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What is Credit Card Churning? How to do it for Frequent Flyer Points

You know how expensive airfare can be if you’re a frequent traveller. But what if you could earn free flights just by signing up for credit cards?

Credit card churning is the practice of applying for multiple credit cards in order to earn the sign-up bonuses that come with them. Frequent flyer points are a popular type of reward that many credit cards offer. Churning can be an effective way to accumulate a large number of points quickly.

But what is credit card churning? And what do you need to know to do it successfully? I have experience in earning thousands of frequent flyer points through this method. In this article, I will cover:

  1. How credit card churning works
  2. Whether it is legal
  3. How to do it successfully (my tried and tested why)
  4. Types of credit cards for churning
  5. Your credit scores
  6. Application rules

How Credit Card Churning Works

To put it simply, credit card churning involves opening credit accounts purely to gain the welcome bonus and other points. After you earn points, you can close the account before you are charged a fee and repeat this process again with a new credit card. To churn means to rapidly proceed through something, so credit card churning entails opening and closing credit cards regularly.

Although some credit cards require a minimum spend to earn the sign-up bonus points, you can still accumulate a large number of frequent flyer points without actually having to spend much money.

For example, a credit card offers 50,000 frequent flyer points as a lucrative sign-up bonus if you spend $3,000 in the first 3 months. You open an account and over time, hit the spending requirement and earn the rewards points. You close the account and move on to the next one. Over the space of a year, you could earn a huge amount of frequent flyer points without ever flying.

How to Do It Successfully

To successfully churn credit cards for frequent flyer points, it’s important to do your research, read the fine print and ensure you have money to pay off your debt. It can be incredibly lucrative to spend and earn points so you have to be smart in the way you do it.

I have successfully been credit card churning for a number of years and the majority of my flights are paid for in points, which means I can enjoy travel for cheaper. Here are my top credit card churning strategy tips:

1. Research the best new cards

You will need a credit card that offers sign-up rewards points and you have to be able to afford the minimum spend. Check out my section on the types of credit cards that can be churned.

2. Read the fine print

This is an important step as you don’t want to open the card only to find out you’re not eligible.

3. Meet the minimum spend smartly

Don’t go wild and put loads of luxury items you did not need on your credit card. Be smart, use it for things you would have normally bought from your debit card and save your debit card money to pay it off. This is incredibly important, you do not want to fall into the trap of racking up credit card debt.

4. Wait for the points to hit your account

You will know if you’ve read the fine print that most cards will take 6-10 weeks to send your points after you hit the minimum spend. You do not want to close your account before you get your points.

5. Pay off the credit card

Use the money you saved from your normal bank account to now pay for the credit card spending every month.

6. Cancel the card

Once you have the points and the card is clear, cancel the card before you are charged another annual fee.

7. Check your credit scores

Do this step regularly as you do not want it to be negatively affected. Ensure it stays as a good credit score so you can always be approved for a card.

8. Apply for another bonus card

Space out your applications by at least 90 days. Every time you apply for a new introductory card, a note is added to your file.

9. Build up to multiple credit cards

Once you are able to manage one account and pay it off successfully, you could have the confidence to manage a few at a time. It is possible to be approved for multiple new credit cards at the same time.

Types of credit cards that can be churned

The most common type of credit card churning is with a bonus point offer credit card. However, there are some other cards you can churn if you are smart.

Bonus point offers

Most credit card companies offering bonus points stipulate that you must be a ‘new customer’. Read the fine print to ensure you meet the new customers requirements of each card as the rules will be different. For example, an Amex card requires you to not have had any credit card account open in the past 18 months but ANZ only stipulates you must not have held a related card in the past year.

Ensure you check the annual fee rules too. Some will offer zero annual fees for the first year, but some will require fees every year. The best bonus point option would be a credit card issuer with zero annual fees, a small minimum spend and a large bonus points offer, but this is a rare dream. Check out all elements and weigh up your risks and benefits to ensure credit card churning is worth it.

Balance transfer card

Sometimes balance transferring for 0% interest charges is referred to as credit card churning. The benefit of this is that you will get longer to pay off your debt without racking up interest charges. However, you cannot use this technique to build up frequent flyer points.

Credit card churning for cash rewards

If flying is not your main priority, it is still possible to get into card churning for cash rewards instead of points. In this case, your credit card strategy will be to research card issuers offering cash rewards as the welcome bonus, such as $400 when you spend $4,000. It is very important to make sure you can pay off the $4,000 otherwise the $400 bonus will not be worth it.

Is credit card churning illegal?

Credit card churning is not illegal. Credit card providers do not encourage it as applying for multiple cards shows you are unlikely to keep your account open with them. Some credit card providers have been making it harder for credit card churners to meet the eligibility criteria to earn rewards. This includes redefining what a ‘new customer’ is or offering a split bonus in which you have a minimum spend in both the first and second year and have to pay double the annual fee.

It is still possible to churn credit cards, you just may have to spend more in order to receive the points.

What are the risks involved?

Now I have answered what is credit card churning, let me cover the potential issues involved so you can assess if it’s worth it for you.

Of course, there are some risks and challenges associated with credit card churning. There always is with any generous rewards process, so it’s important to be aware of all risks before you decide to become a credit card churner:

  1. Credit card fees – If you’re lucky, there will be zero fees. However, most will have an annual fee that you will need to pay upfront. Calculate the value of the points to ensure it’s worth the spend on the annual fees.
  2. Increased spending overall – Credit products will require you to spend thousands before they pay you a few points. Ensure the minimum spend per month is within your normal monthly spend so you can guarantee you will have the money to pay it off.

Credit card debt – Churning cards, especially multiple cards, requires you to increase your spending. If you don’t closely manage your personal finances, it could lead to debt and financial distress.

Your credit score with card churning

A huge risk in credit card churning is affecting your credit score. As with any application, these details are added to your credit history. Churning credit cards will add further details to your history, including that you spent, earnt generous rewards and cancelled your account in a short time.

However, it is possible to positively affect your credit score. Having a good repayment history can increase your credit score and the goal of credit card churning is to pay the debt back 100%. Cancelling the cards quickly can reverse the positive score from repaying but you can keep the card open for longer to ensure it has minimal impact to your score.

Can credit card providers decline applications?

It is always possible that providers can decline your application and they rarely provide a reason, even if you have a good credit score.

A lot of people believe that getting many cards quickly will influence an issuer’s decision to decline an application. It is best practice to wait a few months before applying for another card after your last one.

The takeaway on credit card churning

In summary, credit card churning can be a powerful tool for earning frequent flyer points, but it’s important to approach it with caution and careful planning. If you’re willing to put in the time and effort to do it right and you are confident with your personal finance management, it can be a great way to earn free travel and other rewards.

To learn more about Credit Card churning, you can also listen to my podcast with @Fly_like_Ry, where we discuss frequent flyer points on episode 4. Click here to listen on Spotify.

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