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HomeBlog Credit Card DebtWhat Is Credit Card Churning And Should I Try It?
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What Is Credit Card Churning And Should I Try It?

May 1, 2019 by Tom Harkins

ever wondered what is credit card churning and if it's a good or bad move
figuring out what credit card churning is and if you should do it

Do you ever apply for credit cards just for the sign-up bonuses or rewards points they offer? This strategy of signing up for numerous cards to get those types of benefits is known among credit card enthusiasts as “credit card churning.” Many people take readily to credit card churning; devotees will even apply for and cancel the same type of credit card multiple times just to get the same sign-up bonuses repeatedly. However, while there are some benefits to credit card churning, there are several disadvantages as well. Additionally, making mistakes with this practice could lead to long-term financial harm. Here are some things to think about before you decide to try credit card churning.

Churning and Your Credit Rating

To practice credit card churning, you’ll have to open new and close old credit card accounts constantly. To qualify for those new credit cards, you’ll need an average to good credit score. You can download a free copy of your credit report every year, so make sure you do so and read it thoroughly. Your credit report will give you a clear picture of your current credit rating, so you’ll know right away whether churning is even in the cards for you. Many online banks and financial apps allow you to monitor your credit score in real time, too, so consider downloading one of those to maintain credit score awareness at all times.

You should also be cognizant of the potential impact churning can have on your credit rating. Constantly opening and closing credit card accounts can drag your credit rating down substantially. New credit inquiries account for about 10% of your overall FICO score. Failing to monitor churning’s impact could damage your credit and make it harder to make critical life purchases later on, such as buying a home or a car. Thus, before you start credit card churning, ensure you’re ready to monitor your credit rating closely.

Optimize Your Lifestyle

In some cases–and if you do it right­–credit card churning can help you get the most out of your personal lifestyle. For instance, if you travel a lot for business or pleasure, rewards cards that rack up mileage points can help you save money on airfare and earn tremendous other travel benefits. You may also be able to cash in those rewards points to amplify your spending power. Many cards offer rewards for the purchase of items such as gas or groceries, so they can help your money go a long way. As an added benefit to this practice, you may be able to get those rewards without having to pay substantial interest or other fees if you’re rapidly turning in old cards and closing the accounts.

Manage Your Credit Cards Carefully While Churning

Churning will require you to rack up significant balances on your credit cards for the points, pay them off, and cancel them, and then sign up for new credit cards. You’ll have to repeat this process repeatedly to reap any real benefits from all this churning. Additionally, you’ll also need to be able to pay off those credit card balances regularly in order for credit card churning to work properly.

If you carry a balance that’s too high to pay off in a given month, your ability to close out the old cards and order new ones to earn more points will be severely limited. Moreover, attempting to churn could end up getting you deeply into debt, and make it difficult to pay your current bills or save for the future. If you have trouble managing debt, you should really think long and hard before you decide to start credit card churning.

Read the Terms and Conditions

Not all credit cards are equal, so make sure you know exactly how your bonuses or rewards points are going to work before you apply for a new card. Read the terms and conditions for your rewards points cards very carefully. Many of those rewards credit cards require that you spend a minimum amount of money within a certain period before you qualify for the sign-up bonuses. As an example of this, one credit card from a popular lending institution grants cardholders 40,000 bonus points upon account approval, but not until the cardholder has spent $3,000 within the first three months of card activation. The terms on some credit cards may be a bad fit for your current financial situation, so make sure you read the fine print before you select credit cards with which to churn.

Credit card churning can offer you some excellent financial benefits. However, if you do it wrong, churning can put you in debt and damage your credit. Thus, if you’re thinking about giving credit card churning a try, consider the points discussed here, and proceed carefully.

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Moderate National Debt Relief Caller: Charlotte Transcribed WE 1/24/2021 Charlotte: Before I begin, I have to let you know that our call may be recorded. Can you tell me, how did you first hear about our National Debt Relief? JOAN: Oh, I don't know. I don't remember. I don't know how I heard about it. Charlotte: What made you decide to work with them? JOAN: Well, obviously, I needed to consolidate my debt. Charlotte: Tell me about the service program that they provided you with. JOAN: Well, I'm not done. But for me, it’s costly. What I did not like about it was that they add on. They say it's going to be X amount of dollars. But then what they do is they say, “Oh, well, we found another creditor that you need to…” So that'll be at a different part of the month and I don't like staggered bills. If I'm gonna pay a bill, whether it's to the phone company, the insurance company, whatever it might be, I want to pay that bill once a month. That's the only drawback. Charlotte: So let me get this. Normally, they are collecting the bills upfront. And then they work to get them paid off at a different rate. So everything wasn't collected all at once, if that's what I'm hearing correctly. JOAN: No, no, no. Every month, money is taken out of your account. And they pay X amount of dollars. Like let's say you owe $5,000 with Citibank, $500 in Credit One, whatever. They work out a deal with them and then they say, “Well, you have to pay $350 a month.” And they'll pay $20 a month towards -- they give you like around about how long it's going to take. Two years, two and a half years. And then they work it out that way. Charlotte: Now, what did you think about your negotiator? JOAN: I don't know. I just called up. It's a completely different department. So when you call up to sign up, it's very different. I don't remember that. It's just that they collected all the information. It was easy for me. I didn't have to go through and find whatever bills I wanted to put in the debt relief. They did that. Charlotte: So say you have questions or concerns. How did you get your questions or concerns addressed? JOAN: I would just ask and they answered it. They're very helpful like that. They'll answer any questions you have. And if they don’t know, they will find out. Charlotte: So was there not a particular person that you spoke with? JOAN: No, you don’t have one person that you deal with that just handles your account. Once you do – they’re like headhunters. Until you sign up, you're going to have that one person and even other people calling. Once your name is out there, they're going to keep calling you. So, once you sign up, then it's whoever answers the phone. It’s customer service. Charlotte: How comfortable did you feel working with National Debt Relief through this process? JOAN: I felt very comfortable, very safe. I was not worried about anything. Charlotte: Is there anything about this process that you would have liked to seen handled differently? JOAN: Yes. The way the payments come out. I'd rather have them one instead of … Charlotte: Everywhere. JOAN: Right. Well, not everywhere. For the most part, the bulk of them were. But then if there's one here, one there, they don't just extend it to another payment. And then the payments change, like the payment amount. You could pay $20 for six months, and then all of a sudden, it's $80 for the next three months, so you really don't know. Charlotte: So if you have to rate this experience on a scale of one to five, five is you’d recommend to friends, one you're pretty dissatisfied… JOAN: No. I would definitely recommend it to a friend. Charlotte: How would you say working with National Debt Relief has impact your life? JOAN: Well, it did help until I hit a speed bump. I'm in the middle of a divorce and my husband closed our checking account, of course. But so far, as a matter of fact, that's why I thought you were calling. I have to postpone the next month, so hopefully, they'll be able to postpone it, because I've been postponing it for a few months. Charlotte: Would it be okay if I posted your comments as a review on our public website for National Debt Relief? Because you did give us some really good feedback. JOAN: Yes, but not using my name. Charlotte: Okay, I will make it anonymous for you. I will also send over a link so that you can have it as a record for yourself at jdola20@yahoo.com. JOAN: Yes, but do not put that public. Charlotte: Oh, no, no, no. That doesn't go public. Definitely. How would you say working with National Debt Relief has impact your life. JOAN: Well, really, it would have helped if I could have stayed on the program. Charlotte: We’re recorded.

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