Credit Cards

The Lowdown On Credit Card Churning

Lowdown on Credit Card ChurningTurning over accounts to increase commissions is sometimes called churning in the field of investments. A related use of the word in the area of credit cards defines churning as the practice of regularly opening accounts to score sign-up bonuses, miles and other rewards. The industry is well aware of the tactics and lengths that some consumers go to reap the benefits of an ever-changing landscape of credit card offers. While there’s nothing illegal about the practice, there are dangers to be on the lookout for when churning credit card offers.  Here is the lowdown on credit card churning.

Related: Get a $400 Sign Up Bonus Now – Barclaycard Arrival World Mastercard

The biggest gains will come when credit card offers promoting special, limited time opportunities to earn big rewards are selected that maximize efforts toward reaching a particular goal quickly. So, if the goal were to earn free airfare, it would make sense to use a travel rewards card exclusively. It’s also wise to avoid working toward different rewards in the same time frame; doing so will essentially slow down the progress of achieving the main goal. Once the introductory program expires, it’s time to apply for another great offer.

Who might benefit

The strategy of churning for bigger rewards should be reserved for consumers with excellent credit and the ability to manage changing accounts on a regular basis. To be qualified for a new card as often as every 6 months you’ll need a credit score near or above 780. It will also require that you use a card extensively so that you earn the maximum reward within any parameters that are included in the terms. This may include making every major purchase, or better yet all purchases, with the card and being prepared to pay the balance off in full each and every month. Many of the most lucrative programs require a minimum purchase of a few thousand dollars within the first 90 days of opening the account to receive a hefty cash bonus.

Negative effects of churning

The amount of available credit you will be establishing by regularly opening new accounts may be a red flag to future lenders. So beware if you plan to take on a major project, mortgage or other type of bank loan while in the midst of churning for rewards. Too much available credit, regardless of how much you actually use, may be seen as risky behavior by banks and make getting the loan you need difficult or impossible. It may also make lenders wary enough to charge a higher rate of interest than you would normally be charged for any loans that are approved.

How to minimize a credit score drop

You can expect a small drop in your credit score, when you open accounts within a short period of time, so it’s best to space applications out every 12 months or longer. You can further offset potential damage by choosing lengthy introductory offers and never closing credit accounts.  Once you move to a new card, it’s important that you maintain the integrity of your older accounts by using them for small purchases a few times every year.

Safeguard rewards

A simple mistake can jeopardize the value of the rewards you’ve worked hard to earn.  Terms of an agreement may include the loss of benefits for a missed or late payment.  Reward credit cards that charge an annual fee will cut into any earned rewards.

Failure to redeem rewards is by far the easiest way to slip up and devalue your effort. Another is to ignore any expiration date or fail to complete bonus qualifications. Focus on critical due dates or specific limits associated with the credit card agreement to avoid negating the offer.

Cash rebates are the most popular reward programs. If you hope to accumulate enough cash back to make a major purchase, redemptions could be deposited into a special account until you reach your goal. Some frequent flyer programs allow miles to be transferred to another account making it easier to reach a free travel goal.

Credit card churning needs to be used with caution and isn’t for everyone. While perfectly legal, some credit card issuers have put measures in place to make the practice more difficult. Read all terms and conditions so you understand how each reward program works.

Author Bio: Noreen Ruth writes for a credit blog at and several other popular finance websites. She is interested in educating consumers about using credit responsibly and spreading information on legislative action that will affect their ability to borrow the money they need. She has contributed hundreds of articles to various online sites that provide content on saving money, reward credit cards, debt services, loans and other finance related topics.

Automate Your Savings for Free

Do I sound a little crazy here? Maybe. There is a free app out there called Digit, which enables you to easily automate your savings by analyzing your purchases and income. It saves where you think you can't and does it all for you, for free! I save over $400 a month by doing nothing! Check out my Digit review here.
Guest Author

Guest Author

This is a guest writer that has provided their article to Debt RoundUp. We do not endorse any guest writer or their work. We only provide the platform for them to share their ideas and opinions about personal finance. You may check out their website or blog for more information or to ask them any questions you may have. If you would like to become a contributor on Debt RoundUp, please checkout the guidelines.


  1. October 18, 2013 at 6:04 am — Reply

    I haven’t gotten into the churning game, mostly because I’m worried about taking a hit on my credit report when we’d like to buy a house within the next few years. The risk-reward just isn’t worth it to me. But I am willing to get a new card when it can offer better overall benefits than what I currently have. The other thing I worry about with churning is the potential tendency for people to spend more money just to get the rewards, which seems like a dangerous spiral to me.

    • October 23, 2013 at 9:46 am — Reply

      I understand the concept of churning, but I don’t participate in it. I also do not need to take any hits on my credit since we are working on buying a home next year.

      If you aren’t good with credit cards in the first place or have a problem spending more with credit, then churning would not work.

  2. October 18, 2013 at 6:33 am — Reply

    Great info, Noreen, thank you! We have yet to delve into the world of CC churning, but do think about it as we watch others score huge freebies that way.

