Credit card churning is the proactive process of applying for new credit cards in order to meet different bonuses. In my journey to becoming a hardcore churner, many hours were spent on researching the best credit cards and methodologies in order to earn the most points. This process allows for working class people to accumulate enough miles/points to fly in luxury through their everyday spending. Whether its a single card or several cards, many avid individuals respond positively to the prospect of churning but typically have a few reasons for concern that hold them back from their first application.
Here are a few answers to some of the questions that I’ve come across:
1. Will getting a new credit card ruin your credit score?
No, applying for a new card will not ruin your credit score. A credit check will usually be performed when applying for the card and will consequently drop your credit score by a few points. However, the points lost from the inquiry are likely to recover in the next few weeks. Applying for 1–2 cards for either churning or long term use will have negligible impact as long as you are making timely card payments and maintaining the utilization of your credit.
2. Why should I pay fees for a credit card?
Like many, I am not a fan of annual fees (Who is?!), but there are various products where the points and perks are well worth the cost. The standard no-fee cards that many people use tend to miss out on the higher earn rates and bonuses associated with a premium card. On the other hand, cards that are offered with an annual fee waiver and a large bonus are a must have.
For instance, we can compare the American Express Cobalt Card to a no-fee 1% cashback credit card. Despite a monthly fee of $10, the Cobalt offers 2,500 bonus points each month you spend more than $500 on the card. Along with the bonus, all food/drink and groceries on the card will earn points at an accelerated 5x points per $1. On a monthly grocery/food spend of $500, the Cobalt will accumulate at least $50 in points, whereas the no-fee card will bring in a mere $5.
3. Should I have multiple credit cards at the same time?
Yes you should, especially if you can manage having more than one card. It is definitely recommended to carry 2–3 different credit cards as certain ones will be advantageous over others in particular situations (Dining, groceries, etc). My rule of thumb is to carry both an American Express card and a Visa/MasterCard for scenarios where Amex isn’t accepted.
On the other hand, for more aggressive churners, make sure to always be carrying cards that you are meeting the minimum spend on.
4. Should I cancel the cards that I currently have?
No you shouldn’t; Be sure to keep your oldest cards open. If your current card has an annual fee and perks that don’t justify the price, doing a product switch to a card that has no fee will allow you to continue to build your credit. Your average age of credit will increase as long as the cards are active.
5. How much money do I need to spend to become a churner?
Honestly, not more than what you would normally spend otherwise. The idea of churning is to take advantage of signup bonuses with your everyday spending. Regardless of the amount of credit you’re receiving, it is crucial to maintain good spending habits. The mass majority of points (>85%) that I’ve collected are from bonuses as opposed to points on spending. Whenever I am not meeting a minimum spend on a card, I am looking for the next one to apply for. If your monthly spending very low, then applications for new cards should be spaced out accordingly.
6. Okay, I’m in! But how long do you think we can keep churning for?
Indefinitely. Different institutions will continue to offer new and exciting bonuses on cards in which we can benefit from. These offers are targeted to influence consumer into applying for their cards. As long as there is market competition, churners will be able to take advantage of credit card bonuses.
Hope these answers covered the basics and help take the edge off the mystery of the credit card. I will continue to update this post as more questions come in. Thanks for reading!