Surely you have seen the ads and commercials with attractive celebrities promising high rewards with credit cards. They ask you what’s in your wallet, and tell you that, with a specific credit card, you’ll always be earning. But are you, really? When it comes you credit card churning, you can be.
Every time one of these commercials comes on, you are likely wondering if you should utilize the opportunity to sign up for the incredible promotional offer they are peddling. Some people even go a bit further than just signing up for the card. Instead, they sign up for multiple cards, treating these introductory offers as a great method to earn a bit of a bonus on their typical spending. This is the basic premise of credit card churning, the entire focus for this website, and for this credit chard churning guide for 2023.
Below, we dig into the basics of credit card churning, what you need to get started, and determining if it is worth it to start based on your current financial situation.
- The Basis of Credit Card Churning
- Is Credit Card Churning Legal?
- But How Does Credit Card Churning Work?
- Know When To Start, Know When To Stop
- What You Need To Start Churning: Credit Score
- What You Need To Start Churning: Income to Pay Off Balances
- What You Need To Start Churning: Organizational Skills
- What You Need To Start Churning: An Understanding of the Marketplace
- Getting To The Point: Is Churning Worth It?
- Time To Get In The Game
The Basis of Credit Card Churning
Some credit cards offer users double points or double miles for the first few months after signup. Other credit cards extend the bonuses for upwards of a year. Even more, some others will utilize a pure cash back incentive in the form of a statement credit. However, most travel-related credit cards offer some kind of large bonus after spending a specific amount during an introductory period. Every credit card is different.
Note: For more information about cash back vs travel rewards, check out this guide.
This is where knowing how credit card churning works comes into play. Credit card churning is, in its simplest possible form:
The skill (we consider it an art, let’s be honest) of signing up for credit cards, utilizing the introductory offer by maxing out the extent of what the card offers. Once the introductory offer has been exhausted, you stop using the card at a high volume, and then move on to another card offering a different signup bonus.
The process then repeats.
Is Credit Card Churning Legal?
There is no hard rule or illegality associated with the act of credit card churning. In fact, credit card companies are hoping to entice you with these offers. Of course, the goal of these large-scale signup bonuses is that you stay with the card after the initial bonus has been rewarded. However, there is no rule that says you have to continue using the card at such a volume.
In fact, if you are willing to put in the time, planning, and effort into maxing out the offer and then moving along to the next card, credit card churning can be an extremely lucrative method to earn free (or close to free) travel all over the globe, among other reward opportunities. Heck, most of the 47+ Hilton properties I have stayed at over the past few years have been a direct result of churning.
But How Does Credit Card Churning Work?
Taking advantage of credit card churning can be thought of as similar to maxing out a company 401k match. Assume, for example, the company you work for offers a 401k match, and that match is up to 6% What this means is that, for every dollar you put into your 401k up to 6% of your paycheck before taxes, your employer will match it. Congrats, free money!
Now, if the employer has a promotion where they offer to bump their match up to 10% for three months, and you stay at the 6%, you are not “gaming the system”. However, if you also increase your 401k contributions to 10% to take advantage of the match, then bump it back down to 6%, you are performing a task similar to credit card churning. It’s all about the timing of promotions and bonuses based on offers provided. Nothing more, nothing less.
Know When To Start, Know When To Stop
New credit card offers come around constantly. Heck, check your physical mail! Bonuses are added, introduced, stopped, and downgraded all the time. If you are looking to make the most effective possible impact with your credit card offer selections, it will take extensive research. That’s where I come in to assist with that process and make it more effective for you.
No offer is permanent, and existing offers are discontinued at will. Credit card churning requires you to remain at the top of your game, and be well prepared to pounce on strong offers when they come up. Conversely, it’s also crucial to know when it’s best to abandon or ignore offers that may not be in your best interest.
Most Effective Credit Cards for Churning in 2023
What You Need To Start Churning: Credit Score
Sure, the concept of low-cost (or free) travel, or taking advantage of an extensive points system likely sounds enticing. However, before, you step out and start signing up for handfuls of credit card offers, expecting to start crisscrossing the globe, it’s important to take a few minutes to get accustomed to the process of credit card churning. Some things to consider include:
- How the credit card rewards systems work
- What you need to get started credit card churning
- How long you are going to need to keep at the process
- Whether you have the resources available to properly take advantage of these offers
- If the “juice will be worth the squeeze” in the long run
- What your credit score is and how it can be affected
Credit Score Levels Required To Churn
To start, you are going to need a strong credit score to truly enter the credit card churning game. The FICO scale runs from a score of 300 to a score of 850. If your score is under 700, you are going to need to work on bringing that credit score up before you can contemplate taking advantage of the stellar offers that credit card churning provides.
