Credit Cards

Why You Shouldn’t Be Loyal To Your Rewards Credit Card

credit card rewardsMost of us carry just a couple of cards in our wallet to earn rewards. It feels good. You spend like you normally do and can earn hundreds of dollars a year in travel or cash rewards. And with a couple of cards you can probably take advantage of the bonuses on spending categories like 3% on groceries or 2% on dining that some cards offer.  The Discover it card currently has a rotating category list that earns 5%!

What if you could earn 5%, 10%, or more in reward value on all of your spending throughout the year? That could earn you thousands of dollars a year in rewards.  You can also earn thousands of miles in order to travel.

How can you do it?

Churning Credit Cards

By ditching your loyalty and being ready to try a different rewards credit card every few months.  This tactic is called credit card churning.  You can only do this if you are responsible with your money.

Here’s how it can work: Most rewards cards offer a generous bonus when you sign up as a new card holder and meet a certain spending requirement. For example, there are often miles credit card offers of 50,000 miles or more to start. Let’s say a card’s offer requires you spend $3,000 in 3 months to earn 40,000 miles, enough for $400 in travel. That means the first $3,000 you spend on the card gets you a greater than 13% reward rate ($400 in rewards / $3,000 in spending).

Once you’ve met that requirement, consider applying for a different card with its own bonus offer and spending to meet that offer’s requirement for the next few months. You’ll earn another few hundred dollars in rewards and boost your reward rate well above the 1%, 2%, or 3% most rewards cards offer on their own. There are lots of offers in the marketplace, and banks are always launching new credit cards, so you could hop from one card to another throughout the year, earning thousands of dollars in rewards.

This isn’t for everyone by any means.

You’ll need to have an excellent credit history, and need to be able to handle a small hit to your score of about 5 points for each card application. The good news is, the credit score impact of each application disappears one year after the application. But if you’re applying for a mortgage soon, don’t try this out. Wait until after you’ve been approved. You’ll also need to be a disciplined spender. Don’t buy things you wouldn’t otherwise just to hit a bonus offer requirement. It’s not worth it. And make sure you pay your rewards card in full every month. Interest charges can more than offset any value you get from rewards.

You’ll also need to be organized. It’s okay to have many accounts open. The credit line on them shows you can responsibly manage credit if you leave them untouched. But many cards carry an annual fee. So if you end up not wanting to keep a card, make sure you set a reminder before the annual fee is due so you can cancel and avoid the fee. And your rewards will be scattered in several programs. So you’ll want to keep the logins for each of those programs in a spreadsheet so you actually use the rewards when you’re ready. You can get started slowly. Try just a couple of new cards during the year. That alone will earn you hundreds of dollars in extra rewards you wouldn’t have otherwise enjoyed if you stuck to just one card.

Anytime I write about credit cards, I have to throw this warning in. Though I write about debt, I also understand the power of credit card rewards. I used to be in credit card debt, but now I know how to use my cards responsibly. I pay off my balance every month and don’t spend more than I would on my debit card. If you have problems handling money, DO NOT churn credit cards.

Photo via Images_of_Money

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Grayson Bell

Grayson Bell

I'm a business owner, blogger, father, and husband. I used credit cards too much and found myself in over $75,000 in debt ($50,000 in just credit cards). I paid it off, started this blog, and my financial life has changed. I now talk about fighting debt and growing wealth here. I run a WordPress maintenance and support company, along with another blog. It is Empowered Shopper, which helps people get information about products they want to buy. You can also check out Eyes on the Dollar, which is a great blog that I co-own.


  1. Lindsey @ Cents
    February 12, 2014 at 5:20 pm — Reply

    I think this is definitely worth considering as a good option if you have good spending habits and are organized enough to keep track of everything. I’m not there yet, personally, but I like the idea of being able to take advantage of the bonus offers. Out of curiosity, how long have you been credit card churning? Have you encountered any negative reactions from the companies themselves?

    • February 13, 2014 at 1:59 pm — Reply

      I haven’t been churning for that long, but I haven’t seen any issues with the companies. They know people do it, but they get their money from people that don’t pay their bills on time.

  2. La Tejana @ Debt Free Tejana
    February 12, 2014 at 9:38 pm — Reply

    I recently got a second credit card because of the points for signing up (it got me a free flight- yay!). And I’ve been thinking a little bit about “gaming the system” with cards but it makes me a little uneasy. Do you keep the cards? If not, when do you cancel them?

    • February 13, 2014 at 2:00 pm — Reply

      Hey Tejana. I keep the cards if they are still good cards. The cards that give you the best rewards have annual fees, so you can cancel them before the promo period is up if they have one.

  3. February 13, 2014 at 11:29 am — Reply

    That staying organized point is spot on. We’ve gotten more serious with our churning and I need to have a spreadsheet to keep track of everything – the amount we need to spend, annual fees, etc. otherwise I’m sure I’d miss something along the way.

    • February 13, 2014 at 2:01 pm — Reply

      So true. Google docs works really well for that. You can then access it from anywhere on your phone!

  4. February 13, 2014 at 11:43 am — Reply

    Haven’t gotten into this. Maybe someday. The bonus money is certainly nice.

    • February 13, 2014 at 2:01 pm — Reply

      I am technically a newbie Matt, but it isn’t so bad. I have a high credit score, so I can easily get the cards and it doesn’t affect my score. I don’t be doing too many this year as I want to get a good mortgage rate.

  5. February 13, 2014 at 4:38 pm — Reply

    I currently keep a Platinum Delta Skymiles Amex only because the free buddy pass and the free checked bags I get annually more than covers the cost of the $150 annual fee. Plus, since I use Amazon Payments, I can easily get the 10,000 bonus miles at the end of the year. But if it weren’t for the actual tangible bonuses that I get from this card, I would cancel it in a heartbeat.

    • February 14, 2014 at 4:06 pm — Reply

      That makes sense to me Tara. I would probably do the same thing.

  6. March 19, 2014 at 11:19 pm — Reply

    This sounds like a pretty good idea although it would be a little more work opening and closing accounts. It sounds like the rewards could outweigh the risks. What affect would doing this have on your credit score though?

    • March 19, 2014 at 11:26 pm — Reply

      It doesn’t take much to open and close accounts. Opening credit card accounts can drop your score by a few points. You don’t want to do this if your score is on the edge of different levels like excellent and good, or good and fair.

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