Credit Card Churning: Definition and How It Works

Credit card churning

Credit card companies frequently advertise substantial welcome incentives in order to entice new customers. These welcome incentives can quickly earn a large number of miles, points, or cash back. With such enticing offers, some consumers try to optimize their earnings by applying for many cards in a short period of time in order to collect bonuses. Then they either cancel or discontinue using the credit cards in order to focus on the next offer.
This is referred to as credit card churning, and while it may appear to be a beneficial approach, it is not without risks. Continue reading to discover the benefits and risks of credit card churning, as well as how it can affect your credit.

What is Credit Card Churning?

Credit card churning is the process of opening credit cards in order to keep the first bonus and other benefits in order to downgrade to a no-annual-fee credit card. Churning is the process of constantly opening credit cards in order to accumulate reward point balances.

Simply put, credit card churning is the practice of applying for many credit cards at the same time in order to take advantage of sign-up and welcome benefits. When the advantages and points have been earned, the credit card churner will usually cancel the card.

How to Do Credit Card Churning Correctly

Anyone interested in learning how to churn credit cards should begin by realizing the importance of handling the procedure with caution. The possible drawbacks may outweigh the potential benefits.

#1. Make a plan

Decide what kind of benefits you wish to earn, such as miles, points, or cash back. Start with no more than two to three cards if you know you won’t have to spend too much to meet their spend-based welcome offer requirements. Once you’ve gotten the hang of it, you might want to consider adding more credit cards to your list.

#2. Compare welcome packages

Examine the finest rewards and travel credit cards and select those with welcome incentives that match your objectives. Compare the cards on your list according to other criteria as well. For example, frequent travelers may benefit from cards that include airline/airport incentives as well as travel insurance coverage. Keep in mind that welcome offers are frequently offered for a short time period, so you may need to move fast or wait for a while, depending on the scenario.

#3. Reduce the number of applications.

It’s best to wait at least six months between applications if you want to receive numerous new credit cards to churn. In this manner, you can reduce the negative impact of applying for new credit on your credit score.

#4. Take note of the fees.

If you do not want to pay annual fees, there are various no-fee solutions. Alternatively, you can obtain a credit card that waives the annual fee for the first year and cancel it before the annual cost for the next year is due. When it comes to annual fees on card cards, one alternative is to contact the issuer and request a product change to a no-annual-fee card. If you intend to use your new cards outside of the United States, search for ones that waive foreign transaction fees.

#5. Make reminders

It is critical to pay attention to timetables and deadlines if you want to succeed at credit card churning. To keep on track, consider setting reminders to assist you to complete a welcome offer’s spend-based criterion by the deadline, and remember when the annual fee for a card will be due again.

#6. Pay all balances on time.

Because the interest rates tend to overshadow the number of rewards you get, churning credit cards is best suited for consumers who pay down their balances each month. It is also critical that you make all of your payments on time in order to prevent late fees and a decline in your credit score.

#7. Keep a record of everything.

It’s best to keep detailed records of all your credit card churning activities. The information you keep should contain the names of all your credit cards, annual fees, due dates for annual fees, the welcome bonus, spend-based requirements, and your progress toward satisfying spend-based requirements.

#8. Keep an eye on your credit score.

You get free access to your credit reports from the top three credit agencies in the country, as well as a few more sources. Examine them on a regular basis to see if your credit card churning is harming your credit score. If this is the case, consider putting your plan on hold until you can improve your credit score.

#9. Repeat the procedure.

After you’ve received a welcome bonus, evaluate whether you want to close the account or leave it open. In any event, you can then start looking for the next credit card to churn. Because applying for a new credit card lowers your credit score significantly, it’s best to wait a few months before applying again.

What Is the Risk of Credit Card Churning?

“While the rewards sound fantastic,” writes Bethany Walsh, founder of, “the perils are numerous and must be addressed before signing up for too many cards.” Churning credit cards can have an impact on your credit score, monthly spending, and relationship with banks. The detrimental effects can linger for years in some circumstances.

