Marine On FIRE

Planning to be FIREd from the military

Churning Away?

BLUF:  I see the draw of credit card churning but the added complexity and risk does not result in an appropriate return.  More power to those who do it, while it lasts…

Is Churning a way to Financial Independence?

Credit card churning is the strategy of signing up for a new credit card solely to take advantage of the bonus (free stuff, cash, flights, or hotel stays), and then canceling the card rather than planning to keep it for the long term.

I see more and more people into credit card churning.  I am open to new ideas but have not jumped on the bandwagon yet.

Quite honestly, my initial take on churning is that it is unethical and a few people are taking advantage of the system.  Also, my shred pile primarily consists of unsolicited credit card offers.  Purposely seeking out more credit card offers is not high on my “To-Do” list.

I wanted to get a little more educated on this practice to see if the “juice was worth the squeeze.”

Interest in Credit Card Churning

The Reddit sub group (r/churning) has grown to >100k subscribers.  It is a fairly active group which consistently posts about new deals or people’s experiences.

Here is chart showing the growth of interest in credit card churning over the past few years (google searches as a proxy).  Interest appears to be steadily increasing with no signal of slowing down.

It is interesting to note that credit card churning is primarily an American phenomenon (and a bit in Canada).  I would not be surprised if it starts popping up in other countries soon.  It is also attention-grabbing to see that interest is primarily localized to a few states within the United States.  People can make their own theories on why Californians and New Yorkers seem to be so interested in churning.

The Draw

The interest in credit card churning is easy to understand.  FREE MONEY

If you spend $X,XXX in XX days, you get:

  • Free / discounted travel
    • Airfare
    • Hotels
    • Cruises
    • Rental cars
  • Cash back
  • Points for stuff

I can see the logic.

“Well I already spend ~2,500 a month with my current credit card and pay it off every month, if I just switch to this new one, I also get the bonus. It is basically free money!”

This logic is reinforced by bloggers who seem to have figured out how to optimally exploit credit card companies to travel around the world for free, first-class no less.

But I also remember something in my accounting classes from years ago.

“There’s no such thing as a free lunch.”

What’s the Profit?

Few people state how much they are actually making by churning.  Those who charge more are going to get more.  Also, it is challenging to determine the true value of something (what is the actual cost of a flight from NYC to LA?).

There are few stories of people getting >$5,000 a year, and those appear to be the extreme cases.  So I assume most people are getting a few hundred a year, maybe even $1-2k.

Unnecessary Complexity

I see a lot of added complexity and risk to make $200-2,000 a year.

Complexity includes:

  • Always hunting for the next best deal
    • I can think of better ways to spend my time while I am alive
  • Continuously applying for cards
    • Not very difficult, but it is still work
  • Tracking the 5/24 rule
    • 5 or more cards open in last 24 months will generally result in getting denied credit
    • There are many more rules against churning
  • Hits to your credit
    • Not a big deal if you have a good credit score and / or you are not seeking a loan
  • Not maintaining credit history with one card
    • Having many open and closed accounts makes lenders more suspicious
  • Impacts to insurance rates
    • Home owners insurance often does soft pulls on your credit to evaluate risk, higher risk the more you pay
  • Continuously cancelling cards
    • Assuming people cancel them or they would just keep adding up and therefore negatively impact your credit score
  • Keeping track which ones you once had
    • Some companies do not allow opening and closing cards within a certain time period
      • Citibank only gives bonuses to consumers who have not had a Citi card in the last 24 months
      • American Express allows only one bonus per lifetime (lifetime is defined at ten years to them)
  • Keeping the cards organized
    • “What card are we using today?”
  • Balancing what to charge where
    • One is for gas…
    • Another for travel…
    • Then one for L.L. Bean…
  • Always watching the amounts to hit certain charge gates to qualify for the bonus
    • Must charge $3,000 in the first 90 days to get bonus
  • Never missing a bill and getting charged interest
    • The whole point of churning is getting the benefits while not paying interest
    • Paying interest even one month can significantly reduce any “reward” you were planning on getting
  • Continuous new rules to curb churning
    • You have to read the fine print on each of the cards since credit card companies are not in the business of losing money and are always changing the rules
      • Can no longer purchase gift cards
        • People do suspect things to try and get around this rule
      • No manufactured spending
        • Use Paypal to give a friend money and then they give it right back
        • Creative use of money orders
      • Over paying for things and getting a refund later
        • People doing down-right unethical practices just to get a free flight
    • Churners are technically “gaming the system” and credit card companies will implement new rules to protect their bottom-line
  • Tracking the rules between personal cards verse business cards
  • Higher risk of fraud
    • More taxing to follow up and confirm all the charges are legitimate
    • More accounts to your name
  • Using the “rewards” before paying the annual fees
    • Forced to take “benefits” in certain windows or you will be required to pay the annual fee

Fees for credit cards is another discussion.  This goes against my frugal mind.  I cannot mentally justify paying a fee for a credit card in which there are free comparable ones.

People try to justify the fees by saying you get an airline credit, or something else.  The logic is flawed.

If you were going to buy the $15 drink on the airplane in the first place then great.  But if you are now buying the $15 drink on the plane because the card will reimburse the charge, you already paid and you are still spending more than you would have.

The Dilemma

It is important to understand that credit card companies offer the bonuses to lure new customers and the only reason they continue this practice is because so many people screw up.  Screwing up means giving credit card companies more money in the form of fees and interest.

If credit card companies could completely stop churning, they would, but they are also want new customers. So they are in a dilemma.

I am not defending credit card companies or banks, far from it.  They should reap what they sow.  With that said, I would not be surprised if laws were passed to reduce the practice of churning to “protect the consumer.”  (sarcasm)

Turning away from churning

Is churning a way to financial independence?

No, at best, it is a hobby that exploits credit card companies.

Personally, I do not think credit card churning is worth the squeeze.  The extra ~$200-2,000 a year is not worth the added complexity or risk.

Ethically, I am unable to do some of the things that others do to “create” charges.

Keep it simple, stupid.  I am happy with my few credit cards and the average benefits they provide.

I never say never, so who knows. Whatever you do, pay your balance in full every month!


  1. I do the credit card game somewhat, but I definitely don’t do as much as some people do. I only have a few cards, and kind of want another one, but I’ve been reluctant. I’ve yet to open a card with the intent of closing it sometime after getting the bonus, and I’m not sure I actually want to do that.

    • MoF

      2018-02-12 at 22:46

      I hear you, I am in the same boat. I have yet to open a card with the intent of closing it shortly after.

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