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What Is Credit Card Churning, and Should You Try It?
December 11, 2024
Credit cards often come with lucrative introductory offers. These offers can enable you to earn hundreds of dollars in cash back or rewards points per year.
To take advantage of multiple offers per year, you can use a technique called credit card churning.
But a big problem is deciding on the best credit cards to apply for. There are thousands of different credit cards available.
And while credit card churning promises some great benefits, there are some risks associated with it, too.
Thankfully, Kudos can help you easily search through over 1,300 credit cards to find the best one for your situation.
Keep reading to find out exactly what credit card churning is, how it works, and how to find the best credit cards for churning.
We’ll also explain the main pros and cons of credit card churning so that you can decide if it’s worth trying.
What is credit card churning?
Credit card churning is the action of opening new credit cards to take advantage of sign-up bonuses and other benefits. Then, once you’ve taken full advantage of the bonus, you cancel the card and repeat.
In some cases, you can credit card churn with the same card multiple times — although it’s more common to churn a card once and then move on to another.
The average American has four credit cards open at any given time. If you only have one credit card in your wallet that you’ve been using for years, chances are you’re missing out on free rewards.
Unfortunately, credit card companies tend to reward only new customers, not loyal, long-term ones. So you’ll need to adjust your strategy to take advantage of the benefits that come with credit card churning.
What are the pros and cons of credit card churning?
While credit card churning can have great benefits, it also has some drawbacks to be aware of before you try it for yourself.
Pros of credit card churning
Earn extra cash back, points, and other bonuses faster
Credit card churning can potentially earn you thousands of dollars per year in rewards. All from purchases that you would’ve made anyway.
Take advantage of 0% introductory offers
If you’re currently carrying debt on another high-interest credit card, you can open a new card that comes with a 0% introductory offer. Then, you can transfer your credit card balance from your old card to the new one. Doing this might save you from paying hundreds of dollars in interest.
Annual fees are often waived for the first year
Many of the cards that offer the best rewards and bonuses also come with annual fees. However, a lot of them waive their fees for the first year. So, you can take advantage of everything the card has to offer and then cancel before you have to start paying a fee.
Cons of credit card churning
It can negatively affect your credit score
Your credit report and credit history are based on a range of complex factors.
Credit card churning can temporarily lower your credit score based on your number of new credit card applications and credit inquiries, credit utilization ratio, and credit mix.
It also lowers the average age of your credit card accounts, which negatively impacts your credit score as well.
Banks have caught on to credit card churning and have rules to prevent it
Some card issuers, like American Express, have lifetime limits on the bonuses that you can earn. So, they can only be claimed once per person.
That’s why it’s important to always read the terms and conditions before you apply for a new credit card to churn. Check to see if there’s a penalty for canceling within the first year or any other limitations.
Card issuers can claw back rewards
If credit card issuers feel that you’ve violated their rules or are trying to take advantage of the system, they can take rewards back from you.
For example, if you buy something just to earn the rewards points or hit your minimum spending requirement and then return the item, most credit cards will reverse the points from that transaction.
Some cards also don’t allow their rewards to be used to purchase gift cards.
How to start credit card churning (step-by-step)
The process of credit card churning is straightforward.
Find one or more new credit cards with offers that you find attractive.
1. Find one or more new credit cards with offers that you find attractive.
2. Apply for the card (making sure to read all of the terms and conditions carefully).
3. Meet the minimum spending requirements to earn your bonuses.
4. Stop using the card once you’ve met your spending requirements, and cancel it before being charged annual fees.
5. Repeat the process for additional cards.
And, of course, you need to be sure that you’re making payments on time throughout the entire process. Otherwise, your credit score will decrease.
How to find the best credit cards for churning
Kudos’ Explore Cards feature helps you easily find the best credit cards for your situation.
It’s great for finding credit cards for churning as well as credit cards that you’ll want to hold on to for years to come.
You’ll be able to see the potential earnings you’ll get from each card easily.
Kudos also outlines which cashback categories offer the most benefit for each card and more.
You can filter cards by categories like travel, dining, online shopping, grocery stores, and cash stations. Whatever you tend to spend the most money on each month, Kudos will help you sort through the cards and find one that’s perfect for your needs.
You can choose to see only cards that have no annual fee or ones that offer a 0% introductory APR.
If you don’t have a perfect credit report, that’s no problem; you can still find a card that you qualify for based on your current credit score.
You can even use Kudos’ Explore Cards feature to find cards that are specifically tailored for either personal or business use.
Should you try credit card churning?
Looking at the risks and caveats, you might be wondering if credit card churning is worth it.
In our opinion, yes, it is — as long as you do it in limited amounts and remain responsible about it.
We recommend starting off small and only opening one or two credit cards per year initially to get the hang of it.
Or, open one card for each type of everyday spending that you do — for example, one credit card that gives you bonuses on groceries and another for buying gas.
Credit card churning probably isn’t right for you if:
- You’re planning to apply for a mortgage or line of credit in the near future since churning can impact your credit score.
- You aren’t organized enough to keep track of dates and fee schedules.
- You can’t afford the spending requirements to take full advantage of bonus offers within their time limit. Credit card churning is about earning yourself extra money on things that you would’ve bought anyway. Don’t make additional purchases just to earn rewards.
- You have a history of problems with credit cards, such as credit card debt and financial distress.
- If a card’s annual fees will outweigh the benefits you’ll gain.
There’s also a risk you could harm your relationship with your bank if you take credit card churning too far.
In some extreme cases, banks have cracked down — even closing people’s checking and savings accounts.
While there’s nothing illegal about what credit card churners do, some banks frown upon it as a way of gaming the system.
You can think of credit card churning in the same way that a casino will eventually kick you out for counting cards to tip the odds in your favor at a Blackjack table.
Credit card companies are in the business of earning money and therefore don’t want customers who are costing them. So, if you push your credit card churning too far, they may end up cutting you off.
If you’re going to try credit card churning:
- Set a specific goal, like earning enough travel points to pay for a trip.
- Start small, and don’t apply for multiple cards at once.
- Be sure to understand all of the terms and conditions that you’re agreeing to.
Ready to find your next credit card?
Credit card churning is a great way to take advantage of the appealing introductory offers that many credit card companies offer.
By making effective use of credit card churning, you can potentially earn yourself thousands of dollars in rewards, cash back, airline miles, and loyalty points per year.
However, credit card churning comes with some drawbacks.
For example, you’ll want to avoid credit card churning if you plan to apply for a mortgage or large loan in the near future, as it can negatively impact your credit score.
If you’re ready to start credit card churning, check out Kudos’ Explore Cards feature and find the perfect credit cards for your situation.
Once you have your cards, let Kudos pick the best one every time you shop online. It’s free! Just download the plugin, and Kudos will autofill the best card for each purchase you make.
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Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
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