Credit Card Churning: Some Call It Clever, Others Say Too Risky

Today we have a guest post written By Ms. LLC, a new personal finance blogger from Lovely Life Cents.

Credit cards are a part of life that most people can never avoid. All too often, you’ll hear about someone who’s strapped with credit card debt. Bloggers (like me) tell you all about potential solutions to combat this problem ranging from curbing your spending, snowballing multiple forms of debt, or prioritizing high-interest debt.

Each of these is a solution meant to fix a problem caused by one thing: spending (oftentimes irresponsibly).

What if I told you there was a credit card trick that didn’t involve tightening your belt and tucking away your credit cards? In fact, this trick requires the exact opposite. It requires you to spend.

I’m talking about credit card churning. Depending on who you ask, it’s either a great idea or an awful one.

What Is Credit Card Churning?

Credit card churning involves opening up a new credit card with an introductory rewards deal. Then, you spend until you reap that rewards bonus. Once you’ve gotten the bonus, you close out the card before you have to pay an annual fee.

In most cases, you can try churning with more than one card at a time for multiple bonuses.

In other words, you’re trying to game the introductory bonus system that companies tack onto their credit cards.

At the end of the day, you’ll end up with a bill for whatever you spent, but you’ll also have a sizable chunk of rewards that amounts to anywhere from $100 to $500. It’s a game that can be rewarding. However, the game can also cause a few problems.


Credit card churning: Some Call It Clever, Others Say Too Risky

The Risks

Um, You Gotta Pay It Back

There are several risks associated with credit card churning,.Let’s start with the obvious.

In order to qualify for an introductory bonus, you need to spend anywhere from $500 to $3,000 or even $5,000. Typically, that spending minimum must be met within three months. This is a pretty steep spending quota.

All that money you spent is now a debt that requires repayment. Unless you’re a pay-as-you-go credit card holder, you’ll need to roll over the balance at least once. That means you may have to pay interest on a high credit card balance.

Furthermore, if the rewards card has an annual fee, then you’ll be pressed to pay the balance off before the fee is due. That probably gives you a year. Otherwise, you’ll end up with another big expense.Keep in mind that some people do this with multiple cards.

Keep in mind that some people do this with multiple cards. That can mean big balances to pay.

Your Credit Score

There are several factors that impact your credit score, and card churning can mess with several of them.

For starters, applying for a card usually incites a hard credit pull which almost always drops your credit score by a few points. Multiple cards will amount to more than a few points. That’s just the beginning.

If you open up and use multiple cards, then you’re going to alter your credit utilization ratio significantly.  For a good credit scores, you want to keep the ratio of credit to credit used below 30 to 40 percent. If you’re running up balances and closing cards, it can be hard to maintain a good ratio.

Finally, with more bills to keep track of and pay, you could end up missing payments as a result of credit card churning.

Missing payments and credit utilization are the two things that have the highest impacts on your credit score. 


Earlier, I mentioned that a lot of credit card problems stem from spending. Right now, credit card churning looks like just one big problem.

By now, I’ve probably convinced you to be completely against credit card churning.

After all, what’s the point in spending $5,000 in three months just to earn back $500? You’re down $4,500 when you could be even and consumer debt-free.

For a lot of people, credit card churning can be really risky, especially if you’re prone to not being responsible with your credit cards. You can really mess up churning and put yourself in a hole.

Ah, but for others, credit card rewards can be…rewarding. With responsible and clever credit card use, you can capitalize on the rewards system in a great way.

How to Be a Clever Credit Card Churner

The key to responsible and clever credit card usage and churning is….don’t use credit cards on extras.

Only spend what you need to spend, regardless of how much credit you have.

Method 1:

If you have a large expected expense coming up, then churning could be an excellent way to get yourself a discount.

Let’s say you’re going to renovate the bathroom for the lovely cost of $4,000.

Right before you start the project, you could open up a rewards credit card and spend for the bonus. Let’s say the minimum is $3,000 for a $600 reward. Spending only your budgeted amount for the project, you’re guaranteed to reach the bonus. You would have spent the money with or without the card. Now, you’ll receive a nice discount or rebate on your home renovation project.

Boom! There’s a great way to churn without challenging yourself to spend a ton of extra money.

Let the spending incentivize you to pick up a credit card instead of allowing the credit card incentivize you to spend.

Hardcore credit card churners might not view this as legit “churning.” Some of them might qualify hunting for the rewards program as the true way to churn rather than waiting for a big expense to come up. However, I don’t care! You’re still opening a card up for the expected rewards bonus, and you’ll hopefully be closing it out before any fees arrive.

Method 2:

But say you don’t have any big expenses coming up. you can still churn responsibly without spending extra money.

Just put all of your regular expenses on credit cards and then pay them off each month. 

Electrical bill? Pay it with your credit card. Groceries? Swipe. Gas? Punch that credit button instead of debit.

Okay, there’s a temptation here to overspend your budget. Using this method requires you to carefully track your expenses and charges. When you put the charge on the card, consider the money already gone, just like you would if you’d used your debit card or cash

You may even want to make payments on the card more frequently than just on the statement date.

Using your cards for everyday purchases won’t be as easy as having a few large purchases. You may need to check the cardholder agreement to make sure that some expenses count, especially if you use the card for autopay transactions. You will also need to track the amounts you’ve spent on each card carefully to make sure you get all your bonuses, especially if you’re using multiple cards.

That said, consider churning one card at a time to make your bonus spending easier to track.

Worth the Risk?

Credit card churning can be (ahem) rewarding. By opening and using new cards, you can end up with cash rebates, airline miles, hotel stays, and other benefits that you just can’t get using the same old card all the time.

The more cards you open, the more opportunities you have to enjoy those rewards.

Just use those cards responsibly.

Don’t spend extra money just because you have more credit. Don’t charge more than you can pay. And pay off those cards as quickly as you can.

Otherwise, you’ll end up paying far more in interest and fees than you’ll ever get in rewards.

Do you churn credit cards? What’s your best advice for credit card churning? What are the best cards to churn?

Or have you gotten into debt by churning cards? Do you have some credit card churning pitfalls to avoid? 


14 Responses to “Credit Card Churning: Some Call It Clever, Others Say Too Risky”
    • Emily Jividen 11/06/2017
  1. Mrs. Picky Pincher 11/02/2017
    • Emily Jividen 11/06/2017
  2. Jax 11/02/2017
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  3. FullTimeFinance 11/02/2017
    • Emily Jividen 11/06/2017
  4. Ms99to1percent 11/02/2017
    • Emily Jividen 11/06/2017
    • Emily Jividen 11/06/2017
  5. Mr. JumpStart 11/02/2017
    • Emily Jividen 11/06/2017

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