Credit Churning for Rewards

mapkos13 · ‎03-31-2015

Question about opening accounts for points and then cancelling.

How does this impact your credit and what is the timing of the cancelled cards when doing it?

I've read to cancel just before the year is up to avoid any annual fees.

Doesn't this impact your score though having new accounts opened and closed? It would appear that it will lower your AAoA's.

Maybe once it's closed it doesn't impact it but I'm just not sure?

Anonymous · ‎03-31-2015

@mapkos13 wrote:
Question about opening accounts for points and then cancelling.

How does this impact your credit and what is the timing of the cancelled cards when doing it?

I've read to cancel just before the year is up to avoid any annual fees.

Doesn't this impact your score though having new accounts opened and closed? It would appear that it will lower your AAoA's.

Maybe once it's closed it doesn't impact it but I'm just not sure?

Hers a thread that you should read that deals with closing credit cards:

http://ficoforums.myfico.com/t5/Credit-Cards/Closing-Credit-Cards/m-p/347190?jump=true

Anonymous · ‎03-31-2015

@mapkos13 wrote:
Question about opening accounts for points and then cancelling.

How does this impact your credit and what is the timing of the cancelled cards when doing it?

I've read to cancel just before the year is up to avoid any annual fees.

Doesn't this impact your score though having new accounts opened and closed? It would appear that it will lower your AAoA's.

Maybe once it's closed it doesn't impact it but I'm just not sure?

I wouldn't worry about AAoAs as much as id worry about Adverse action.

Anonymous · ‎03-31-2015

There are downsides.
The biggest, as Nixon said is that banks will get upset with you and start closing your accounts.
However, if you sign up for 3-5 cards a year probably the risks are low for AA. There are still the negative effects on your FICO, so make sure the bonus is worth it to you. Don't sign up for that Walmart CC that gives a free 2L bottle of Soda as a sign up bonus, but do consider that Citi Aadvantage that gives you 50k miles.
Lastly, combine applications of cards you want to churn which have little utility after the bonus with cards you want to keep, like hotel cards which give an annual free night which upset the yearly fee, or no AF cards with good rewards

Anonymous · ‎03-31-2015

@Anonymous wrote:
Don't sign up for that Walmart CC that gives a free 2L bottle of Soda as a sign up bonus...

However, if they throw in a bucket of deli chicken, this statement may be up for reconsideration!

B335is · ‎03-31-2015

Every lender views churners differently. The rules for actually getting multiple bonuses over and over vary by lender. You must consider your maximum exposure with each lender because if you've hit it, you are forced to close down existing accounts to open up available credit. As for the impact to your scores, the continuous hit to AAoA require an occasional Amex account to soften the blow.

longtimelurker · ‎03-31-2015

@B335is wrote:
Every lender views churners differently. The rules for actually getting multiple bonuses over and over vary by lender. You must consider your maximum exposure with each lender because if you've hit it, you are forced to close down existing accounts to open up available credit. As for the impact to your scores, the continuous hit to AAoA require an occasional Amex account to soften the blow.

Right, and the rules for a given lender also change over time (e.g. Citi made churning some of its AA cards harder). The goal also has to be auto-approvals as much as possilbe, you don't want to get into a recon discussion where you have opened and closed cards from that bank 9 times in the last 6 months!

Open123 · ‎03-31-2015

A few general guidelines when trying to app for cycling sign-up bonuses.

1. Usually, don't cancel immediately after earning the bonus. Wait 12 months, or right before the annual fee is due, then call in to cancel. When asked for the reason, simply state the card didn't fill your needs as you had expected.

2. Do try to app with lenders who pull different CRAs.

3. 5 or 6 per year is completely safe, but if you have a thick file with low UT, 3 per quarter should be fine too.

When following these, I've never experienced any declines (except for when hitting a max CL or card limit), suffer any AA, or experience any large drops on my Fico score.

Good luck!