Credit Card Churning


If you think about reward cards, I am sure it has occurred to you to try to get the “sign up bonus” more than once. Not too far removed from that idea is the thought of applying for several credit cards at once solely in order to receive sign up bonuses. One easy way to do this is to apply for both the personal and business cards, each with a healthy bonus.

Warning, Proceed With Caution

Clearly, caution is required, but as your reward card guru, with dreams of international first class travel, I decided to test the waters of this practice, known as churning. Technically, churning refers to opening multiple credit card accounts with the same company for their sign up bonuses. Very closely related to this practice is merely opening up several cards at once to accumulate bonuses.

The Pitfalls

There are a lot of problems with this plan, but for some, they are manageable. First, you will always want to protect your credit score, one of your greatest financial assets. Two components of your credit score that are vulnerable to this technique are credit history and credit inquiries. Your credit history is merely the average length of time that companies have extended credit to you. If you have accounts that you have held for years, opening up new ones won’t hurt you that much. Just to be safe, most people recommend keeping a new account for at least a year before canceling it.

The number of inquiries is another small factor in your credit score. When you apply for a card, the company checks your score and creates an inquiry. In theory, having too many inquiries in a short period of time supposedly identifies you as a greater credit risk, thus temporarily lowering your score.

Another aspect of your credit score that will actually improve when you churn cards is your credit utilization. The more credit you have available, the better. Therefore, having more cards will actually help your score somewhat.

The next pitfall is the credit card companies themselves. Most do not allow churning, although there are some notable exceptions. To find out which companies currently allow churning, check out the credit card forums over at Flyertalk. In my experience, even the companies that forbid churning only do so for a limited time. I have gotten bonuses for various airline cards multiple times, but only after having canceled several years earlier, even though their rules expressly forbid receiving bonuses multiple times.

One of the problems I faced recently, was the dreaded “financial review” from American Express, after I applied for and received several of their cards in a short period of time. I passed their “review” but it was frustrating and time consuming.

Finally, a real concern is organizing all of this info. To do it right, you need to track which cards you apply for, which you received, and what bonuses you are entitled to. Most importantly, you will get a lot more bills in the mail that need to be paid on time and in full.

My Experience

While technically not “churning”, I applied for many Delta and Starwood American Express personal and business cards last year, with the hopes of taking advantage of the Big Delta Promo that returns a %150 bonus on top of all miles earned. While Delta later claimed the promo was a mistake, they decided to honor it for people like me and my wife who signed up while the web site was live. In the course of a few weeks, we earned over a hundred thousand Delta SkyMiles from sign up bonuses and by transferring StarPoints to SkyMiles. This should translate to several hundred thousand miles, enough for our family to fly across the world later this year. Keep in mind that my wife and I had zero SkyMiles on November 1st, and you will understand why I was willing to take some risk for $10,000 worth of tickets.

Did It Damage My Credit?

To my relief, my credit score remained very high when I checked it recently. I did not look at it every day, so I can’t really say if it underwent a minor dip after I received all of the cards. Suffice it to say, that my score remains where one should expect it to be for someone who pays all of his bills on time and in full.

Lessons Learned

First, only undertake this if you are highly organized. It is all too easy to mix up bills, in fact I actually ended up slightly underpaying some $10.00 bill by a couple dollars, incurring a few cents worth of interest.

Second, make sure that the reward is worth the risk. Usually, getting a sign up bonus is a great way to “top off” an account that is near a large reward.

Finally, don’t immediate jump on all offers you see. If my wife and I had taken advantage of all of the Delta rewards a few years ago, we would have been ineligible to get them and the big bonus now. Likewise, my parents have chosen not to sign up for some of the higher end Delta cards that offer base miles, holding out for a year in which they come up short of the qualifying miles needed to retain their status.

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6 Responses to “Credit Card Churning”

  1. Tom Says:

    I’ve never tried this but I am intrigued …
    I’m pretty organized so I could probably handle it.

  2. Eric Says:

    I was JUST looking up what churning meant so thanks for the timely article!

    Btw, off topic but in your “ask a question” series, it says that you can ask a question by leaving a comment but mine was never answered (couple months ago). Is it better to email you guys instead? Thanks.

  3. Mr Credit Card Says:

    Why don’t you do both and we’ll try to answer.

    We get lots of question, so thanks for reminding and coming back.

    Mr CC

  4. A D Says:

    Re, Delta 150% promo. I signed up and transferred starwood miles BEFORE it was taken off. Subsequent phone calls to Delta I was told that I will get the 150% bonus, however i do not have anything in writing from Delta.
    Have you received your bonus miles yet? If not when do you expect to get it.
    Would it be possible for you to let me know when you receive it?
    I think that Delta will honor this for someone like you with a Blog to let the world know but not for someone small like me.

    Thank you.

  5. Eric Says:

    Thanks Mr. CC. Will do if I can ever remember my original question :)

  6. Ed Flickinger Says:

    B of A and Choice Hotels robbed my account of 54,000 points 4 years ago. I had purposely paid and stayed at Choice Hotels many times to earn points.

    It is true that I earned B of A points were from a couple of credit card churns prior to earning many points from hotel stays. If it was a mistake on their part, they should not have punished me for when I paid for more hotel nights.

    I have tried in the past to contact both Choice Hotels and B of A with no resolution on this issue. What do you suggest?

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