Credit Card Churning: Is the Risk to Your Credit Score Worth It?

Credit card churning—repeatedly opening cards for sign-up bonuses—can be lucrative, but it comes with credit score implications. Here's what you need to know.

What Is Credit Card Churning?

Churning involves:

1. Opening a new credit card for the sign-up bonus
2. Meeting the minimum spending requirement
3. Earning the bonus (cash back, points, miles)
4. Possibly closing the card after the first year
5. Repeating with another card

The Credit Score Impact

Short-Term Effects

Negatives:

• Each application creates a hard inquiry (-5 to -10 points)
• New accounts lower your average account age
• Multiple inquiries can be a red flag

Positives:

• Higher total credit limit (lower utilization)
• New accounts (credit mix)

Long-Term Effects

If you churn responsibly:

• Initial dips usually recover within a few months
• Increased credit limits can help your score
• Long payment history on accounts you keep

If you churn irresponsibly:

• Many hard inquiries compound damage
• Short average account age hurts
• Closing accounts increases utilization

Risk Factors to Consider

1. Starting Score - Higher scores are more resilient but also have more to lose
2. Number of Recent Applications - Banks may deny you if you've opened many cards
3. Chase 5/24 Rule - Chase denies applicants with 5+ new cards in 24 months
4. Total Debt - Opening cards to spend more creates financial risk
5. Organization - Missed payments would devastate your strategy

Is Churning Right for You?

Good candidates:

• Already have excellent credit (760+)
• Disciplined with spending
• Organized with payment due dates
• Not planning major purchases (mortgage, car) soon
• Understand the rules and risks

Bad candidates:

• Below 700 credit score
• Tend to overspend
• Might miss payments
• Applying for mortgage in next 6-12 months
• Need credit for other purposes

Best Practices If You Churn

1. Limit applications to 1-2 cards every 3-6 months
2. Never carry a balance (negates rewards with interest)
3. Keep your oldest cards open
4. Meet spending minimums with normal spending or prepaid bills
5. Track all due dates meticulously
6. Monitor your credit scores monthly

The Verdict

For most people, the credit score risks outweigh the rewards. But for disciplined individuals with excellent credit and no major purchases planned, strategic churning can work.

Proceed with caution and full understanding of the implications.