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+1-802-778-9005Credit card churning is an act of opening credit cards over and over again to earn as many bonuses as you can in the initial months or sometimes years.
Credit card companies like to offer a first-year bonus to attract new clients, so individuals apply for numerous cards, get the bonus, and abandon the card. Credit card churning is mostly used, where one applies for credit cards mainly to get a bonus associated with the card.
Credit card churning is the act of applying for credit cards solely in order to get the welcome offers for the initial sign-up.
Sometimes, this involves the practice of either closing cards after bonus posts to the account or before the next annual fees are applied. This can be profitable if you do it properly, though you should know that if you open and close cards constantly, card issuers will mark you as “red flags.” Indeed, there are some severe failures that the churners can stumble at if they are not very careful.
The usage of the term has evolved, but the following scenarios are currently considered credit card churning.
However, over time, when people wish to obtain even more different types of rewards, this is also considered credit card churning, as it is repetitive but done on a larger scale.Credit card churning can also mean applying for multiple new credit cards all at once and then completing the multiple application process again a few months later.
When credit cards churn in this way, an applicant gets multiple credit cards at once (in a single day; for instance, an applicant can apply for three or more credit cards). Then, after three months, the applicant goes back to apply for another batch of different cards. This is done until there are new cards to be applied for and the applicant can satisfy the spending needs for a particular bonus on the credit cards.
Credit card churning means that a person can obtain several large welcome bonuses in a few months, and these bonuses make it relatively easy to accumulate a massive amount of miles, points, and cash back.
The term credit card churning originally referred to applying for the same kind of card over and over. This is mostly to get a huge welcome bonus offered on a card and then cut that card off right after the bonus has been received.
The process includes applying for a credit card, getting approved for one, using the card for a certain amount of purchases in a certain period, gaining a huge sign-up bonus, and then canceling the card before the next annual fee is due.
Example of Credit Card Churning
The credit card you plan to apply for offers a 100,000-point sign-up bonus, a $295 annual fee, and a minimum spending requirement of $3,000.
When you apply for a credit card online, the process takes approximately 10 minutes. If successful, the credit card will arrive within 5 or 6 business days once you have activated your credit card.
You’ll meet the minimum spend within the first month of card ownership or until you make your first statement. If you are successful, you will be charged an annual fee of $295 and receive 100,000 Points within a few days of your statement arriving. As soon as the points are in your account, you will pay the credit card in full and call your bank to cancel the credit card.
When you cancel your credit card, you will request a prorated refund of my annual fee. Banks can refund annual fees by check within 5 business days. Once you are sure that the card is closed, you apply for a new card and do the same; this entire process is called “Credit Card Churning”.
| Pros of Credit Card Churning | Cons of Credit Card Churning |
| ✅ May boost your credit score ✅ Receive other card benefits ✅ Diversify your points and miles currencies ✅ Earn points and miles quickly | ❌ Negative impact on credit ❌ Time- consuming ❌ Promotes high spending ❌ Accured debts |
Credit card churning generally works like this:
Churners manage to accumulate rewards far more frequently than they could obtain them in a traditional way of utilizing one or two cards and accumulating a large amount of points by spending point rewards.
There are still some people who almost religiously churn, i.e., attaining a few miles, a few hotel stays, or cold hard cash a few times a year, all by using the right credit cards for free.
Issuers often keep a limit on earning signup bonuses in order to prevent credit card churning. Though credit card companies like to attract new cardholders, they would prefer to establish a long-term banking relationship with credit card users rather than have temporary users. Banks get benefits when customers receive their cards but don’t utilize their offers and pay interest and fees.
There are different rules by different issuers, which make it difficult for cardholders to churn. Along with that, for customers who keep attempting to cancel credit card accounts too early, card issuers take back bonus points earned and deny further accounts.
Some of these restrictions include:
| Bank Name | Restrictions |
| Chase | Chase has an unwritten 5/24 rule where Chase will not permit you to be approved for a new Chase card if you have opened 5 personal credit cards (from any issuer) in the last 24 months. Secondly, you won’t be eligible for the current signup bonus if you get a new card member bonus for that card within the last 24 months. |
| Wells Fargo | Wells Fargo doesn’t have any specific rules when it comes to sign-up bonuses. However, if you have opened a Wells Fargo credit card in the past six months, you may not be eligible for an additional Wells Fargo credit card. |
| Bank of America | Bank of America does not establish any restrictions regarding sign-up bonuses for its credit cards. However, you may not be allowed a card if you’ve had it within the past 24 months. |
| Capital One | Capital One welcome bonuses are only available to new card members who have not received a bonus for the same card within the past 48 months. |
| American Express | American Express has a policy called the “once-per-lifetime bonus policy,” which means you can only receive a welcome bonus on a particular card once in a lifetime. |
| Citi | Citi offers sign-up bonuses only to new card members who have not received a bonus for the same card within the past 48 months. |
Credit utilization makes up 30% of your credit score, so you should keep this number under 30% to maintain a good credit score.
Applying for multiple credit cards within a short period in order to get the incentives that the new card offers beyond paying the annual fee and then promptly canceling the card is actually damaging to your credit ratio.
If you have multiple credit cards and make sure to pay your bills in full each month, then your number is likely low. But, if you’re racking up large amounts of debt across credit cards to get sign-up bonuses, this number could be higher, and your credit health could be at stake.
The minute you apply for a new credit card, a hard inquiry is generated. A hard inquiry is when a lender requests your credit reports before approving your application. It can appear on your credit report for up to two years and cause your credit rating to drop briefly by five to ten points.
Hard inquiries generally only hurt your credit scores a little, but multiple applications can increase the damage. Also, when you have applied for these credit cards, it gets to the attention of the issuers that you are getting credit-hungry. You may be refused credit in the future.
If you are someone who opens many credit cards to get the sign-up bonus, then closing the cards will hurt your credit score.
The average length of credit history decreases, which makes up 15% of your credit score if you have many recent accounts.
It is easier to maintain an account and use it for that rather than to close old cards completely; you could switch your credit card to a no-fee card but still retain the same card number and, therefore, credit line and credit history.
Payment history constitutes 35% of your FICO Score and 41% of your Vantage Score. Though your credit score is part of your financial profile, it is crucial to maintain it.
If you miss the notices and fall 30 days behind, the card issuer may report the late payment to the credit bureaus, which could significantly hurt your credit scores. Delays in payments result in fees and penalties, but always call the card issuer and ask to have these charges removed if it is just an error.
While credit card churning may not heavily affect your score, it can significantly impact how credit card issuers view you as a customer in the future.
Instead of churning, consider these strategies to maximize your credit card rewards:
Opening new credit cards strategically can help you earn points and miles, but it’s vital to choose cards that fit your lifestyle for long-term benefits. The opportunity to gather points, miles, and other bonuses is interesting. It may be easier to churn and obtain free rewards, but the consequences are dangerous to your credit standing and financial future. This lowers one’s credit score and, if not controlled properly, leads to needless overspending and debt accumulation.
Yes, churning credit cards hurts your credit scores because each new account lowers the average age of your credit accounts.
The 5/24 rule means you can only be approved for some Chase cards if you’ve opened five or more personal credit cards from any issuer in the past 24 months.
A maxed-out credit card can lead to declined purchases, impact credit scores, and increase monthly credit card payments.
A golden rule of credit cards is never to charge more than you can pay off in full each month. This keeps your balance at $0 and helps you avoid paying interest.
No, credit card churning is not profitable for most people. While it can be tempting to earn rewards quickly, the risks outweigh the benefits.
