Credit Card Churning is a strategy in which individuals open new credit card accounts to receive credit card sign-up bonuses and cashback rewards. The goal is to receive cashback bonus rewards.
This is also referred to as Credit Card Hacking. Sometimes the churner will close the account before the next years annual fee is going to be billed.
The process involves applying for a new credit card, meeting the minimum spending requirements to earn the bonus, and then closing the account before the annual fee is due or after the reward is received.
Effective Credit Card Churning
To engage in credit card churning effectively, it is essential to have a good credit score, as credit card issuers only offer sign-up bonuses to customers with excellent credit scores.
Organization is Important
It is a good idea to be organized and disciplined in managing your credit card accounts to ensure you meet the minimum spending requirements, pay your bills on time, and avoid accruing debt.
Credit Card Churning Benefits
The potential benefits of credit card churning include accumulating large amounts of cashback rewards, points, or miles that can be used for travel or other expenses. Personally I have received over a dozen sign up bonuses for credit cards through the years.
Additionally, it allows individuals to take advantage of new credit card offers and promotions.
Potential Churning Drawbacks
However, the practice can have drawbacks, including the risk of accruing debt, paying multiple annual fees, and damaging one's credit score if not managed correctly.
Churning Mistakes
Common mistakes to avoid when engaging in credit card churning include applying for too many credit cards at once, not meeting the minimum spending requirements, carrying a balance on the card, or missing a payment.
Churning and your Credit Score
Credit card churning can affect credit scores positively or negatively, depending on how it is managed. Applying for multiple credit cards within a short period will result in hard inquiries, which will lower credit scores.
However, maintaining a low credit utilization ratio and paying bills on time can help improve credit scores. To minimize the impact of credit card churning on credit scores, it is essential to keep credit card balances low. Also avoid opening too many accounts at once, and do not cancel credit cards with long credit histories.
My Credit Card Churning
I have generated several thousand dollars of bonus cash and Airline miles. I used to spend a lot of money on my credit cards for my business. This gave me the opportunity to benefit from applying for new credit cards with bonuses as large as $1,000 after spending $10,000 in the following three months. There is a certain extra grin I get from getting a $1,000 bonus from a Bank.
My Limits I limit new credit cards to just one or sometimes two per year.
How to get Free Travel
Most of the good Airline travel credit cards have an annual fee. They also usually have very good sign up bonuses. I signed up for a United Airlines card and received two free trips anywhere in the United States. I had to spend $3,000 in 90 daysto get those Miles. I can converted the miles to two free tickets.
With the United card I did not have to pay the annual fee until following year.
Referring Friends for Free Airline Miles
Another way I've gotten free airline miles was by referring friends to the United card. This will get them and me at least one if not two free flights anywhere in the United States.
I have gotten way more airline miles from spending on my Airline cards that I have from traveling. But I have traveled for free on many many flights.
Credit Card Churning after Retiring
I usually apply and get two new credit cards every year to harvest more credit card rewards or airline points. Now that I have retired I don't spend near as much money on my credit cards as I used to.
I signed up for one new card last year and received a $200 sign up bonus after I spent $3,000 in the following 90 days. You can buy prepaid spending cards like Amazon cards or Home Depot cards if you are short of spending the required amount for a bonus.
A little short of my Churning Goal
Once I was only about $200 short of getting my bonus on a new card. I bought four $50 Amazon cards at Staples. I ended up using a couple of those cards eventually and I gave two of them out as gifts.
Only apply for cards that offer sign-up bonuses that you can easily meet. There's no point in applying for a card with a $1,000 sign-up bonus if you can't spend the minimum required in the first three months.
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