What Is Credit Card Churning?
Credit card churning is a strategy that involves repeatedly opening new credit cards to earn sign-up bonuses. While this can provide substantial rewards like bonus miles, points, or cash back, it also carries risks.
How Credit Card Churning Works
Credit card companies often offer large bonuses to attract new customers. Instead of sticking with one or a few cards, churners open many accounts in a year to maximize these bonuses. They typically cancel or downgrade cards before annual fees are charged to avoid costs.
Benefits of Churning
- Bonus miles that reduce travel expenses.
- Thousands of points that can offset purchases.
- Cash rewards directly earned from sign-up offers.
Risks and Considerations
- Possible damage to your credit score.
- Increased chances of denied credit applications.
- Potential account closures by credit card issuers.
Credit card churners ask, “How many accounts are too many to open this year?” instead of declining new cards due to having enough already.
Unlike regular rewards card use, where users aim to build credit and enjoy ongoing benefits, churning focuses on repeatedly opening and closing accounts to collect initial bonuses and reduce travel costs or earn cash-equivalent rewards.
Summary: Credit card churning can yield significant bonuses but entails notable risks, requiring careful management to avoid harming credit and facing application refusals.
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