Reply
Super Contributor
MidnightVoice
Posts: 8,161
Registered: ‎03-25-2007
0

Credit Card Churning

I am not sure I have seen this discussed here, so I thought I would throw in a quick post

 

http://www.budgettravel.com/blog/the-risks-of-churning-mileage-credit-cards,12055/

 

This year, a record number of travelers have opened multiple credit card accounts to earn thousands of "free" frequent flier miles as part of sign-up bonuses. Some of them went on to close the same accounts soon afterward to avoid annual fees.

This increasingly common practice is called "churning" (or "shotgunning"). Airline analyst Jared Blank this week blogged about how he and his wife earned about 500,000 miles from credit card bonuses this year alone by churning rewards cards.

 

Now some people who do this claim it does not hurt their scores, and if it is done once every 366 days (367 in a leap year) I guess it could be true.  I have not tried it - I have plenty of credit, too many cards to keep track of, and I have noticed that many of these cards now need money to spent in a certain period of time to get the full rewards.

 

What do you all think?

The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Super Contributor
longtimelurker
Posts: 8,089
Registered: ‎04-22-2013
0

Re: Credit Card Churning

Churners on Flyer Talk do it more often than once a year, though some issuers require that sort of period between apps for the same card.   With a thick file, there is indeed an impact, but within three months or so, much of the dip has gone.

 

With manufactured spending, meeting required spend isn't an issue.

 

P.S.  Love the Pete Atkin/Clive James sig.

Valued Contributor
takeshi74
Posts: 3,217
Registered: ‎06-05-2013
0

Re: Credit Card Churning


MidnightVoice wrote:

 

Now some people who do this claim it does not hurt their scores, and if it is done once every 366 days (367 in a leap year) I guess it could be true.


Depends on one's credit.  With a thick file the effect would be less of an issue than it would be for one with a thin file.  Keep in mind that everyone's credit isn't the same.

Frequent Contributor
mikka1
Posts: 272
Registered: ‎12-28-2011
0

Re: Credit Card Churning

Last year I've been normally applying for 1or 2 new cards roughly every quarter. My wife has been applying for 1-2 cards every 6 months or so.

I'd say "use it while it lasts" :-) I also think that possible impact to the credit score is overemphasized - based on my monthly TU score I see that it's much more important what your utilization is rather than if you had 1-2 new inquiries recently.

So, IMO applying for 6-8 cards per year in total is fine even with my rather short credit history. Anyway, when you decide to stop (e.g. before mortgage) it recovers pretty quickly...

In my wallet now: Amex PRG NPSL, Amex BCE $15k $17k (thanks to recent CLI), Chase Freedom 11k, CSP $6k, Chase United ME $5k, Citi Dividend $5.6k, Discover It $4.5k and a handful of other cards...
TU Dec 2013 - 752Sep 2013 - 764 - new all time maximum

Obsolete data &colon:smileywink: Current TU - probably around ~750. I am now applying only for cards I can have fat sign-up bonuses on, repay them right away and close before next year. That's why BKLSBNKDELAWARE probably blacklisted me long ago, LOL...
Established Contributor
emptypockets
Posts: 1,008
Registered: ‎02-03-2009
0

Re: Credit Card Churning

It is a great way to get miles/points to use for travel. My last few apps were solely for the points, etc. that I was able to get for them (50k AA, 50k SWA, 70K Mariott). My AAoA is ok (around 5 yrs), and the dip in my score varies...but as someone alluded to, the dip seems to be more if my utilization goes up vs. as a result of INQ's. I have been reading alot on FlyerTalk, and have learned what I can about churning. Some of the info there is great (i.e. getting 2 cards to earn a bonus companion pass where someone can fly with you free wherever you go).

 

I am not a true churner (some of those folks have 5-6 of the same cards and got the bonus each time), I doubt if I will cancel and re-apply for certain cards. If you put your mind to it, it can be quite lucrative. But it is not for the faint of heart or anyone who is super interested in keeping their scores in the 800+ range. If you can't stand to see fluctuations in your score, it is not for you.

 

 


CC's: AMEX (4), Alliant Visa, PenFed AMEX, Pen Fed Promise, Citi (4), Chase (6), Nordstrom Visa,US Bank Cash+, Huntington Voice, UMB Visa, Nasa FCU Plat Cash Visa, Barclay's Visa, Citi (4), Discover IT, Walmart Discover, Sam's MC, Cabela's Visa, Cap One QS, BOA (2), BMW Visa, Comenity Visa/MC (3), Ebates Visa Siggy, 5/3 RLR MC, DC Premier MC, Macy's AMEX; A few store cards.

