What Is Credit Card Churning? And Should You Take Part?


When you think of the word “churning,” what’s the first word that comes to mind? For me, it was “butter.” As in butter churn.

But in the payment world there’s a newer and certainly riskier version, known as “credit card churning.” And it’s got nothing to do with butter.

In fact, it has a lot more to do with cheese than anything else. Or bread, if I must continue to deliver bad money puns…

That’s right – the art of credit card churning was cultivated to make money without really lifting a finger.

All that is necessary is typing (filling in credit card applications) and swiping (spending on said credit cards).

What Is Credit Card Churning?

In short, credit card churning is the act of opening and closing credit card accounts frequently to take advantage of various promotions.

For example, a sign-up bonus that earns a large amount of points or miles in exchange for spending a certain amount.

If the consumer meets the credit card minimum spend within the timeframe allowed, they earn the bonus.

Some refer to it as “app-o-rama” because you apply for a handful of credit cards all at once every few months.  Then rinse and repeat.

Some churners literally apply for 4-5 credit cards in a day to get them all approved before their credit reports begin to look really, really suspect.

As a rule of thumb, it’s recommended to start with what you think will be the most difficult approval.

And then move backwards to the easier approvals (assuming you want to open a bunch of credit cards at once).

Earning Big Bonuses, Over and Over Again

A savvy consumer can earn thousands of dollars worth of points or miles annually via credit card churning.

This is mainly due to the ridiculously large bonuses offered by credit card issuers these days.

For example, Amex Platinum is offering 125,000 Membership Rewards if you spend $6,000 in the first six months of card membership.

Those points might be valued at about two cents each, per TPG valuations.

But in reality, they can be worth a whole lot more if transferred to an airline partner.

In that case, you might be looking at a value of 10 cents per point if you redeem for a business class flight.

And all one has to do is apply for the card, shift their normal spending from their old card(s) to the new card, meet the spending requirement, earn the bonus, and move on.

Applying for Multiple Versions of One Credit Card

Hardcore churners will open multiple versions of the card, .

For example, there are four different version of Chase Ink.

At last glance, there’s Ink Business Premier, Ink Business Unlimited, Ink Business Cash, and Ink Business Preferred.

They offer anywhere from 90,000 to 100,000 Chase Ultimate Rewards points currently.

You can imagine someone opening several and earning a few hundred thousand points.

The same can be accomplished with personal and business versions of a credit card.

Such as the the Amex Platinum and The Business Platinum Card.

Maximizing the Bonus Categories to Earn Even More

To make it even sweeter, credit card churners will increase spending in bonus categories.

For example, some Chase Ink cards offer 5X at office supply stores.

A savvy credit cardholder could maximize their point accrual by spending as much as possible in that category.

So if they need to spend $6,000 to earn the 90,000-point bonus, they may do most of that spending at say Staples.

If maximized, they could earn 120,000 points on one card. That’s enough to fly most places business class (or even first class)!

If the card has an annual fee, typically they can avoid paying it the second year by closing the card before it’s due.

But before they close it, they’ll either redeem the points, transfer them to a different card, or transfer them to a partner loyalty program.

That way they’re safe even if their credit card is no longer in existence.

In the process, the savvy cardholder gets a decent chunk of cash (or travel rewards).

And the card issuer just spins their wheels, thinking they’ve acquired a new credit card customer (though they still earn interchange fees in the process).

Aggressive credit card churners will close their cards, wait X amount of months, and then apply for the very same card to get the bonus again.

Some card issuers have restrictions on this, but others don’t, and even if there is a restriction, it might only be for 24 months since you last received the bonus.

You Can Earn Free Airline Flights and Hotel Stays

The most common example of credit card churning involves travel rewards credit cards.

Say an airline offers 100,000 bonus miles if you sign up for their card and spend “X” amount.

The Citi AAdvantage Executive World Elite MasterCard offers 50,000 American Airlines miles after you make $5,000 in purchases within three months of account opening.

If you meet their spending requirement, you might earn yourself a first-class roundtrip flight to Europe on their dime, or many free trips across the country.

The really good churners fly first class across the world and stay at the finest five star hotels at no cost to them. Thanks Hyatt.

The possibilities are endless really, depending on what credit card issuers are willing to offer.

Tip: If you want to churn successfully, make sure you don’t carry a balance on any of your credit cards.

Zero balances on existing cards will up your chances of getting approved for subsequent credit cards, even if you apply for stacks and stacks of new cards constantly.

Downsides to Credit Card Churning

While it might sound like a great idea, or even a second job or side hustle, credit card churning does have plenty of downsides.

For one, it requires you to open lots of new credit card accounts.

Every time you apply for a credit card, you’ll be hit with a credit inquiry.

These remain on your credit report for two years.

And they can lower your credit score, especially if you rack up a ton of them in a short period of time.

Inquiries are particularly harmful if present on your credit report when applying for other more important loans.

For example, an auto loan or a mortgage.

Do you really want a $200 cash back bonus to put your home purchase in jeopardy?

Secondly, each time you successfully open a new credit card, the average age of your accounts is shortened.

If your credit history is full of recently-opened accounts, your credit score will drop.

Many of these bonus offers and deals also require you to spend a lot of money.

If you’re not careful, you could spend beyond your means.

Or frivolously ring up purchases to meet the spending requirements. Kind of reminds me of the movie Brewster’s Millions.

Hey, it’s great to earn cash back, but not by spending more money than you normally spend. That kind of defeats the purpose, right?

Issuers Have Cracked Down on Credit Card Churning

Lastly, you may find that your churning dreams will be dashed in no time at all if credit card issuers catch on.

If they see that your credit history is full of open and closed credit card accounts, they may be quick to deny your application.

In fact, Chase has already introduced the so-called 5/24 rule.

It automatically denies you if you’ve already opened five new personal credit cards in the past two years. That should stop most churners in their tracks.

American Express also recently imposed a once-in-a-lifetime bonus.

It applies to both consumer cards and business cards.

Citi also doesn’t offer bonus points to those who received a bonus in the past 24 months. Or if they closed a Citi card in the past 24 months.

At this point, most card issuers have restrictions in place.

This has made the credit card churning game all the more difficult.

But if you’re new to the game, you can still take advantage of tons of different offers.

The only thing that’s required is more (and better) planning before you get started.

If you want to make the most of credit card rewards, apply sparingly and only when a deal is too good to pass up. Otherwise you might just cost yourself money in the process.

If you’re intent on credit card churning, make sure you do your research first. And a lot of it.

There are a lot of unwritten rules to the game that you should be aware of before you go head-to-head with the credit card issuers. And they change daily.

(photo: Brian Boucheron)

By Colin Robertson

Colin created this blog after spending several years in a job that required him to scour credit reports on a daily basis. His goal is to help individuals better understand their credit and get the most out of credit cards.

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