What Is Credit Card Churning?

Written By
Julija A.
July 06,2023

Credit cards can have a bad reputation. If, for whatever reason, you don’t keep up with your monthly payments, or you build up a high amount of credit, you risk finding yourself spiraling into more and more debt.

However, credit cards can also have certain benefits, provided that you use them wisely. Credit card churning is a practice some people engage in to take advantage of the various signup offers and bonuses that come with new credit cards, and can be a way to boost your finances. From air miles to cash back, there are a whole lot of rewards to be earned when you open a brand new credit card.

Learn all about credit card churning, what it involves, and how you can benefit from it. We’ll also detail the potential risks to help you avoid harming your finances.

How Does Credit Card Churning Work?

Many credit card issuers will offer some kind of reward for opening a new card. Some of the most common types of rewards are air miles, points, gift cards, travel perks, or cash back offers to spend on everyday purchases, at restaurants, hotels, online retailers, and so forth.

To qualify for these bonuses, the user will typically have to meet a minimum spending requirement during the introductory period. Users will open a new credit card to benefit from the rewards, then close the account as soon as they qualify, clearing all of the debt balance as they do so.

Most people will open multiple credit cards at once, and then proceed to fulfill the requirements for the signup offers and use them. After doing that and closing the accounts, they will then be able to make other applications for other credit cards with rewards and bonuses.

Introductory offers come with some strict criteria, and usually require users to make purchases to qualify for the rewards. Cash or balance transfers won’t be accepted in the minimum spending requirement.

However, it’s not just money-savvy individuals who know about credit churning. The credit card issuers are well aware of the practice, too, and many have taken steps to prevent people from taking advantage of the deals they provide.

For example, some issuers, like Chase, put blocks in place to reject those who have opened more than five accounts in the last two years. This is known as the Chase 5/24 rule.

Other credit card issuers may only let individuals benefit from one signup bonus during their lifetime, so it wouldn’t be worthwhile to sign up with that provider again.

Pros and Cons of Credit Card Churning

Free money always sounds tempting, but there are some drawbacks to credit card churning, too.

Benefits of Credit Card Churning

  • You get the chance to earn some great rewards - air miles, points, gift cards, or vouchers, for example.
  • No interest to pay if you pay your balances on time.
  • You’ll be able to stop using your cards and close your accounts when you want, provided you’ve paid your statement balances.
  • Showing effective management of your credit cards can help you improve your credit score.

Drawbacks of Credit Card Churning

  • You face having your cards canceled by the issuer - a measure that could include associated accounts or cards, too.
  • Your welcome offer could be withdrawn if the issuer suspects you’re playing the game.
  • You could also be refused a credit card for the same reason.
  • Applying for multiple credit card accounts impacts your credit rating, as each application temporarily affects your score.
  • If you can’t afford to pay your balances, you risk getting into considerable debt.
  • Many cards come with annual and other fees, which could impact the value of your bonuses. 

It’s important that you research credit card churning and specific card offers in detail before you go ahead with your applications. You’ll need to be secure in your financial situation and ensure you have a plan for paying back your spending straight away.

How To Take Advantage of Credit Card Bonuses 

If you think you’re ready to try to churn credit cards, these are the steps to help you succeed.

Research Credit Card Offers

This is where you’ll spend time looking for suitable offers from credit card companies. Offers change regularly, so make sure you’re taking advantage of the most up-to-date ones. A search for signup bonus credit cards can help you find the pick of the best deals.

Make Your Applications

Experienced credit card churners limit their applications to two or three at a time. They will then leave it several months before making any other applications.

Keep in mind that multiple applications will negatively impact your credit score. If you’re applying for a mortgage or other loans at the same time, you could end up getting rejected because of your reduced score.

Pay Close Attention to Fees

A significant number of credit card providers charge an annual fee, especially those that have an introductory offer. Some companies may only charge the fee after a certain period has passed, so you’ll need to make sure you cancel the card before the set date arrives. However, this could also potentially make you lose the reward or points you’ve worked towards.

It’s vital to read the terms and conditions carefully before you sign up for any reward offer, making sure that any fees you pay don’t outweigh the reward you get.

To get the most from your credit card churn, always check the fine print. That way, you’ll ensure you fully understand what you’re signing up for.

Pay Your Balances on Time

This is imperative since late payments can have grave and far-reaching consequences for your credit rating, impacting the rates you could receive for a mortgage, loan, or future credit cards. Most credit card churners try to pay their purchases off immediately, choosing to use their cards for items they can afford or were planning to buy anyway.

Clearing your balances at the end of the promotional period will help you get the most value out of your churn.

Keep Track of Your Activity

If you want to become successful at churning, you’ll need to be well organized and keep track of all of your credit card activities. Keep a record of important details such as the date you opened the account, the dates any payments are due, and when the promotional period ends. You’ll also want to track your spending so that you can stop when you’ve reached the minimum for the spending requirement.

You should also track the progress of your reward. If you don’t receive the reward within the indicated time frame, contact the issuer to investigate. One of the downsides of churning is that you may end up being rejected for some of the deals, which can affect where you stand financially and turn the whole undertaking into a waste of time.

Conclusion - What Makes a Good Churner?

Successful churners are those who have a good credit rating, are savvy with money and good with numbers, and don’t rely on a credit card for spending. If you’re able to make large purchases that you can pay off quickly, then churning could be a way for you to benefit from a credit card financially.

If you’re not great at budgeting or have existing debts, then churning isn’t the answer for you as you stand to end up with more debt than you started with, with further damage to your credit rating.

Credit card churning is a tempting way to earn some bonuses - provided that you know how to find a good deal. A lot of people churning credit cards juggle them in this way to enjoy the benefits and take advantage of offers in quick succession.

If you understand the risks and are in a strong financial position, then churning could be the right move for you.


Is credit card churning illegal?


Credit card churning isn’t illegal, but it is frowned upon by credit card issuers. Many have clamped down on those who open a lot of credit accounts and withdraw offers after a successful application.

Why do credit card customers churn?


Credit card customers churn to take advantage of the various offers and rewards that are available when they register for a new card. Everyone enjoys getting a gift, and if you’re able to benefit from air miles, cash back, vouchers, points, and more, it could be an excellent way to make some extra money through loyalty programs.

Is credit card churning ethical?


While it may be controversial, using credit cards for churning is mainly seen as unethical by the credit companies themselves. The answer to this question depends on where your own ethical values lie.

What is bank churning?


Bank churning is similar to credit card churning, but instead of signing up to credit card offers, bank churners sign up for the introductory offers provided by banks in exchange for switching or making that account your primary account.

This can be harder to do than credit card churning because there are fewer banks to choose from, and it can be difficult to move your scheduled payments around frequently.

About author

Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.

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