Churn and Burn Credit Cards: A Guide to Strategic Earning

Churn and burn credit cards can be a lucrative way to earn rewards, but it requires a strategic approach. You can earn up to 5x points on every dollar spent.

To get started, you'll need to apply for multiple credit cards, a process known as "churning." This involves applying for a credit card, meeting the minimum spend requirement, and then canceling the card before the annual fee is due.

The key to successful churning is to apply for cards that offer high sign-up bonuses and rewards rates. For example, the Chase Sapphire Preferred card offers 60,000 bonus points after spending $4,000 in the first 3 months.

Credit card churning is a strategy where people repeatedly open and close credit cards to earn intro bonuses. Churners apply for multiple cards in quick succession, earn the welcome offer, and then close the account before the annual fee posts in the second year.

Card issuers like Chase have implemented policies to stop or make it harder for people to churn. For example, Chase's 5/24 rule prohibits people who have opened five or more cards in the past two years from opening a new Chase consumer credit card.

Intro bonuses can be lucrative, but there are restrictions in place to prevent abuse. Some credit card issuers, like American Express, limit you to earning an intro bonus only once, while others restrict you from earning an intro bonus too frequently, such as every 24 to 48 months.

To give you a better idea of these restrictions, here are some common rules:

Credit card churning can be a great way to earn rewards, but it's not without its risks. Banks may close your accounts if they think you're gaming their program, and you'll forfeit your rewards.

Some potential downsides to consider include the risk of damaging your credit, accruing debt, and jeopardizing future loan applications. You might have a plan for making the minimum required purchases and paying off the balance, but an emergency expense or lost job could leave you without the means to pay off the debt.

Here are some specific risks to be aware of:

Churning can be a great way to earn rewards and bonuses, but it's essential to understand the rules and restrictions that come with it. Credit card issuers have put systems in place to stop the practice, but it's still possible to earn intro bonuses with the right strategy.

For example, some credit card issuers have a rule that allows you to earn an intro bonus if you don't currently have the card and haven't earned the intro bonus for the card in the past 24 to 48 months. This means you can qualify for an intro bonus again if you cancel your card and wait until that period ends.

However, some card issuers have restrictions in place to limit how many new cards you can get within a specific period and how many cards you can have at one time. For instance, Chase has an unofficial policy called 5/24, which prohibits people who have opened five or more cards (including non-Chase cards) in the past two years from opening a new Chase consumer credit card.

Here's a quick rundown of some common restrictions:

Remember, the companies' policies can change at any time, and there may be exceptions to these rules.

Churning credit cards can have some significant downsides, and it's essential to consider them before diving in.

A dip in your credit score is almost inevitable if you apply for multiple credit cards in a short period. This is because each hard credit inquiry can lower your score slightly. In fact, even if you're approved for a card, the inquiry will stay on your credit report for two years.

High spending can be a major issue with credit card churning. Many welcome offers require a minimum spend to qualify for the bonus points and miles, which can be a problem if you haven't already planned a large purchase.

Credit card churning can be time-consuming, requiring you to keep track of multiple accounts and make payments on time. It's not just about applying for new cards; you also need to consider the timing of your applications to maximize rewards.

Here are some of the potential impacts on your credit score:

Credit card churning can have some serious drawbacks, so it's essential to consider them before you start applying for new cards.

Banks may close your accounts if they think you're gaming their program, and you'll forfeit your rewards. This has even led to cases where card issuers have closed checking and savings accounts.

The card issuer can take back your rewards, which is a big risk if you're counting on those points or miles. If you have a negative rewards balance, new rewards you earn could go toward bringing that back to zero.

Opening multiple credit cards can lead to a dip in your credit score due to hard credit inquiries and closed accounts. Each new card can lower your average age of accounts, which makes up 15% of your FICO score.

You might have a plan for making the minimum required purchases and paying off the balance, but an emergency expense or lost job could leave you with debt and high interest rates.

Here are some potential credit downsides to keep in mind:

You could also jeopardize future loan applications if you open new credit accounts too close to the time you need to apply for a significant loan.

To earn rewards strategically, start by targeting a reward currency that's most beneficial to you. This means choosing a card that aligns with your spending habits and travel plans.

The Chase ecosystem is a great place to begin, as it has a 5/24 rule that allows you to earn points and miles without hurting your credit score. Building up the Chase Trifecta is a good starting point, as it offers a solid foundation for earning rewards.

Make sure to apply for cards that you plan to keep for the long term, as applying for too many cards at once can negatively impact your credit score. This means justifying the annual fee, which can be a challenge, but some cards make it worth it.

For example, many hotel credit cards offer valuable sign-up bonuses and a reasonable annual fee, often under $100. These cards can be a great option if you travel frequently, as they often include a free night certificate that outweighs the annual fee cost.

If you find that a card's annual fee is no longer justified, consider downgrading to a free version in the same card family. This way, you can still earn rewards without the added expense.

Churn and burn credit cards can lead to a vicious cycle of debt, with some individuals accumulating over $10,000 in credit card debt in just a few years.

High interest rates can make it difficult to pay off debt, with some credit cards charging as much as 30% interest per year. This can lead to a situation where the minimum payment is not enough to cover the interest, causing the balance to grow.

It's essential to be aware of the risks and consider the long-term consequences of using credit cards in this way.

Credit card issuers have their own rules to prevent credit card churning, making it more challenging to accumulate points and miles.

Chase's 5/24 rule is a notable example, limiting applicants to five new cards in a 24-month period. This can be a significant hurdle for those trying to churn.

American Express has its own limit, restricting users to five personal or business credit cards at a time. This means you can't just keep applying for new cards to rack up points.

Citi's 8/65 rule is another example, only allowing one card application every eight days and no more than two cards every 65 days. This can make it difficult to plan and execute a credit card churning strategy.

If you try to cancel your credit card accounts too soon, some issuers may take back any bonus points earned and not approve you for future cards. This can be a major setback for those trying to accumulate points and miles.

Churners are sacrificing their financial stability for the sake of accumulating points. This behavior is often driven by the desire to achieve elite status or redeem valuable rewards.

The average churner spends around $2,500 per year on credit card fees, which can lead to a significant debt burden.

Credit card companies are aware of this behavior and have designed their rewards programs to encourage it. This can create a vicious cycle of overspending and debt accumulation.

In fact, a study found that 75% of credit card holders who churn regularly have difficulty paying their bills on time. This can have long-term consequences for their credit scores and financial well-being.