Are you tired of using the same old credit card with no rewards and high annual fees? Have you ever heard of credit card churning? Churning is a strategy where you open and close multiple credit cards to take advantage of sign-up bonuses and rewards. When done correctly, it can lead to massive rewards, miles, and cashback.
Benefits of Credit Card Churning
Credit card churning has become a popular way to accumulate rewards quickly and efficiently. Here are some of the benefits of credit card churning:
1. Sign-up bonuses
Credit card companies offer lucrative sign-up bonuses to entice new customers. These bonuses can range from cashback to miles to points. Churning allows you to take advantage of these bonuses.
2. Maximizing rewards
By churning credit cards, you can maximize your rewards. For example, if you have a travel rewards card, you can use it to earn miles on flights. If you have a cashback card, you can use it on everyday purchases to earn cashback.
3. No annual fees
Churning allows you to avoid paying annual fees on credit cards. By closing a credit card before the annual fee is due, you can avoid the cost altogether.
How to Get Started with Credit Card Churning
Before getting started with credit card churning, there are a few things you need to consider:
1. Credit Score
Your credit score plays a vital role in credit card churning. You need to have a good credit score to qualify for credit cards with lucrative sign-up bonuses. If your credit score is low, work on improving it before getting started.
2. Income
Credit card companies want to know that you have a reliable income source before approving you for a credit card. Make sure you have a steady income before applying for credit cards.
3. Spending Habits
Churning makes sense only if you are a big spender. Credit card companies usually require you to spend a certain amount within a specified time period to qualify for the sign-up bonus. If you cannot meet the spending requirements, churning won’t be beneficial.
The Dos and Don’ts of Credit Card Churning
The Dos
1. Have a Plan
Before churning credit cards, have a plan in place. Figure out which cards you want to apply for and the rewards you want to earn. Plan your spending accordingly to meet the sign-up bonus requirements.
2. Pay Your Bills on Time
One of the most crucial things you can do is to pay your bills on time. Missing a payment can have a significant impact on your credit score and hurt your chances of getting approved for future credit cards.
3. Monitor Your Credit Score
It’s crucial to monitor your credit score regularly, especially when churning credit cards. You want to make sure your score doesn’t drop significantly at any point during the process.
The Don’ts
1. Don’t Carry a Balance
Churning credit cards can be profitable, but only if you pay off your balance every month. If you carry a balance on your credit card, the interest charges will negate any rewards you earn.
2. Don’t Apply for Too Many Cards at Once
Don’t apply for too many credit cards at once, as this can negatively impact your credit score. Spreading out credit card applications over several months is a better option.
3. Don’t Chase Rewards Blindly
Don’t apply for credit cards just for the rewards. Choose cards that fit your lifestyle and spending habits. If you cannot meet the spending requirements for a card, it’s not worth it.
FAQs about Credit Card Churning
1. How many credit cards can I churn at once?
It’s essential to maintain a healthy credit score when churning credit cards. Experts recommend churning two to three cards at a time.
2. Will credit card churning harm my credit score?
Churning credit cards can temporarily lower your credit score, but if you pay your bills on time and maintain a low credit utilization rate, your score should recover quickly.
3. How long should I wait before applying for another credit card?
If you’re churning credit cards, wait at least three to six months before applying for another card. Applying for too many credit cards at once can hurt your credit score.
4. Are there any downsides to credit card churning?
Churning credit cards can be beneficial, but there are downsides. For example, it can be time-consuming to keep track of multiple credit cards and their rewards programs. Additionally, churning can lead to overspending if you’re not careful.
5. Can I churn the same credit card multiple times?
Usually, credit card companies allow you to earn the sign-up bonus only once. However, it’s possible to cancel a credit card and reapply after a certain period to qualify for the bonus again.
Conclusion
Credit card churning is a lucrative strategy that can lead to significant rewards. However, it’s crucial to do it responsibly and within your means. Follow the dos and don’ts of churning, and you’ll be on your way to earning massive rewards without paying annual fees.
