What is credit card churning?

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Credit card churning, also referred to as credit card farming, is a way to profit from the bonuses credit card companies offer to new customers. It involves opening up new credit card accounts and meeting certain spending requirements to qualify for rewards.

You can earn thousands of dollars and airline miles through this process, but it’s financially risky. You could end up with accounts you don’t need and spend more than you otherwise would. Our credit card churning guide gives you the lowdown on how it all works and what the risks are.

Key takeaways:

• Credit card churning is the process of opening new credit cards to gain welcome offers and bonuses, then closing the accounts.
• The dangers of credit card churning include losing track of credit cards, missing payments, paying large fees and hurting your credit.
• Several banks have implemented new policies to prevent credit card churning.

What is credit card churning?

Credit card churning is the process of opening a credit card, meeting the spending requirements to collect the welcome offer and then closing the card. The goal of credit churners is to collect bonuses such as airline miles, travel points, cash or other rewards.

Telltale signs of credit card churning include opening multiple credit accounts within a short period of time and having duplicates of the same card.

Credit card churning example

Let’s say a bank offers cardholders 25,000 points if they open an account and spend $3,000 in the first three months. The churner opens an account and spends $3,000 by purchasing a gift card and buying a new couch.

The credit card company awards the bonus—good for two short domestic flights. The churner waits as long as required before closing the account and opening up a new one, starting the churning process again.

For credit card churners, this is serious business. They might have seven accounts open at once and spend hours managing them, keeping track of every detail on spreadsheets.

Juggling many credit cards can earn you huge rewards, but it’s not something to take lightly. You could end up damaging your credit and acquiring large amounts of debt.

Benefits and dangers of credit card churning

Churning credit cards can be profitable—you could earn thousands of dollars in credit card rewards and offers. There are many benefits that entice individuals to start credit card churning:

• You gain airline miles: Many credit cards offer bonus miles that can help cover the cost of a flight. Many credit churners use these airline miles to travel for cheap or even free.
• You get reward points: You can redeem credit reward points for travel accommodations, gift cards and other merchandise. Many credit cards provide cardholders with a signup offer of tens of thousands of reward points.
• You earn cashback bonuses: Some types of credit cards offer cash back, which is a percentage of the money you spend using the card. Some credit cards offer a cashback bonus to new users.

On the other hand, professional credit card churners often don’t mention the pitfalls of gambling with your credit. Before you reach for that shiny new credit card application, here are some of the drawbacks to consider.

• You risk overspending: When you open a credit card account with a lucrative signup deal, you’ll be required to spend a minimum amount using the card—sometimes thousands of dollars in a matter of months. If you don’t need to spend this amount, you’re overspending, which defeats the purpose of churning for free perks.
• You can’t keep up with your payments: If you’re not able to make payments on time, you could end up losing a lot of money in interest. Even worse, your account could be sent to a collection agency. Both scenarios are tough on your finances and could impact your credit.
• You pay more in annual fees than you gain in rewards: All credit card companies need to make money, and they often do this by charging annual fees. Once you do the math on fees and interest, you may realize that you’re spending more than what you’re gaining in rewards. 
• You may be banned: If you’re suspected of credit card churning, a credit card company may close your accounts.

Does credit card churning affect my credit?

Credit card churning can negatively affect your credit in several ways, like shortening your length of credit history, increasing your likelihood of missing a payment and making you look like a risky borrower.

When credit reporting companies like FICO^® calculate your credit score, they’re assessing how safe a borrower you are. Any behavior seen as risky can result in a lower score. Typically, companies look at five factors when determining your credit score: payment history, amounts owed, age of credit, new credit and credit mix.

Here’s how you can negatively affect your credit score by credit card churning:

• Higher risk for missed payments: Any missed payments impact your score. The biggest factor affecting your credit is your payment history.
• Larger amounts owed: Many cards require you to spend a certain amount of money to collect the bonus offer. However, owing a lot of money can lead banks to view you as higher risk.
• Shortens length of credit history: Opening several new cards shortens the average age of your accounts and reduces your score.
• New credit accounts: If you open several new cards at once, you may appear to be a risky borrower. Lenders may think you’re more likely to miss a payment, and your credit score may decrease. In other words, the more cards you take out, the greater the possibility your score will suffer.
• Multiple hard inquiries: Each time you apply for a new credit card, it triggers a hard inquiry on your credit report. Multiple hard inquiries in a short period of time can hurt your credit score.
• Lack of credit diversity: Piling all your debt onto credit cards is viewed as risky behavior. Credit reporting companies look more favorably on those who have different types of credit, such as an auto loan, a mortgage and a credit card. You may not achieve the best score unless you diversify your credit.

How banks prevent credit card churning

Since long-lasting banking relationships are more profitable, many banks have implemented policies that limit people’s ability to churn their cards. Here are a few examples of these guidelines:

• American Express: You can only receive each AmEx card’s welcome bonus once per lifetime.
• Chase: You are eligible for most Chase welcome offers only once every 24 to 48 months, depending on the specific card.
• Citibank: You can only receive welcome bonuses on Citi cards once every 24 to 48 months.
• Bank of America: Bank of America uses a 2/3/4 rule, which means the bank will only approve you for two new cards within two months, three new cards within 12 months and four new cards within 24 months.
• Wells Fargo: You may not be eligible for an additional credit card if you’ve opened a Wells Fargo card in the prior six months.

Safer alternatives to credit card churning

Credit card churning is risky. It requires time and a strict organizational system, and it could damage your credit. Luckily, there are other ways to ensure you’re getting good deals from credit cards.

• Choose a card whose perks align with what you need, rather than trying to get free stuff. If you travel a lot, choose a card that rewards you with airline miles for each dollar spent. If you’re a frequent shopper, opt for a card that issues points for shopping at certain retailers.
• Look for cards that reward you for being loyal rather than signing up. Because credit card issuers are getting wise to churning, some now offer cardholders bigger bonuses for staying loyal. You can earn bonuses after spending a certain amount in the first year or for making payments on time.
• Choose a hybrid approach, where you earn a signup bonus and then hold onto the card for a couple of years. You can usually downgrade a card with the same company to avoid high annual fees. While building a solid relationship with one lender may not be as exciting as credit card churning, it pays off in the long term without as many risks.

Credit card churning FAQ

Below, we’ve answered some common questions about credit card churning.

Can you make money credit card churning?

Since many credit cards offer signup bonuses, you can make money credit card churning. However, these cards often charge fees and annual interest, which may cut into your profits.

Is credit card churning illegal?

Credit card churning isn’t illegal, but it typically violates the terms and conditions of the credit card. As a result, credit card companies reserve the right to rescind your bonus offers if you violate their policies.

Is credit card churning worth it?

While credit card churning can serve as an easy way to make extra cash and earn rewards, it can also lead you to rack up debt. Credit card churning isn’t worth it if it hurts your credit or puts you in a negative financial situation.

Credit card churning: Proceed with caution

Rewards credit cards range from those that give out airline miles to bonus offers to cash back. While stockpiling signup bonuses on new credit cards can be tempting, it’s also risky. Without carefully managing your open credit card accounts and spending habits, you could end up with lots of debt and damaged credit. If you already have damaged credit as a result of credit card churning or other circumstances, consider looking into credit repair services to see what your options are and how you can get your credit back on track.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.