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What is credit card churning?

Last Updated: January 11, 2024
4 min read

Key points about: risks of churning credit cards

  1. Credit card churning happens when a person opens multiple credit card accounts solely to get welcome and sign-up bonuses.

  2. Credit card churning can have a serious impact on your credit score and can lead to excess credit card debt.

  3. The best alternative to credit card churning would be to choose a card with rewards that fits your spending habits, and to use that card responsibly.

Credit card churning is the practice of opening and closing new credit card accounts just to get sign-up bonuses and rewards. Credit card churners sign up for multiple new credit cards at once, meet the minimum spending requirements to get a sign-up bonus, and then cancel the card before getting any fees. While credit card churning may seem like a good way to get more rewards, credit card churners risk hurting their credit scores and may rack up tons of avoidable debt.

Did you know?

A better way to maximize your credit card rewards is to find a card that fits your current spending habits and use that card responsibly.

How does credit card churning work?

Credit card churning happens when a person applies for lots of credit cards to collect big sign-up and welcome bonuses (often in the form of cash back or miles). Once they get the sign-up rewards and bonuses, a credit card churner will usually stop using the cards or cancel them, only to repeat the process again.

People who credit card churn want to rack up a high number of miles or cash back points in a short period. And although this tactic can seem rewarding, credit card churning can have long-term consequences.

Juggling multiple cards and due dates can increase the chance of missed payments and overspending. Not only that, credit card churning is also becoming harder to do, with many credit card companies putting rules in place to limit it.

How does credit card churning impact your credit?

Credit card churning means more hard inquiries

Credit card churning can have a huge impact on your credit score for many reasons. For one, each credit card application usually requires a hard inquiry. Whenever you apply for a credit card orloan, the lender will typically check your credit score to determine if you’re a good person to lend to (your creditworthiness). Credit bureaus record these checks on your credit report as hard inquiries, and inquiries may stay on your report for up to two years. Hard inquiries on your credit report may lower your score by a few points.

If you open several new credit card accounts within a short period of time (like credit churners do), it can result in multiple hard credit checks, which can impact your score.

Credit card churning hurts your credit utilization ratio

Credit churning can also hurt your credit utilization ratio. Your credit utilization ratio is the amount of credit you’re using compared to the total amount of credit that you have available.  When you open multiple credit card accounts, you increase your available credit. However, each credit card issuer may tie its welcome bonus to a minimum spending requirement. That means a credit card churner may end up with substantial credit card debt. The spending can cause your credit utilization ratio to spike. Since your credit usage makes up 30% of your credit score, your score may take a hit in the process.

Credit card churning lowers the average age of your accounts

Credit card churning can also have an impact on the average age of your accounts, which will go down as you close credit card accounts. Credit reporting agencies look at older credit accounts positively when determining your credit score. If you keep opening and closing credit card accounts, you may shorten the average length of your credit history, which can lower your credit score.

Is credit card churning worth it?

Credit card churning may seem like a good way to take advantage of credit card sign-up bonuses and rewards and earn extra perks like cash back or reward points, but there are several reasons why this strategy is not worth it in the long run.

Credit card churning may make it harder to get credit in the future

As previously mentioned, churning credit cards can seriously hurt your credit, which may make it harder for lenders to approve you for new credit in the future, or for you to qualify for the best credit card options available. If you plan to buy a new car or home in the future, credit churning activity may make that more difficult.

Credit card churning may result in more interest and fees

Not only that, but credit card churning can also be time-consuming and risky. You need to keep track of multiple credit cards, each annual fee, their reward programs, and their due dates to avoid late fees and interest charges. You also need to make sure you meet the minimum spending requirements to qualify for sign-up bonuses. If you don’t manage your cards properly, you may end up paying more in fees and interest charges than you earn in rewards.

Credit card churning can lead to excess debt

A credit card churner may end up with substantial credit card debt. To meet the minimum spending requirement for sign-up bonuses, you may feel tempted to spend more money than you can afford, which can lead to more credit card debt than you can handle. Plus, having multiple credit cards can make it harder to keep track of your spending and budget effectively.

Is there an alternative to credit card churning?

Credit card churning may seem like a good way to earn rewards and bonuses, but it comes with many downsides. Instead of focusing on short-term gains like signup bonus points, it’s better to choose cards that offer rewards and benefits that align with your spending habits and financial goals. 

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