What is Credit Card Churning?

Published May 2021
For some, earning rewards through churning is an attractive option. For others, frequent credit applications may mean lower credit scores and credit card debt.

Key Points

  • Credit card churning is the opening of new credit cards to secure lucrative rewards and bonus deals during the promotional period.
  • Credit card churning can hurt your credit scores and limit your credit options.
  • Credit card churning can also land you in credit card debt.

Credit Card Churning Definition: Credit card churning is the practice of hunting for credit card rewards and bonuses and opening several new credit cards to take advantage of the best deals. Having secured the rewards, the credit card “churner” closes the cards, often before incurring the annual fees.

Successful credit card churners can earn free flights, vacations, holiday accommodation, and cash this way.

Credit card issuers frown upon the practice, seeing it as a way to game the system. 

Here’s a look at how credit card churning works, its pros and cons, what it takes to successfully churn credit cards, and how the practice impacts credit scores. 

How Credit Card Churning Works 

The theory behind credit card churning is simple. Find good promotional deals, sign up for them, redeem them by fulfilling the requirements, and quit using/close the credit cards. 

In practice, credit card churning is an effort-intensive undertaking requiring outstanding research, constant monitoring, and some creativity. 

  • The first step is to find two or more good promotional deals. A “good” deal means an attractive reward/bonus in the currency of your preference (points, frequent flyer miles, cash-back, etc.). The rewards should also come with advantageous terms, such as the lack of a requirement to keep the cards open after you secure the bonuses, promotional annual fees, etc.
  • Once churners have found a few attractive deals, they apply for the credit cards. Churners apply for several cards at once, or they space out their applications to cover a few months.
  • They secure the rewards by fulfilling the spending requirements.
  •  Churners cancel the cards before they incur an annual fee, or stop using them.
  • They repeat the process over and over. 

Credit Card Debt and the Pros and Cons of Credit Card Churning 

Credit card churning seems like an attractive proposition for some credit card holders because: 

  • It allows them to grab more rewards than any single credit card ever would.
  • The promotional terms make it possible for churners to earn rewards much faster than they could on a “normal” credit card.
  • Credit card churners enjoy the freedom of canceling the card after they earn the bonus. This way, they do not get stuck with a card that may feature a subpar reward system for everyday spending. 

Credit card issuers have caught on to the practice and taken steps to make it more difficult for churners to game the system. 

  • To limit credit card churning, some credit card issuers have instituted limits on how many credit cards you can open within a given period. Other measures include the limiting of bonuses to one per user per lifetime or one bonus per credit card.
  • If churners cannot afford the spending requirements, they risk landing in credit card debt. If your churning attempts have landed you in debt trouble, seek credit card relief now. Contact a ClearOne Certified Debt Specialist to find out what options you have.
  • Although some credit card issuers waive annual fees as part of their promotional offers, such fees may put a significant dent in the rewards/bonuses.
  • The repeated applications for credit cards may negatively impact credit scores.
  • Applying frequently for credit may also increase your chances of being turned down. 
  • Do not increase your spending to fulfill your reward/bonus requirements. Such an approach is often a path to serious debt. Seek credit card relief as soon as possible if you are in trouble. 

The Impact of Churning on your Credit Scores and Credit Card Debt 

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Credit card churning is a risky financial move. If you miss a few details here and there, you could find yourself in credit card debt in the blink of an eye. Churning also impacts your credit scores. 

There are five factors that make up your credit score. According to Experian, your payment history accounts for 35% of your score, followed by the amount you owe at 30%, the length of your credit history at 15%, new credit at 10%, and the types of credit you have at 10%.

Credit card churning can negatively impact your credit score in the following ways:

  • It affects your credit utilization ratio, which falls into the category of “Amounts Owed.” Churning can make your utilization ratio go down, but if you fail to make your payments on time, it can also sink you into debt.
  • If you forget to pay a bill on time, churning can upend your payment history, which accounts for 35% of your credit score.
  • Closing credit cards can affect your credit utilization and the average age of your accounts, which impacts the “New Credit” category of your credit score.
  • Lenders may also consider frequent credit card applications as a sign of financial distress. 

If you have tried your hand at credit card churning and find yourself struggling with credit card debt, we can help. Contact a ClearOne Advantage Certified Debt Specialist at 866-481-1597 to learn what your credit card relief options are and get a free savings estimate today.

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Topics: Credit Card Debt