Is Credit Card Churning a Smart Financial Strategy?

Is Credit Card Churning a Smart Financial Strategy?

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[legaryd]

If it feels like work, then credit card churning isn't the hobby for you. If you enjoy doing it, you become very efficient about integrating it into your life. Also, it's not a few thousand bucks or a hotel. If you're a reasonably successful professional, it's worth a lot. I've been "churning" for over 10 years, and it's probably earned me $200k in free flights, hotels, etc. I also have a perfect credit score and pay probably about ~$125 bucks a year in annual fees.

[jeffs.]

Ok here's what I just did which did not burn calories: 1. Spend 2k in 90 days to get 50, 000 Delta Points. Paid for daycare. 2. Cancel card around month 10 or 11 to avoid annual fee and won't black list you for cancelling too soon. 3. Get a RT ticket to Greece for free. Takes 15 minutes of my time. This does not burn calories. This won't make you rich, that's not the point. Just be responsible. It's easy. I appreciate your thoughts although going into more depth would be helpful.

[lonz_]

Credit card churning is a FANTASTIC idea...IF!!! you are responsible and know what you're doing. Just like anything else financially...so I think to paint it in a bad light is misleading. It really is not that hard to do as long as you do your research.

[jeffjagodinski]

Lol
Read wealthy barber also....great book !

[A-HLE]

Churning is opening an account, getting the bonus, and closing the account. Churning is not cash back or holding on to a card. $200/hour is what it is worth in my opinion.

[michaeldowning]

I only carry enough balance usually (1-9%) to report to the credit bureaus by the end of the month, so my credit can continually move up. Otherwise if I paid my balance in full before my statement closes, it would show 0% utilization. Is this okay ?

[snach]

Credit card churning is equivalent to a credit card ponzi scheme.almost identical, you borrow from peter to pay paul and mary

[joshalecusan]

I do 'savings account churning'. I look for banks with bonuses that don't require me to open a credit card. They typically require you to hold $1000 in the account for 6 months, and sometimes a few other small requirements.

I do one or two accounts at a time and have made $1, 450 the past year and a half from 4 banks. No credit cards or annual fees required and very little effort. Once I meet the deadline I close the account.

[spritely]

Made $5k in credit card sign up bonuses and points this year. $0 in interest paid, $95 in annual fees now downgraded to a $0 annual fee card.

[TadashiTravelTours]

As much as I like citing myself as an exception to the rule by having redeemed points and miles from credit cards for ~$52, 000 of flights and hotels since summer 2017. When others ask me if they should do the same, my general response is: it would likely take them too much time researching, handling N number of credit cards, and there is too much that can possibly go wrong (racking up annual fees, interest, not redeeming the points well, etc.) to justify trying to do what “pro churners” do. Full disclosure, I view this “points game” as a hobby and not as a way to build wealth though. I work and tutor as a side hustle to build wealth. Making that distinction is important. Thank you Money Guy

Thank you for providing the public with a solid, principled response - a better response than the other guy in Tennessee

[alexchen]

I wouldn't encourage anyone to get bogged down with credit cards but if you're very disciplined, it can be profitable, especially if you like luxury travel. Two things from the video, I'd disagree with- 1. you can churn through credits and still have an excellent or near perfect credit score as long as your careful to pay off your bill each month (easily done by setting up autopay). 2. Banks don't have to make money on every single customer to have huge profits. The large sign up bonuses are loss leaders used to entice more people to sign up. They'll make money from many of these people but they'll also loss money from a small fraction of well disciplined financial mutants. Net, the banks will still make a lot of money which is why they keep on putting out large bonuses to sign up for new cards. Think of it as a money transfer from the financially unsavvy to the financially savvy.

[theanimecompletionist]

I can see what you’re saying, but for someone young like me (late teens/early 20s) a few thousand back a year is huge. I end up using huge bonuses by leveraging my credit and get about 40% return on spend or more back per year. You can do this with cell carriers too by buying phones on device payment plans and then switching carriers to have them “buy you out” and switch back. I think I average $2000-4000 back per year and only spend $8000-10000.

[LordJonSRS]

I’ll keep cards that have 0 annual fee but I do have quite of bit of them… of course I have investments from stocks and that is my side hobby is all things finance

[anniealexander]

Credit cards can be very beneficial as long as the person can control spending. I got over $500 in bonus rewards last year. It was very helpful during the week of Christmas and the week of buying my daughter school clothes and school supplies.

I always read to make sure it's a good card. No annual fees or the ones that charge you immediately for interest on purchases.

I'm a landlord and I've put a roof and 3 heat and air units on 0% cards. It eliminates my need to have an emergency fund.

[IamChucky_]

I’ve been credit card churning for years. Easy money. I basically only apply for 0% apr 0 annual fee cash back credit cards and use them as a debit card paying for gas, groceries etc and once I hit the minimum money spent and get the reward I use it as a statement credit and pay off the balance and switch to the next card. I never close the cards I just put them away in a safe place. I eventually after a year or so if inactivity the bank will close the card on their own.

[GreenBeats]

They touch on the bigger financial picture being a priority which is good, but overall this was a very weak rebuttal to credit card benefits strategies. "The credit card companies are smarter than you": please stop using this old and tired logical fallacy. They mention rotating category cards--those are a minority on the market and aren't difficult to track. They mention closing most of your churned cards is bad for your credit score. That is a poor generalization. You just need 1-3 "keeper" cards to preserve your credit history and yes you can cancel 20 cards and still have an 800. They obviously aren't familiar with the nitty gritty of credit card bonuses, travel, and rewards strategies. Making $2000 in tax-free bonuses is actually a huge deal if you are taking home 30k-60k after taxes. You can also go for a strategy that is in-between a 25+ card strat and a <5 card strat by churning through 10-15 cards, mostly grouped into a few companies, where you only have to keep track of a few logins. This would still net you a large chunk of money for minimal effort, aided by auto pay.

[MoistPancakes]

You wanna align your credit cards with future goals. I don’t plan on traveling this year. So, I’m using credit cards with cash back bonuses. Sometime near the end of 2025, I wanna travel to some European countries. So, around the end of 2024, I’m gonna start using a credit card that has travel rewards.

[djpuplex]

Make a extra $500 A year for the Roth from credit card bonuses and points.

[wildfoodietours]

There are sure some master churners out there, but it isn't for me as the time and effort involved seems immense. Plus, one mistake can ruin it all.

[tcgtpl]

As TMG will say, Find out your why. Why are you playing the credit card churning game? It should be either cash back or points/miles, and then find out which cards really max out your benefit to spend ratio. I find that there once you get over about 5-6 cards there really isn't much additional benefit from having more cards.