Credit card churning can be intimidating, but it doesn’t have to be. Here are some pointers on how to get started.
Choose credit cards strategically
I try to have a future vacation in mind before applying for cards. When you’re ready to start planning, spend some time checking out rewards bookings for different hotels and airline. Pex, a search engine for flight and hotel reward bookings, is a huge timesaver. This research will inform which cards you will need to open to make your vacation possible. You can then check this list of best travel credit cards to find the best sign-up bonuses. Be cognizant of spending requirements and never open cards if you will be buying things you don’t need just to hit them (believe me, it can be tempting…).
Since Chase instituted the 5/24 rule, you may want to go for Chase cards first. Other credit card companies also have restrictions on how often you can apply, how many cards you can have at a time, and how often you can receive a sign-up bonus. Research these rules before deciding what cards to apply for.
Don’t apply for credit cards without a plan…a better deal may come along
Sign up bonuses tend to fluctuate. For example, you would not want to sign up for a Southwest card through Chase when the bonus is only 25,000 miles because a few months later, they may be offering 50,000 miles (perfect for earning the Southwest Companion Pass!)
Credit card companies may also target offers. While it’s not clear how this works, I recently signed up for the Gold Delta SkyMiles Card from American Express with a 50,000 mile sign up bonus while the website is offering only 30,000.
If you know you definitely need miles or points for an upcoming trip, go ahead and apply, but if deals are lower than they’ve been in the past, it may be better to wait on it.
Keep track of dates
Make an excel spreadsheet of all your credit card accounts. You’re going to want to keep track of the following dates:
- When you opened the card
- When you need to hit the spending requirement by
- When you received your bonus (helpful for knowing when to reapply for Chase cards)
- When an annual fee is due
- When you closed the account
Pay your credit card bills in full every month
Always pay in full each month. Credit card companies bank on people paying interest and fees. Any benefit from credit card churning will be negated if you’re racking up debt.
This is one of the most important considerations before you decide to start churning. You can check your credit report for free each year. Checking your report will help you monitor how you are doing and allow you to verify that the information is accurate. Credit reports can be requested from each of the following agencies:
In addition to requesting official reports, you can sign up for Credit Karma to easily view your TransUnion and Equifax reports at any point during the year. You can also sign up for Experian to have a full picture of your credit history. This will allow you to check for potential errors and monitor which credit bureau is pulled by each company when applying for new credit cards.
Redeem and enjoy, but don’t forget to close or downgrade your account
Credit card churning can have a negative impact on credit if you are not careful. First off, never cancel the credit card you’ve had the longest. Length of credit history is an important part of your credit score but luckily it’s easy to avoid messing this part up! Other things to consider: closing a card will decrease your total available credit (i.e., you will have a higher credit utilization rate). It will also decrease your average age of accounts (AAoA). You may wish to downgrade the card to a no fee option instead of closing it to avoid this. Doctor of Credit created a comprehensive list of downgrade options by card issuer.
If you need to cancel, try to get a retention bonus when calling the bank. American Express offered my boyfriend a $100 statement credit for keeping the card open for 60 more days. Be aware of annual fees. You can call and try to have these waived. Capital One has been known to waive the fees in the past. Lastly, spend or transfer points before closing the account to avoid losing your *not-so* hard earned points.
Collecting miles and points through credit card churning is a great way to travel for less. If you are organized, open credit cards strategically, and pay your credit card bills in full, you’ll be able to enjoy these perks! Here’s a list of resources to get you started.
Last updated: 1/9/2017