What Is Credit Card Churning?
Credit card churning is a financial strategy that involves opening multiple credit cards to repeatedly earn sign-up bonuses, such as cash rewards, travel points, or airline miles. While this can be profitable for some, it carries notable risks.
How It Works
Churners apply for several new credit cards within a short period to collect generous welcome bonuses. After meeting the spending requirements to earn those rewards, they often cancel or downgrade the cards before annual fees are charged.
Potential Rewards
- Bonus miles that reduce travel costs
- Points redeemable for purchases or cash
- Cash back for meeting initial spending thresholds
Risks and Drawbacks
Although this method can yield hundreds or thousands of dollars in value, it is not without consequences. Frequent credit applications may harm a person’s credit score and increase the likelihood of rejected applications or account closures by issuers.
“While this can yield hundreds or even thousands of dollars in rewards, it carries significant risks including potential credit score damage and account closures.”
Key Takeaway
Credit card churning can be profitable for disciplined users but risky for most, as it involves strategic timing, financial literacy, and careful management to avoid long-term credit harm.
Author’s summary: Credit card churning offers attractive short-term rewards, but repeated applications and cancellations often lead to lower credit scores and lost financial stability.