Current Scores: EQ My Fico (12/14): 785; TU MyFico (12/14): 795; EX (My Fico): 765; Walmart TU Fico 08 (12/2014): 788
Super Contributor
MidnightVoice
Posts: 8,161
Registered: ‎03-25-2007
0

Re: Credit Card Churning


longtimelurker wrote:

 

P.S.  Love the Pete Atkin/Clive James sig.


Not many would know that over here  :smileyvery-happy:

The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Senior Contributor
Open123
Posts: 4,219
Registered: ‎02-23-2011
0

Re: Credit Card Churning

The past year, I've gotten about 10 - 12 CCs (so many, I've lost count) purely for sign-up bonuses.  Usually spaced about 3 months apart with an inquiry on each respective bureau.  During each time, my credit score has always been from 725 - 760, depending on the issuer.  No matter what I do, my scores never dip below 725.

 

All approved, though not instantly.  No AA, and AAOA is currently at around 10 years bolstered by 4 backdated Amex cards.  Will apply for another Amex in January (or, before if there's anything compelling) for an additional aged account.

 

So, in my case, there is has been no negative effect.

 

 

Established Contributor
scenery_guy
Posts: 936
Registered: ‎07-24-2012
0

Re: Credit Card Churning

What's this credit card "churning" you mention? I'm going to have to check into this idea. 

 

All kidding aside I don't think it's churning unless you get the cards and the bonuses, keep for less than a year then close it, wait out a period and reapply for the card. If that's the case stand by as I am approaching the cancel the card phase for those labeled non keepers. 

 

No ill effects for me yet, mostly all approved instant if not they were approved within a couple of days (Citi denying me for two apps in one day blew perfect for me). AAoA still hovering almost dead on 10 years due to a few very old cards. Also keeping scores above 720-725 and that seemed to help. Of course zero lingering debt on all cards a big plus (unless I am apping soon I let things post before paying just to watch my Credit Karma go bonkers). No matter what always paid in full before due date. 

 

No new cards planned for rest of the year unless something very special appears. I need to close some and begin the wait it out phase. In the mean while Mrs. scenery_guy can do the new card procurement. 

Senior Contributor
Open123
Posts: 4,219
Registered: ‎02-23-2011
0

Re: Credit Card Churning


mikka1 wrote:

I'd say "use it while it lasts" :-) 


+1

 

In general:

 

1.  When issuers are in an "easy" or "loose" credit phase, apply and request CLIs.  

2.  When they're in a "tightening" or "contracting" cycle, don't apply or request CLIs.

3.  When sign-bonuses are generous (or, at historical highs never seen before), apply for them.

4.  When they're low, don't apply.

 

Money now is worth 2 times more than later, and infinitely more than 5X "conditional" over time.  Just seems common sense to me.  

 

When everyone is selling, then buy; conversely, when everyone is buying, then sell.  It has always befuddled me how such simple self-evident truth is lost on so many.

Established Contributor
FutureBillionaire
Posts: 650
Registered: ‎12-12-2012
0

Re: Credit Card Churning


Open123 wrote:

The past year, I've gotten about 10 - 12 CCs (so many, I've lost count) purely for sign-up bonuses.  Usually spaced about 3 months apart with an inquiry on each respective bureau.  During each time, my credit score has always been from 725 - 760, depending on the issuer.  No matter what I do, my scores never dip below 725.

 

All approved, though not instantly.  No AA, and AAOA is currently at around 10 years bolstered by 4 backdated Amex cards.  Will apply for another Amex in January (or, before if there's anything compelling) for an additional aged account.

 

So, in my case, there is has been no negative effect.

 

 


As soon as Amex comes out with a card that will give me some benefits, I will app for it.

Gas: Discover It, Penfed Platinum Rewards x2, Chase freedom, Citi TYP
Plane tickets: CSP
Groceries: AMEX BCP, Penfed Platinum Rewards,Citi TYP
Clothes: Express, Amex BCP, Discover IT
Amazon: Citi Forward, Cash +
Restaurants: Citi Forward, Chase Freedom, Discover IT, CSP
Hotels and other travel: Discover Escape, CSP
Movies: BofA travel rewards visa signature(fandango), Discover IT, Citi Forward, Freedom
Bars, clubs, tomfoolery: CSP, Citi Forward, Discover IT, Freedom
Balance transfers: Kroger 123 rewards
Bill Pay: Chase Ink Plus, Citi Forward,
Everyday spending: Bofa Accelerated cash rewards amex, Discover Escape

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+
}