What Is Credit Card Churning?

What Is Credit Card Churning?

Are you looking to maximize your credit card rewards and earn the most points, miles, or cash back possible? If so, you may be interested in the practice of credit card churning. Credit card churning is a strategy that involves opening multiple credit cards, meeting their signup bonus requirements, and then closing them before any annual fees kick in. This allows you to earn a significant amount of rewards without paying hefty fees.

What is Credit Card Churning?

Credit card churning is a method of maximizing credit card rewards by opening and closing accounts to earn sign-up bonuses repeatedly. The term "churning" comes from the idea of churning butter, which involves taking cream and stirring it until it separates into butter and buttermilk. Similarly, credit card churning involves taking advantage of credit card offers, earning rewards, and then moving on to the next offer.

How Does Credit Card Churning Work?

Credit card churning involves several steps. First, you need to find credit cards that offer attractive signup bonuses. These bonuses can range from cashback rewards to travel points. Once you've found a card you're interested in, you'll need to apply for it and meet the requirements to earn the bonus.

Typically, credit card issuers require you to spend a certain amount of money within a specific timeframe to earn the bonus. For example, a card may offer a $500 cash back bonus if you spend $3,000 within the first three months of opening the account. Once you've met the spending requirement and received your bonus, you can move on to the next credit card offer.

It's essential to keep track of which cards you've opened and when you need to close them to avoid paying any annual fees. Some credit card issuers require you to keep an account open for a specific amount of time to earn the bonus, so make sure you understand the terms and conditions before signing up.

Check out the pros and cons of credit card churning in this blog post.