When I first heard about credit card churning, I thought it was completely irresponsible. Isn’t it bad for your credit score? Aren’t you taking advantage of the promotions? But after my first free hotel stay, I started to come around to the idea. Not only can it increase your credit score, but credit card churning can also allow you to travel in ways you never thought possible. Even when I got started churning I never thought I’d be “good” enough at it to get to fly Singapore Suites or go on a honeymoon worth tens of thousands of dollars. Surprisingly, credit card churning is a lot easier than you would think. Here’s exactly what you need to know about credit card churning for beginners.
What is Credit Card Churning?
In a few words, credit card churning is opening credit cards for the sign-up bonus. Usually, you have to spend between $1,000-$5,000+ in three months to get x number of bonus points or miles. Once you earn the bonus on one credit card, you move on to another card, rinse, and repeat. On most credit cards, you can earn the sign-up bonus a second, third, or even more times. There is typically a waiting period between when you can re-open the card but the bread and butter of credit card churning is repeatedly earning the bonus on the same cards.
Follow these steps and you’ll be credit card churning in no time!
Step 1: Review the Rules
As credit card churning has become more popular, banks and credit card issuers have added rules and restrictions. Start by reviewing this set of rules and restrictions by bank to see what cards you may or may not be eligible for. For example, if you received a sign-up bonus on an Amex card in the past, you won’t be eligible to receive it again.
Step 2: Choose credit cards strategically
I always recommend starting with Chase credit cards since they offer the best portfolio of credit cards. If you reviewed the rules in step 1, you’ll have read about the Chase 5/24 rule. The rule states that if you’ve opened five or more credit cards at any bank in the past 24 months, you won’t be eligible for Chase cards. Figure out your 5/24 status and then select which card you want to apply for. It’s a good idea to form a strategy for which cards to open. I outline my full credit card strategy in-depth here.
Also, sign-up bonuses tend to fluctuate. For example, you would not want to sign up for a Southwest card through Chase when the bonus is only 40,000 miles because a few months later, they may be offering 60,000 miles (perfect for earning the Southwest Companion Pass!). If you know you definitely need miles or points for an upcoming trip, go ahead and apply, but if deals are lower than they’ve been in the past, it may be better to wait .
Step 3: Don’t Open Too Many Credit Cards at a Time
When forming your strategy using the tips in step 2, check this list of best travel credit cards to find the best sign-up bonuses. However, when signing up for credit cards, be cognizant of spending requirements. Never open a new card if you will be buying things you don’t need just to hit the requirement (believe me, it can be tempting…).
Step 4: Keep track of dates
When you start opening credit cards, it’s extremely important to stay organized. Make a spreadsheet of all your credit card accounts. You’re going to want to keep track of the following dates:
- When you opened the card
- When you need to hit the spending requirement by
- When you received your bonus
- When an annual fee is due
- When you closed the account
Step 5: Pay your credit card bills in full every month
Always pay in full each month. Credit card companies bank on people paying interest and fees. Any benefit from credit card churning will be negated if you’re racking up debt. This is one of the most important considerations before you decide to start churning.
Checking your report will help you monitor how you are doing and allow you to verify that the information is accurate. Credit reports can be requested from each of the following agencies:
- Equifax
- Experian
- TransUnion
In addition to requesting official reports, you can sign up for Credit Karma to easily view your TransUnion and Equifax reports at any point during the year. You can also sign up for Experian to have a full picture of your credit history. This will allow you to check for potential errors and monitor which credit bureau is pulled by each company when applying for new credit cards.
Step 6: Close or downgrade your credit card
Credit card churning can have a negative impact on credit if you are not careful. First off, never cancel the credit card you’ve had the longest. Length of credit history is an important part of your credit score but luckily it’s easy to avoid messing this part up! Other things to consider: closing a card will decrease your total available credit (i.e., you will have a higher credit utilization rate). You may wish to downgrade the card to a no-fee option instead of closing it to avoid this. Doctor of Credit created a comprehensive list of downgrade options by credit card issuer.
If you need to cancel, try to get a retention bonus by calling the bank. American Express is well known for offering retention bonuses. When I called to close my Amex Platinum, I was offered 30,000 points to keep it open! Also, be aware of annual fees. You can call and try to have these waived. Capital One has been known to waive annual fees in the past. Lastly, for points like Chase Ultimate Rewards points or Amex Membership Rewards points, be sure to spend or transfer points before closing the account. This doesn’t apply to airline or hotel credit cards. Once you earn those points and they appear in your account, they are safe.
Final Thoughts
Collecting miles and points through credit card churning is a great way to travel for less. If you are organized, pick credit cards strategically, and pay your credit card bills in full, you’ll be able to enjoy these perks! I hope this guide for credit card churning for beginners was useful. Check out our full list of resources for more on how to get started and post any questions in the comment section!
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