Even if you have a FICO score of 700, there are pitfalls to keep an eye on that can result in minor dings to your credit rating and credit score as a result of churning mishaps (they do happen). For this reason, having a score of close to 750 or above would be what we would consider the minimum entry-level to get started in credit card churning.
Also to note is that you may have “different” credit scores based on where you check. At the time of writing this, my own personal credit score(s) were:
- 752 via the FICO score available through Citi found here.
- 787 via the TransUnion Vantage Score through American Express found here.
- 786 via Equifax VantageScore 3.0 through Credit Karma found here.
If you’re looking for a strong resource for increasing your credit score, I have one right here at Credit Card Churning: How To Improve Credit Score: The Ultimate Guide.
But Why Such High Credit Scores?
Many of the most effective and impactful introductory credit card offers are only offered by higher-end credit cards requiring pretty good credit scores. While you might be able to qualify for a decent enough credit card with a credit score of 650, you will likely not be accepted by the types of cards offering the introductory offers that make credit card churning a worthwhile endeavor.
Another reason you are going to want a strong credit score is the entire purpose of churning. You apply for a bevy of credit cards over time, max out the introductory offer, then close (or our recommendation, significantly decrease spend on) the account and apply for another.
Note: Two of the factors that comprise your credit score are the number of accounts and the average age of the account. Most credit card account closures would be detrimental to these numbers.
10 percent of your FICO score is determined by the number of “hard pulls”. A hard pull is when a credit card company pulls your credit history to determine your creditworthiness. For each card issued, and in many cases for applications denied, it can bite away at your credit score with small nibbles of 10 to 15 points here and there.
You’ll need that extra buffer built into your credit score to absorb these little hits from playing the game. That “fair/good” borderline score of 700 may dip low enough to hurt your access to the higher-end plastic.
What You Need To Start Churning: Income to Pay Off Balances
Freely disposable income is another requirement, along with a higher credit score, to make the most of your opportunities for credit card churning. After all, what good is having access to better deals if you can’t take proper advantage of them without detrimental effects on your income?
If you are approved for a card that has “double points” for the first 90 days (always with the caveat of a maximum), you want to be able to spend that maximum right away. Spend less and you don’t get the full benefit. Take longer and you don’t get the full benefit. So, you need to be able to jump on these deals when you are approved.
However, the bill will always come due. If you don’t have the capacity to pay off these balances in full as soon as the introductory offer ends, you risk being “stuck” with a card, or worse, paying exorbitantly high penalty interest fees. Paying higher fees will bite into the profits you are working to earn, thereby eliminating all your progress and possibly costing you money rather than saving you money.
As another negative side effect, failing to pay off your balances on time every time will be detrimental to your credit score, as on-time payments are one of the largest factors that weigh into the score. In fact, per Experian themselves, it is the most heavily-weighted factor.
What You Need To Start Churning: Organizational Skills
An excellent credit score and fluid cash flow will only get you into the game of credit card churning. If you want to stay afloat in the credit card churning system, and if you want to excel at it, earning yourself the maximum benefits without getting caught off guard and exposing yourself to costly risks, you will need to spend something more valuable than your money. You’ll have to spend plenty of your time.
Having good organization skills, tight money management abilities, the willingness to do constant research, and a rich understanding of the credit system are some of the tools you will need to make the rewards all worth the effort. Pro tip? Become extremely proficient at using spreadsheets.
Well-honed organization skills can’t be overstated. If you’re the type being approved for higher-end credit cards and you’re prepared to spend your money and immediately pay off the balances, you’re most likely the type of person with good organization skills.
You need to have a system of paying your bills on time, avoiding paying any late fees, and in general being responsible for your money. If you don’t have AutoPay set up on the credit cards you already have, get familiar with this concept.
Some people rely on late notices and grace periods to pay their bills. This won’t work here and is poor personal financial planning anyways. One late payment and the penalty interest rate puts everything you’ve worked for in this entire credit card churning endeavor at risk.
Know When To Push On, And When To Pull Back
Money management isn’t always just about paying your bills on time. Sometimes, it’s knowing when to pull the trigger and when to pull back. Credit card debt can be dangerous and financially crippling. Playing games with your money can be rewarding but those rewards can be almost too enticing and addicting.
