While I am not nearly as dedicated as some other folks to credit card churning, it is such an easy way to make some extra cash and free bennies, that it is hard to pass up. I have been churning cards for about 2 years now, and have made THOUSANDS of dollars in points, miles, and cash.
What is Credit Card Churning?
If you’re not familiar, credit card churning is basically just means signing up for new credit cards to get the promo points, and then closing out the card, and moving on to another as soon as you earn the points. To do it right, it just takes a few minutes of your time per month.
Here’s What I Made in 2 Years of Credit Card Churning:
- 150,000 miles on American Airlines for FREE. We plan to use these miles during our Family Gap Year to South America for FREE flights. This is supposedly a cash value of $2,250, but I think I can get FREE flights potentially worth much more than that.
- $3,800 in straight-up FREE cash-money cha-ching. That’s just the promos themselves, not including additional cash-back I made from spending. That is a cash value of, I repeat, $3,800. For FREE.
- 50,000 FREE points at Starwood Hotels. This is an equivalent cash value of about $250, but can be used for 3-4 nights at a very nice hotel, perhaps in Cusco, Peru.
- 60,000 FREE points at IHG (Intercontinental Hotels Group). This has an equivalent cash value of about $300, but can be used for a few FREE nights of FREE rest and relaxation at a mid-class hotel, perhaps in Argentina or near the beach in Uruguay.
Add it all up, I have made $6,600 in two years just by churning credit cards. Not bad for just a few minutes of work per month. In fact, those have to be some of the most lucrative minutes anywhere.
The typical promo gives about $300-$500 in value for spending $3,000 or $4,000. In addition to the promo points, the cards will typically give you 1-2% points on everything you spend. Think of the math! If you’re a dedicated churner, it is like getting a 10-15% discount on everything you spend!
My wife and I churn 4 credit cards: a personal card for me, a personal card for her, a business card for me, and a business card for her. Most credit card promotions are for 3 months. In the two years we’ve been churning, we’ve gone through 14 cards.
I was actually neglecting it for several months in 2016. We could have done several more cards (oh well!). There are some folks out there that really go the extra mile with credit card churning. We are pretty lackadaisical about it. But, even so, we are still making good money.
What About Fees, Interest, Penalties?
Most cards with awesome promos charge an annual fee, but they usually waive the fee for the first year. Sign up, do your spending in the first 3 months, get your promo, close it, and move on. Do this, and you’ll never pay a penny of fees, interest, penalties, so long as you pay off your cards in full each month.
Here’s precisely how much I’ve paid for fees, interest, and penalties while I’ve been churning:
Now, there are some promo cards that don’t waive the annual fee for the first year. These are often still worth it, because you can get something like $1,000 in points if you pay a couple hundred in annual fees. It’s still FREE money. I personally have avoided those cards so far. I also pay off every balance every month, so I can legitimately say that I have paid zero in fees, interest, or penalties.
The Hardest Part About Credit Card Churning.
The hardest part about credit card churning is just keeping track of all the cards. I keep a spreadsheet where I record which cards are open, how much spending has been done, and how much is remaining until I get my promo. I also record the annual fee date, so I be sure to close the card before the first anniversary. It just takes a few minutes to fill in each month (when I get the bills).
If you don’t track the cards like this in a spreadsheet, you’ll likely make a mistake. Perhaps you’ll miss a promo because you didn’t spend enough, or keep the card open beyond 1 year, and be hit with an annual fee.
It’s also hard mentally to keep track of all the cards. My wife is constantly asking me, “which card should I be using?” I can’t remember much past last week, so the spreadsheet is my friend.
Your Credit Score
There are rumors out there that churning hurts your credit score. But, after going through about 20 cards in the last 3 years, my credit score is still over 800…. so, not really.
Here’s a snapshot of my current credit scores:
So, no, the verdict is that it hasn’t really impacted my credit scores. More importantly, it doesn’t matter. I don’t care much about my credit scores.
Credit scores are most important if you want to take out a loan, and I have no need to take out any loans. No thank you. The size of my mortgage is already impressive enough.
Credit scores are also used as a background check for all kinds of things, like employment, apartment rentals, etc. But, my credit score would have to be massively impacted by churning in order to make any difference here. Any credit score over 650 or 700 is going to be viewed very favorably by any employer or landlord.
Don’t Credit Card Companies Catch On?
Credit card churning is perfectly legal, and the credit card companies are all very aware that some people do it. But, so few people churn successfully, that it’s not really worth it for the credit card companies to clamp down hard. After all, the whole point of the promos is to entice people to sign up. The credit card companies know that for every 100 people that sign up, they will make money. They just don’t always know exactly who they will make it from.
What they do is they tinker with their eligibility rules for the promos. These rules will sometimes prevent some churners from getting one promo or another if they are not careful. But, at the end of the day, they will continue to offer promos to entice customers to sign up. So, the rules will not prevent a dedicated churner from easily making thousands of dollars per year.
For example, you are only eligible for the American Airlines points promos once per year. But, in my household there are two adults (that includes me), each with a business account and a personal account. So that means we can actually theoretically take advantage of 4 American Airlines promos in a year. Free flights, anyone?
Is It Really This Easy?
Yes it is. Next question?
Seeing as there are no further questions, class is dismissed.