The following are the most common threats to be concerned about:

  • Overspending: In the excitement of obtaining these welcome bonuses, you may spend more than you originally anticipated. While many cards demand $3,000 in spending to obtain the bonus, others, such as the Capital One Venture X, require $10,000 or more (over a longer time; typically six months). This could wreak havoc on your household budget and impair your capacity to avoid interest or meet other obligations.
  • Not receiving the bonus: To receive the welcome bonus, you must spend a particular amount within a certain time frame. If you miss the hurdle by any amount, even $1, you will not receive it. Before applying, ensure that you can meet the requirements within a reasonable time frame.
  • Annual fees are exorbitant: Many of the best welcome bonus credit cards include annual fees that are not waived the first year. The annual cost is often compensated by the welcome bonus, but this is an expense that diminishes the value of your bonus. The Platinum Card from American Express, for example, provides a welcome gift of 100,000 points but an annual charge of $695.
Read Also: EXCLUSIVE CREDIT CARDS: The World’s Most Exclusive Options in 2023
  • Keeping track of playing cards: When you use many credit cards on a regular basis, it’s simple to lose track of a card and miss a payment. This can lead to late fines and a negative record on your credit score that can last up to seven years.
  • Endangering a banking connection: If you churn credit cards on a regular basis, a bank may opt to cease its relationship with you and close your accounts. Banks have sophisticated tracking systems that can identify whether you are a profitable customer or not. Customers who go too far may be barred from using the bank’s products in the future.

What Effects Can Credit Card Churning Have on Your Credit?

Although welcome bonuses and other advantages are great, churning cards might reduce your credit score and influence other loan applications. Churning isn’t worth it if it means paying a higher interest rate or being denied for a mortgage or other major loan.

Walsh cautions, “The consequences of credit card churning are mixed. Your score may improve as a result of larger total credit limits, but it may suffer as a result of so many hard queries.”

#1. Payments History

Making on-time payments is crucial to maintaining a decent credit score. Payment history accounts for 35% of your credit score. Missing even one payment due to managing too many cards might harm your credit score for up to seven years. Setting up automatic payment of the minimal amount due will keep you from incurring late penalties and damaging your credit score.

#2. Utilization Ratio

Your credit usage ratio shows how much of your available credit you are using. This makes up 30% of your credit score. The smaller your utilization ratio, the higher your score. If you spend a lot of money to get the welcome bonus, your utilization ratio may skyrocket. The negative impact is temporary as long as you pay off the balance in full as soon as possible. However, if you carry a balance from month to month, you will pay a lot of interest which may hurt your credit score. Opening a new card, on the other hand, may cause your utilization ratio to decrease because your total available credit has increased.

#3. Average Age Credit

The duration of your credit history accounts for 15% of your score and is important because it demonstrates appropriate credit utilization over time. Opening a new credit card reduces the age of your overall credit. Opening many credit cards at once can significantly reduce your average credit age. The impact on your score is determined by the number of other accounts you have. This means that each new account may have a different impact on your score than another. This is why it is a good idea to maintain some credit cards for a long time. Credit cards with no annual fees are ideal for this purpose.

#4. Mix of Credit

Lenders are interested in how borrowers handle various sorts of credit. This is why they prefer a combination of term loans (mortgages and auto loans) and revolving credit (credit cards). Term loans demonstrate your ability to consistently make the same payment. Revolving credit demonstrates your capacity to exercise restraint and avoid exceeding your credit limit. If you apply for too many cards at once, your credit mix may be skewed toward revolving credit, which could harm your credit score.

#5. New Credit

Every time there is a hard inquiry for a new credit application, your credit score changes. Hard inquiries can linger on your credit report for up to two years and reduce your score for up to 12 months. A single query is sufficient for the majority of folks. Credit card churning, on the other hand, frequently entails multiple queries, which accentuates the negative impact on a credit score.

How Do Banks Control Credit Card Churning?

Many issuers limit credit card churning because it can take years for a consumer to become profitable after receiving a welcome incentive. Some of these rules are stated directly on company websites. Others, on the other hand, are unwritten laws that the card-churning community has learned mostly via trial and error. Here are the most recent rules for some of the most well-known banks:

The once-in-a-lifetime rule of American Express

Most American Express credit cards only allow you to earn a bonus once per card type. While this is a “once in a lifetime” incentive, cardholders have reported being able to receive it again several years after canceling their accounts. Customers are permitted to have a total of five credit cards and ten charge cards between personal and business cards.