Knowing when to jump at that delicious offer and when you need to let it pass you by can be an expensive lesson if you come up on the short end of that equation. Show restraint, and recognize that spending freely can be habit forming and you need to take a break when the lure draws you out of your comfort zone.
What You Need To Start Churning: An Understanding of the Marketplace
Knowing the rules of the game before you jump in isn’t enough. You have to stay up to date with rule changes and market updates. Credit card issuers may change long-standing offers at any moment. New issuers eager to draw in customers may offer an amazing short-time deal.
Understand the Rules, Regulations, and the Market
You’ll need to keep abreast of all these offers in order to pounce on the ones that will give you the best returns and abandon the ones that you have already drained of their usefulness.
Alongside the offers, you’ll need to keep track of your cards, their offer expiration deadlines, your progress toward maxing out the offer, and even your own credit card churning progress as dated and deadlines may impact when you can move forward with additional cards.
Understand What Credit Card Companies Think of YOU
Some credit card issuers have begun instituting their own rules to counter credit card churners. While the act of churning is not explicitly “wrong”, it goes without saying that we are taking advantage of the better parts of a system and denying the issuers the benefits of reaping high-interest payments for these top-notch cards.
Imagine walking into a Las Vegas casino and winning a jackpot on a single pull of the first slot machine you touch. Of course, the casino wants you to stick around so the house can recover that money, but the intelligent player will walk away while they are ahead.
Unable to “make” you stay, some credit card issuing companies have implemented rules that limit their exposure to those “in the know”. Rules about how many cards you can have at one time, how many applications they will process in a given period of time, and other limiting factors that keep credit card churners at bay while still being able to offer these benefits to the casual customer.
As a credit card churner, you must be aware of these rules and their constant updates to maximize your profits without jeopardizing your rewards. One of the most common examples of this is Chase’s 5/24 rule.
Getting To The Point: Is Churning Worth It?
You came here to find out the answer, is credit card churning worth it? After reading this article, you know exactly what I’m about to say. Yes, it is worth it, but only IF you are financially capable AND willingly dedicated to putting in the effort to make the rewards worth the effort.
Having the resources is certainly a prime requirement. Without an excellent credit score, even attempting to churn credit cards will most likely be less than fruitful for you. Mediocre cards just don’t have that enticing of offers you need to make all this worth it.
Looking for some additional resources? Check these out:
- Manufactured Spending: A Comprehensive Guide For 2023
- Potential Credit Card Churning Risks For 2023 and Beyond
- How To Improve Credit Score: The Ultimate Guide For 2023
- What is Credit Card Churning? The Ultimate Guide For 2023
- About Churning: Learning To Travel For Free In 2023
- Credit Card Churning Pros and Cons: Our Take For 2023
You need a spectacular credit score to be issued the cards that offer the very creme-de-la-creme of deals. Target the cards with double cashback, extended introductory offers, 50,000 points if you spend $1000/month for three months, the list goes on.
All these amazing offers just aren’t available to you with less than a superlative credit score. Not to mention the disappointment of falling out of the approval bracket with a few hard pulls on your report.
Plenty of cash on hand is another minimum entry hurdle that could decide the “worth” of credit card churning. Let’s choose the example from above, and say you spent $1000/month for three months and received your 50,000 points toward your reward goal.
Now you have a $3,000 balance coming due. If you don’t have the means to immediately pay off this debt, your entire gambit was for nothing. Paying down a credit card can be near impossible with the penalty interest rates. Additionally, high outstanding credit-rated against available credit will also cut your credit score, and possibly impact your future card applications.
You must be prepared to spend the money, reap the rewards, and then pay off the card before moving on to the next step. Being hit with the insane interest rates common in this space negate the credit card rewards that you worked hard to obtain.
Time To Get In The Game
With an exceptional credit score and free cash flow, you are in the game. Staying in and making this all pay off will come down to your effort and abilities. Will you dedicate the time and energy necessary to keep on top of all the moving pieces in your credit card churning empire?
More cards mean more points of failure. More issuing credit card companies mean more rules, regulations, and procedures you’ll need to stay aware of.
Years ago there was a surge in the popularity of “radical couponing” where consumers made the most out of the store and manufacturer coupon tools that were available to them. Some of these shoppers went so far as to make spreadsheets, organize them into folders, and do nearly constant research into which store and which products would maximize their efforts.
Credit card churning is very similar to this experience. You will get out of it what you put into it. The casual spender won’t get much out of churning, but if you’re capable and willing, credit card churning can be highly rewarding.