Credit Card Churning and Why It's Not Worth It

By Amy Lu. Last updated 23 April 2017. 5 comments

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If you know about credit card rewards, you may have heard about the wild things people do to accumulate them. One of these tricks is called churning, where people sign up for dozens of credit cards just to get the sign up bonuses. Is it worth it? Most likely the answer for you would be no. Here's why.

Your Credit Score Will Take a Hit 

Each credit card that you apply for is a hard inquiry. That makes lenders suspicious and will lower your credit score. You never know when your score might affect you that you weren't prepared for. If you have to rent an apartment, buy a car, or get insurance earlier than expected, all those rewards you got can't help a dime. (See also: Surprising Ways Bad Credit Can Hurt You)

You Can End Up Paying Interest for Your Rewards

All the bonuses come with a condition: that you spend a certain amount of money within a specific time frame. You might be tempted to go on a shopping spree to fulfill those requirements, and end up biting off more than you can chew. If you leave a balance and pay interest, all those rewards would never cover that cost.

You Can End Up Paying a Lot of Annual Fees

The more rewards a card offers, the more likely there's an annual fee. Many cards might waive the first year, but then the second year rolls around and you'll be automatically charged the fee. 

A Lot of Points Might Go to Waste

Not all cards offer the same type of travel rewards. Different cards have different relationships with various airlines and hotels. You might end up wasting a lot of points if you can't get all of them to one airline to make the ticket purchase or hotel stay. Also, different airlines have different conditions for using points for travel -- there could be blackout dates or limited award seats. You might find that the dream vacation you were hoping to land for free isn't even available, regardless of the number of points you have.

There Are New Rules Designed to Curb Churning

Issuers have recently implemented new rules on sign up bonuses, that blocks people who had previously already gotten a bonus from them from getting them again. Signing up, cashing in, cancelling, and then signing up again is no longer an option. That means that the amount of rewards you can get have dropped significantly, and you might end up getting a credit card where you don't qualify for the sign up bonus.

What Are You Going to Do With All Those Cards?

Cancelling cards is going to ding your credit, so what are you going to do with all those cards after you've cashed out the bonuses? 

The best way to earn rewards is through everyday spending -- go ahead and sign up for the best travel rewards card, use it on the spending that you would normally do, and with some patience, you will get your dream vacation.

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Credit Card Churning and Why It's Not Worth It

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Guest's picture

And here I thought I had too many cards open and should not get a new one that offers $100 cash! Here comes another card for me! I think we have 3 or 4 cards, use only one regularly, but have enjoyed the blessings because we pay them off every single month, only buy what we've saved up for already, and have an excellent credit score. (Although I was jealous of my hubby's score in the low 800's while mine was a paltry 7 points behind his -- yeah, I'm a bit competitive! lol) But, if they want to offer it to me, why shouldn't I enjoy the benefits?

Guest's picture

This sounds like a serious game of strategy in which the stakes are very high. Just using a credit card safely and effectively is difficult for a lot of people, this seems like a post just for the pros. You are assuming a lot of risk if you don't have iron willpower.

Guest's picture

I'm intrigued. I currently have credit card debt, but I'm paying that off and will be done by summer. I use another credit card that doesn't have much in the way of rewards that I put about $200 on each month and pay off quickly. I think I could be a good churner.

Guest's picture

I'm not a frequent traveler but I usually take a vacation requiring flight once a year. More often than not I am finding that miles aren't what they used to be. Unless you are willing to be very flexible on departure/arrival dates it is often hard to get the trip you want. Twice in the past year I tried to book trips in non-peak times but would have had to move either the departure or arrival by as much as 3 or 4 days to get the flights, which wasn't possible in either case as we had set times for our accommodations, or deal with overnight layovers. From now on I will probably pay for the economy ticket and reserve miles for upgrades to first class on longer trips.

Guest's picture

Nothing wrong with it, if you know what your doing. I do the occasional credit card for the large bonus if its worth the while, and only if my regular bills/spending will help hit the required spending minimums. I do not go out of my way to reach those spending limits or anything. This is not for the weak or faint hearted, yes its not worth racking up a balance and paying interest, because it most cases it will negate any rewards.