Credit card churning is a practice that involves repeatedly opening and closing credit cards to take advantage of sign-up bonuses. By churning, you can earn significant rewards, including points, miles, and cash back. However, it’s important to approach churning responsibly to avoid damaging credit scores.

How Churning Works:

To churn a credit card, you apply for a new one that offers an attractive sign-up bonus. Check out the cards page to get an idea of what’s out there. Typically, these bonuses require spending a specific amount within a certain period, such as “$1000 within the first three months.” Once you meet the spending requirement, you receive the bonus. After a year or so, you close the card and re-open it under a different account to benefit from another sign-up offer.

Benefits of Churning:

• Earn Free Rewards: Signup bonuses can range from a few hundred dollars to several thousand points or miles, allowing you to indulge in travel upgrades, gift cards, or cash back.
• Flexible Travel: Churning points and miles can provide flexible travel options, as you can redeem them for flights, hotels, and other travel-related expenses.
• Build Credit History: Churning can contribute to a stronger credit history, as responsible card usage demonstrates to lenders that you manage credit well.

But watch out! There are some Risks to Churning:

• Credit Score Impacts: Opening and closing credit cards frequently can initially negatively impact your credit score due to hard inquiries and average age of accounts. In my experience, opening a card gives my account a temporary ding since there was a hard credit inquiry. After some time, the hard inquiry falls off and I am rewarded with a high credit limit and therefore lower overall credit utilization.
• Annual Fees: Some credit cards charge annual fees. If the benefits do not outweigh the fees, churning may not be financially advantageous. Pick the card that is right for you where the benefits outweigh the fee.
• Potential Debt: Churning involves spending to meet minimum requirements. It’s crucial to avoid debt accumulation by paying off balances in full within the grace period. DO NOT GET INTO DEBT FOR THE SAKE OF CHURNING A CARD. It goes against the spirit of churning. We’re do this for free things, not to be shackled by additional debt.

Responsible Churning:

To churn responsibly, focus on cards with valuable sign-up bonuses that align with your spending habits. Only apply for cards you can afford to use and manage responsibly. Monitor your credit score regularly and avoid excessive inquiries within a short period. Furthermore, research card terms and conditions thoroughly to avoid any surprises down the line.

Take a look at the cards section to find out which card is right for you.