How Much Does Credit Card Churning Really Affect Your Credit?

Share this

If you’re inspired by the myriad of credit card offers that you see every day online and in your mailbox, you might have considered credit card churning. Credit card churning is the strategy of signing up for a new credit card in order to take advantage of the bonus, and then canceling the credit card rather than adding it to your wallet for the long term. The end goal is usually to travel for little or no money.

A common story is that a couple will go on a great trip, cruise, have a great time, and realize they would like to do more travel, explains Gideon Sandford, founder, and blogger at the Free-quent Flyer. “They’ll start looking for opportunities for travel on the cheap. Pretty quickly you’ll run into the blogosphere of people who churn credit cards.”

While the notion of racking up points to redeem for travel perks or a trip to say, Morocco or Thailand has obvious appeal, one should heed a bit of caution before jumping on the bandwagon. For starters, credit card issuers frown on it and may levy heavy consequences. Also, only those with really great credit can pull it off. The risks involved in credit card churning mean it’s an activity that is best suited to members of the credit elite.

What Is Credit Card Churning?

In its purest form, churning is opening the same credit card multiple times to repeatedly earn the card’s signup bonus. As I mentioned above, churning also includes opening different new accounts to earn signup bonuses and then closing the accounts. Some credit card churners have dozens of credit cards open at the same time.

Many credit card issuers offer a signup bonus when you first sign up for a credit card. For instance, you can earn tens of thousands of bonus points or miles after you spend a certain amount of money on purchases on the credit card within a set period of time after opening the account. To sweeten the deal, you might also score extra points if you add an authorized user during the same time period.

How Credit Card Churning Affects Your Credit Score


Every credit card application has the potential to lower your credit score by a few points. It’s a “hard inquiry.” Inquiries account for 10 percent of your credit score. Each inquiry remains on your credit report for two years, but only affects your score for the first year. The effect on your score diminishes over that time.

Opening a new credit  card may cause your credit score to go up if you carry a balance on other credit cards and the new credit card helps you lower your utilization ratio. It can make your score go down by lowering the average age of all your credit accounts.

Closing a credit card can affect your score in different ways. If you carry a balance on other credit cards, the loss of the available credit could cause your utilization ratio to go up and your score to come down. If you have zero balances across the board, closing a credit card doesn’t affect your utilization ratio at all. Utilization accounts for 30 percent of your credit score.

If you close an older credit card, your average account age might come down, and your score could drop. If you close a newer credit card, your average account age might go up, and your score could rise. Account age makes up 15 percent of your credit score.

If you have great credit and a long credit history, opening and closing credit cards may not affect your score in a major way. On the other hand, if your credit score is average or weak, or falls near the cusp of two credit score categories, the changes could more significantly affect your score.

The Dangers of Credit Card Churning


It would be nice if we could all get an easy 50,000 point bonus a few times every year. This strategy, however, is not for everyone. Here are some of the perils.

You’ll run the risk of carrying debt. Credit card expert Jason Steele points out that many new credit cardholders fall into debt. Interest charges are vastly larger than rewards. A $500 savings on plane tickets can be eaten up very quickly by interest if you carry a balance.

When a spending threshold is required to earn a bonus, you could be tempted to buy things you don’t need, just to register the purchase. Impulse buying is bad for your budget and could lead to debt.

You might not be able to keep up with monthly payments. If you juggle multiple credit cards that have spending requirements for a bonus, or even one new credit card in addition to your usual accounts, you could miss a payment. That could lead to late fees and interest charges. Falling behind even one month can easily spiral into a vicious cycle of debt. Before you know it, you’re ponying up a lot of dough. Worse yet, your credit suffers.

It’s easy to get sidetracked. Sandford points out how easy it is to lose focus. Before you know it, you’re on a rabbit trail of offers and you’ve forgotten what you initially wanted the points for.

For example, you sign up for a credit card because you want to go on a Disney cruise.  Then you read a post about the best ways to redeem points to go to the Maldives. The strategy for earning this trip is totally different from the strategy for earning the cruise, and you’ve shifted gears halfway down the road.

Other disadvantages to losing your focus: the redemption value of the trip you want could change while you explore all the possibilities, or you could end up with points and miles that you aren’t likely to use (5,000 point hotel rooms are a great deal, but they’re not located where most consumers want to go).

Annual fees add up. You could pay a pretty penny in annual fees. One of the most important jobs of a credit card churner is to keep an eye on which credit cards have annual fees, whether the rewards outweigh the cost, and whether and when to cancel the credit card to avoid an additional fee. Sandford notes that some cards have annual fees reaching $495. If you forget about the card when the annual fee comes around, it is likely to significantly offset rewards.

Churning is time consuming. Hardcore credit card churners are known to spend upwards of an hour every day reading up on credit card offers and figuring out the best ways to earn and maximize their points. What you don’t pay for with money you pay for with your time.

Churning requires high level organization. From bonus points offers to interest rates and fees, to knowing how to maximize redemptions and all the different ways to book a trip, there’s a lot to track. You need to be very detail-oriented.

Churners risk the wrath of card issuers. Once credit card issuers flag you as a credit card churner, you could be blacklisted. Remember: the reason why credit card companies offer generous signup bonus offers is that they hope to gain long-term, loyal card holders. Issuers lose money on new cardholder offers. They frown on credit card churning and may ban you for a period of time or forever.

See your score.
Reach your goals

Begin your financial journey with Credit Sesame today.  Get your FREE credit score in seconds.

By clicking on the button above, you agree to the Credit Sesame Terms of Use and Privacy Policy.

See your score.
Reach your goals.

Begin your financial journey with Credit Sesame today.
Get your FREE credit score in seconds.

By clicking on the button above, you agree to the Credit Sesame Terms of Use and Privacy Policy.

Advertiser Disclosure

Many of the offers that appear on this site are from companies from which Credit Sesame receives compensation. This compensation may impact how and where products appear (including, for example, the order in which they appear). Credit Sesame provides a variety of offers, but these offers do not include all financial services companies or all products available.

Credit Sesame is an independent comparison service provider. Reasonable efforts have been made to maintain accurate information throughout our website, mobile apps, and communication methods; however, all information is presented without warranty or guarantee. All images and trademarks are the property of their respective owners.