    • October 23, 2013 at 9:46 am — Reply

      I would certainly wait until you were out of debt Laurie, but I am sure you already know this!

  3. October 18, 2013 at 7:13 am — Reply

    Good steps. I’ve opened around 5-6 different credit cards in the past 6 years and have never seen a drop on my credit store and have never missed a payment. All I’ve done is reap the rewards, which can be really quite significant!

    • October 23, 2013 at 9:47 am — Reply

      Good to hear about your experience with churning. Thanks for the comment.

  4. October 18, 2013 at 9:04 am — Reply

    I haven’t done any sort of credit card churning, but I might have to hold off because I might need to take out an auto loan sometime in the near future (we have two aging cars). I would obviously like to take advantage of these rewards and I hope I can sooner rather than later.

    • October 23, 2013 at 9:47 am — Reply

      I would also wait DC. The loan is probably more important than getting some rewards.

  5. October 18, 2013 at 10:18 am — Reply

    I haven’t done any CC churning and probably won’t. I know financially responsible people can benefit from this practice. I simply don’t want to put in the effort to open accounts and switch things around constantly in order to earn some minimal rewards. Essentially it comes down to a time and management issue for me.

    • October 23, 2013 at 9:48 am — Reply

      I can certainly understand your position Brian. It makes sense to me. Churning credit cards is not for everyone.

  6. Romona @Monasez
    October 18, 2013 at 1:04 pm — Reply

    Great information.I never heard of churning before. Guess I learned something new today.

    • October 23, 2013 at 9:48 am — Reply

      Glad we could teach you something new today Romona.

  7. October 18, 2013 at 6:25 pm — Reply

    I never thought of it as “churning” before, but it does make sense. I probably get three offers per day for cash-back cards, 0% interest cards, etc. But like Matt, I’ve always been afraid that taking advantage of too many offers might trash my credit score, so I’ve just stuck to my two. It looks like you’ve got it down to a science, though!

    • October 23, 2013 at 9:49 am — Reply

      I would just take the best offer that you have and take that. You don’t have to jump into churning, but you should take advantage of the rewards if you are responsible with credit.

  8. October 18, 2013 at 11:06 pm — Reply

    It’s good to close cards you never plan on using again so long as they are the new cards and not the old cards. I now when I churn try to close an older card a couple of months before I’m ready to do the new card. It seems to work and I never get dinged on my rating.

    • October 23, 2013 at 9:50 am — Reply

      Thanks for the tip Tara. I agree with you. I wouldn’t close an old account that has history, but if it is a churning account, then you could close it with minimal affect.

  9. October 20, 2013 at 8:23 pm — Reply

    Credit card churning is beyond my capabilities at the moment. Even if I could, the idea seems a little sketchy to me. There are too many ways to screw up and end up with egg on my face. While I love the “work the system” feel of it, I remain suspicious. Kudos to all who can make it work though!

    • October 23, 2013 at 9:51 am — Reply

      You have to be really responsible with the credit card and that is the only way it works. If you think you might not pay the balance in full, then churning wouldn’t work.

  10. October 21, 2013 at 12:12 am — Reply

    I’m a huge fan of credit card churning. In Canada, there definitely are less opportunities for it, but I take them where I can!

  11. October 21, 2013 at 7:16 pm — Reply

    I have been looking into this concept for travel hacking and have been leary. Thanks for sharing information that would help ease my mind as I experiment with this idea. I appreciate most the tip on only opening one new card a year or waiting for longer terms on rewards. I know that applying for multiple card can affect credit score, but this way seems like it will reduce the effect at least! Thanks!!

    • October 22, 2013 at 12:36 pm — Reply

      Thanks for stopping by Karla. If you do this correctly, you won’t hurt your credit score and can get some good rewards. Good luck with it!

  12. October 22, 2013 at 6:50 pm — Reply

    The key to credit card churning would have to be managing your finances in a responsible manner. I would worry about people getting in over their heads, though. I just wrote a blog about quick cash lenders and how dangerous they can be for irresponsible borrowers. One of my sources indicated that people also frequently take out multiple loans, at multiple different “quick cash” locations, (similar to card churning) with disastrous results.  Many times they are robbing Peter to pay Paul, and since those types of lenders don’t check a borrower’s credit history, many times people find themselves overextended. You would really have to be on your game to make the above work in your favor.

    • October 24, 2013 at 2:51 pm — Reply

      Churning credit cards only works if you can handle your finances. You should NOT do this if you carry credit card debt or don’t pay off your balance in full each month. This reward system is not for you.

  13. October 22, 2013 at 8:08 pm — Reply

    A minimum of six months between applications should be enough to protect your credit score, unless you make the big mistake of carrying debt on the new accounts. It requires a commitment to strictly follow a schedule to prevent incurring interest or annual fees.

    • October 23, 2013 at 9:52 am — Reply

      I agree Noreen. Thank you again for providing this article.

Leave a reply

Your email address will not be published. Required fields are marked *