Credit Card Churning - Advanced Rewards Strategy

Credit card churning involves systematically applying for new cards to earn signup bonuses, then potentially canceling or downgrading cards before annual fees become due. While this strategy can generate substantial rewards value, it requires careful planning and disciplined execution to avoid negative consequences.

Signup bonuses represent the primary motivation for churning, often providing rewards worth $500-$2,000 or more per card. These bonuses typically require meeting minimum spending requirements within the first few months, making churning most suitable for people with sufficient regular spending or planned large purchases.

The 5/24 rule, implemented by Chase, automatically denies applications from people who have opened five or more credit cards from any issuer within the past 24 months. This rule significantly impacts churning strategy, as Chase offers some of the most valuable cards and bonuses. Many churners prioritize Chase cards early in their churning journey.

Credit score impacts from churning include both positive and negative effects. New accounts temporarily lower your average account age, while hard inquiries cause small, temporary score decreases. However, increased available credit can improve utilization ratios, and additional payment history can strengthen your credit profile over time.

Annual fee management represents a crucial aspect of churning strategy. Many churners cancel cards before annual fees post or downgrade to no-fee versions of the same cards. However, some cards offer benefits that justify keeping them long-term, even with annual fees. The decision requires careful analysis of ongoing value versus costs.

Manufactured spending techniques allow churners to meet minimum spending requirements without additional out-of-pocket expenses. These methods involve purchasing cash equivalents or prepaid products that can be converted back to cash, effectively earning signup bonuses on artificial spending. However, issuers actively combat manufactured spending and may claw back bonuses or close accounts.

Churning requires significant time investment for research, application management, spending tracking, and points optimization. The strategy also requires excellent credit and sufficient income to qualify for premium cards. For these reasons, churning appeals primarily to financially sophisticated individuals with specific goals like funding luxury travel.