What Is Credit Card Churning?
Credit card churning is a technique to repeatedly earn sign-up bonuses by opening multiple credit card accounts. Although it can provide rewards like bonus miles, points, or cash back, this approach involves certain risks.
How Credit Card Churning Works
Credit card companies often offer substantial bonuses to attract new customers. While many people might think they already have enough cards, churners ask themselves how many new accounts they can open within a year. Churning involves applying for multiple credit cards to collect welcome bonuses, then canceling or downgrading them before annual fees are charged.
Potential Rewards
- Bonus miles making vacations cheaper
- Points to reduce new purchases
- Cash back rewards
Risks to Consider
- Damage to credit scores
- Denied credit card applications
- Closure of existing accounts
Credit card churning is when an individual opens multiple new credit cards to earn lucrative sign-up bonuses, such as cash rewards, travel points, or airline miles. Unlike ordinary rewards card use, where the goal is to build credit and benefit from ongoing perks, churning depends on constantly opening and closing accounts to maximize sign-up bonuses and offset travel costs or earn cash-equivalent rewards.
While churning can yield hundreds or even thousands of dollars in rewards, it is important to weigh the benefits against the potential harm to your credit health and future applications.
Summary
Credit card churning is a reward-focused strategy of opening and closing multiple cards, offering high bonuses but posing risks like credit score impact and account denial.