The 2/3/4 rule of Bank of America:

There are no restrictions on incentives in general, but Bank of America does limit the number of cards you can apply for. You may be accepted for up to two cards in 30 days, three in 12 months, and four in 24 months.

Capital One’s two-card-per-customer policy

Capital One generally limits each customer to a maximum of two cards at a time. You are also limited to one card approval every six months.

The Chase 5/24 rule.

You will not be authorized for another card if you have opened five or more new credit cards from any issuer in the last 24 months. Furthermore, Chase rules limit benefits for each card family (Southwest, Ultimate Rewards) to once every 24 months, regardless of when you apply. Cardholders of the Chase Sapphire Preferred and Chase Sapphire Reserve must wait 48 months between bonuses.

The Citibank 8/65/90 rule:

Citibank restricts applicants to one every eight days, with a maximum of two every 65 days. One business card is issued every 90 days. Furthermore, many Citibank cards have 24-month family bonus restrictions based on when a bonus is obtained or an account is canceled. This means that when an account is closed, the clock resets. As a result, some clients apply for a new card before canceling an existing one.

Does Churning Credit Cards Hurt Your Credit Score?

The practice of switching credit cards frequently in order to maximize rewards and points can sound appealing at first, but it comes with significant drawbacks. It is a high-risk strategy that can lower your credit score, raise your interest rate, and potentially result in additional late fees and interest charges. If you choose to implement this strategy, you should be aware of the potential consequences.

What Is a 5-24 Rule?

What exactly does the 5/24 rule entail? There are numerous card issuers, but Chase is possibly the one with the most stringent requirements to meet in order to open a new account. If you have opened five or more personal credit cards within the past 24 months, regardless of which card issuer they are from, you will not be approved for the majority of Chase’s credit card products because of the company’s “5/24 rule.”

What Is the Best Credit Card Churning Strategy?

Instead of looking for credit cards that can be opened and closed in a short amount of time, the best strategy is to choose credit cards that you intend to keep and use on a regular basis. You will continue to be eligible for the benefits that come standard with the card and earn rewards for your day-to-day purchases if you maintain an active and in-good-standing account.

Is It Ok to Open 3 Credit Cards at Once?

There is no reason why you cannot submit an application for two or more credit cards in a short amount of time, or even all at once if you so choose. However, having multiple inquiries into your credit card history can hurt your credit score and raise a red flag for potential lenders.

Is Credit Card Churning Profitable?

Credit card churners are among the least profitable customers for the bank because they are not required to pay any interest and only have to pay minimal fees. When you make charges with your credit card, the banks will still get the transaction fees, also known as swipe fees, but the amount they get may not amount to very much depending on how frequently the card is used after the welcome bonus has been earned.

Is Credit Card Churning Illegal?

The use of multiple credit cards, however, is not against the law. On the other hand, it might be against the terms and conditions of certain credit cards, which would mean that the card issuer has the right to close your account and/or take away your rewards if you did something like that.

Is Credit Card Churning Worth It?

Credit card churning is a risky activity because, although you could potentially earn an additional bonus for signing up, you are also putting your credit at risk. It is possible that your existing accounts will be closed, which will deprive you of the ability to use credit. You also run the risk of having future credit card applications declined, which would result in the loss of any points you have accumulated.


The perks and benefits you might gain from credit card churning can significantly improve your travel experience. While there are various advantages, you should be aware of the hazards and how they can affect your spending and credit. These effects might sometimes endure for many years. Begin slowly and stick to a sensible plan of action. With the appropriate incentives, you may earn points to book free travel and see destinations all over the world.

Credit Card Churning FAQs

Can you make money credit card churning?

How much you may gain by churning out credit cards depends on the welcome incentives of the cards you obtain. With numerous welcome bonuses ranging from $500 to $1,000 or more, it is easy to understand how profitable this technique is. You must also account for any fees or interest charges that may reduce the value of the bonus awards you earn.

What is the 5 24 rule?

Chase’s 5/24 rule states that if you’ve opened five or more personal credit cards (from any card issuer) in the last 24 months, you won’t be approved for most Chase cards.

Does credit card churning lower credit score?

Yes, it does. This is because the things you’ll have to do to obtain the best rewards — opening a lot of cards and spending on them on a regular basis — might have a negative impact on your credit ratings if you’re not careful.


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