the card are worth it. For example, some cards offer additional travel benefits, extended warranties, rental car protection, and more. Taking advantage of these benefits can significantly outweigh any annual fee.

4. Read the fine print

You should always read the terms and conditions of a credit card to understand fees, requirements, limitations, and other information. Doing this when credit card churning is critical because you’ll want to ensure you understand any restrictions and requirements to earn the bonus.

5. Make payments on time

Avoid late fees, and damage to your credit by making all of your monthly payments on time. Keep in mind that any damage to your score can make it more difficult to get approved for cards in the future, and payment history makes up 35% of your score.

Also, try to pay off your balance in full each month to avoid interest charges. If you aren’t able to pay off your balance completely each month, you may not want to participate in credit card churning because the interest and increased credit utilization may cause more harm than good.

6. Set a rewards goal

It can be helpful to have a goal or idea of what you want to spend your credit card rewards on. For example, earning cash back to use to buy a new laptop. Or, earning miles to help cover airfare for a vacation. Knowing how you want to allocate your bonus earnings can help you choose the right card.

7. Monitor your churning statement and credit score

Having multiple credit cards with different balances, different due dates, and different requirements and restrictions can be complicated to track. Create some kind of chart or spreadsheet to help keep you organized. Include details like:

• The card and card issuer
• The date you opened the card
• Annual fee
• Bonus amount
• Spending requirements, and the date by which you need to meet it

Also consider tracking your progress toward meeting the spending requirement so you don’t miss any deadlines, whether the bonus has been applied to your account, whether you’ve used the bonus and any promotional interest rate information.

Additionally, you’ll want to keep track of your credit score to understand if credit card churning is having a negative impact.

How does churning affect your credit score?

Credit card churning can impact your credit score in a variety of ways.

First, churning may help your credit score because:

• Opening new cards can cause your available credit to increase, lowering your credit utilization rate.
• Making payments on time can positively impact your payment history.

On the other hand, churning can hurt your credit score due to:

• Each new credit application triggers a hard credit inquiry on your credit report, which can decrease your score. Multiple hard inquiries within a short period can do even more damage.
• Every new account will lower the average age of the accounts in your credit report. Generally, a higher average age of accounts is better for your score.
• If you don’t use credit cards responsibly, you could increase your credit utilization ratio. Having a utilization ratio of less than 30% is ideal.
• If you miss a payment on one of the cards, it can significantly impact your score since payment history makes up 35%.

Is credit card churning worth it?

• Credit card churning isn’t for everyone; however, it may be worth it to you if you:
• Have excellent credit. To qualify for the best credit cards, which would have the most lucrative signup bonuses, you typically need good or excellent credit. If you have poor credit your application will likely be denied. Additionally, applying for multiple credit cards at once can hurt your credit, so having excellent credit to start can help minimize damage.
• Are a responsible spender. It’s best if you have a positive track record of using a credit card responsibly, including paying off your balance on time and in full each month. If you’re not careful, card churning can quickly lead to credit card debt, and having a history of irresponsible card use can increase your chances of debt getting out of control.
• Spend a lot. Most welcome bonuses require you to spend several hundred or even thousands of dollars on purchases within a few months. If you typically spend that much, credit card churning may be a lucrative way to earn even more. However, if you don’t typically spend that much, you may get yourself into credit card debt by spending more than you should.
• Have the time and energy to track and sustain churning. As mentioned previously, it’s a good idea to track the cards you’re using, how much you spend, and other details to not only make sure you earn the bonus but also don’t overspend or damage your credit score too much. As long as you don’t mind keeping track of your cards and the progress toward earning bonuses, churning might not be a bad idea.

On the other hand, credit card churning may not be worth it if you:

• Have never had a credit card.
• Spend more than you should, or are already in credit card or other debt.
• Have poor credit.
• Are preparing to take on a major loan, such as a personal loan or mortgage?
• Are thrifty (and your spending isn’t high enough to meet spending requirements).
• Would rather keep things simple or don’t want to have to keep track of your cards and spending?

Other things to know about credit card churning

If you’re exploring the pros and cons of credit card churning, the key factors to keep in mind include:

• It’s generally recommended to space credit card applications at least three to six months apart.
• You typically must spend a certain amount of money within the first few months to earn the bonus, so only apply for cards that you can meet those spending terms.
• Only spend what you can afford to pay off. With the average credit card interest rate at about 18%, carrying a balance can quickly lead to credit card debt.
• Many credit card companies are taking actions to prevent credit card churning, including restrictions around how often you can earn a bonus on a given credit card or group of credit cards. Review terms and conditions before applying.
• Before canceling the credit card, make sure there are no requirements for keeping the card open for a certain period or you might have to re-pay the bonus. Also, keep in mind that closing a credit card can hurt your credit score.

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