Credit card churning is a strategy some people use to maximise rewards, sign-up bonuses and other perks offered by card issuers. Credit card companies provide incentives such as reward points, cashback, discounts and introductory offers to attract customers. Welcome bonus points are a common attraction that churners target.
Churning typically involves applying for a card, redeeming the welcome benefits and then closing the account. While this practice is not illegal, it can have consequences for both the card issuer and the cardholder’s credit profile.
Below we explain how credit card churning works, the drawbacks, and what to consider before attempting it.
How Credit Card Churning Works?
Imagine you apply for a new credit card and receive approval. Shortly after activation, the issuer credits 1,500 reward points as a welcome benefit. You redeem those points for air miles and book a discounted flight. Once the reward has been used, you decide not to keep the card for ongoing spending and close the account. With no annual fee or cancellation charges, the issuer closes the account and you may then apply for another card to repeat the process.
This cycle of opening a card to claim the welcome offer and then closing it after redemption is credit card churning. Many churners aim to cancel the card before any annual fee is charged so they can enjoy benefits without paying for them. Cards with generous welcome offers and low or no joining and annual fees are typically the most attractive for this tactic.
Credit Card Churning: When to Cancel
Many users who plan to churn cancel cards soon after redeeming their rewards. However, closing cards merely to chase sign-up bonuses can damage your credit score and in some cases lead issuers to flag or restrict your accounts. This article does not recommend churning as a healthy long-term strategy for credit management.
How Does it Damage Your Credit Score?
Frequent opening and closing of credit accounts can harm your credit profile. Each new card application typically triggers a hard inquiry on your credit report, which can temporarily lower your credit score. While a single hard inquiry has a small impact and can be offset by responsible credit behaviour, repeated inquiries from churning will have a cumulative effect.
Additionally, maintaining active credit accounts over time helps build a longer average age of accounts, which benefits your credit score. Closing accounts reduces the average age of your credit history and can therefore lower your score. If you use cards only to collect welcome offers and do not carry out regular, on-time payments, you won’t build the positive payment history needed to offset these negatives.
Multiple Credit Cards: What are the Drawbacks?
Holding multiple credit cards is fine for many people, but it carries downsides if not managed carefully. A larger number of cards can lead to higher aggregate fees, increased management complexity, and a greater risk of missed payments. Before applying for additional cards, consider your financial capacity to manage them responsibly.
For many cardholders, one well-chosen card that aligns with regular spending patterns and rewards goals is preferable to juggling several accounts solely for sign-up bonuses. A single, versatile card can reduce complexity while still delivering meaningful benefits.
When evaluating credit cards, look for features like security protections, relevant category rewards, cashback rates and annual fees. Choose a card that complements your spending habits and long-term financial goals instead of relying on repeated sign-up bonuses.
FAQs on Credit Card Churning
Is credit card churning worth it?
In the short term, churning can provide attractive perks and savings. Over the long term, though, frequent account turnover and hard inquiries can harm your credit health and limit access to credit.
Is credit card churning legal?
There is no law that makes churning illegal, but many issuers have policies to deter or penalize repeated churners. Issuers may refuse applications, limit rewards or close accounts if they detect patterns of abuse.
Is it ok to have multiple credit cards?
Yes—many people responsibly maintain multiple cards to take advantage of different rewards, credit limits and protections. Only take multiple cards if you can manage payments, fees and account monitoring responsibly.
How often can you churn credit cards?
There is no standard rule for frequency, but churning typically involves redeeming welcome bonuses and closing accounts soon after. Frequent churns increase the risk of credit score damage and issuer restrictions.
Can I have two credit cards from the same bank?
Yes, banks may allow multiple credit cards per customer, subject to your creditworthiness and the issuer’s policies.