Credit Card Churning: Make Money with Credit Cards? (2023 Guide)

By Planting Our Pennies •  Updated: 06/27/23 •  5 min read

Looking for an easy way to make money that doesn’t require any work? Let me introduce you to the world of credit card churning.

Churning credit cards is an easy way to score some free money just by being issued a new credit card. Some card issuers offer hundreds of dollars in free cash, making it a great option if you have strong credit and know how to manage money properly.

That said, churning credit cards can be dangerous and get your burned if you aren’t careful.

In this post, I’ll give you a deep dive on everything related to credit card churning. Ready? Let’s dig in!

What is Credit Card Churning?

In a nutshell, credit card churning is the practice of applying for credit cards specifically to earn sign-up bonuses, and then, once the reward is earned, either closing the card or ceasing to use it. Sounds simple, but let me assure you, it’s a fine art.

Here’s a great video that explains more about how it works.

Pros of Credit Card Churning

  1. Rewarding Returns: As we’ve discussed, credit card churning can yield significant rewards, from free or discounted travel to substantial cash back. Over the years, I’ve redeemed thousands of dollars’ worth of rewards, and there’s a certain thrill to getting that statement credit or booking a “free” flight.
  2. Additional Perks: Many rewards credit cards offer additional perks beyond the sign-up bonus. These may include free or discounted access to airport lounges, complimentary hotel stays, travel insurance, extended warranty coverage, and more. Some cards even offer elite status in hotel or airline loyalty programs, which can yield additional freebies and upgrades.
  3. Credit Score Boost: If managed correctly, credit card churning can actually help improve your credit score over the long term. This is because having more available credit can decrease your credit utilization ratio, which is a major factor in credit score calculations.

Cons of Credit Card Churning

  1. Requires Organization and Discipline: Credit card churning is not a set-it-and-forget-it strategy. It requires a high degree of organization to keep track of multiple cards, their respective spending requirements, and due dates. It also requires discipline to avoid overspending just to earn rewards.
  2. Potential Credit Score Impact: Each time you apply for a new credit card, the issuer conducts a hard inquiry on your credit report, which can temporarily lower your credit score. If you apply for many cards in a short period, this can significantly impact your score. Also, closing a card can increase your credit utilization ratio or decrease your average account age, both of which can also negatively impact your score.
  3. Risk of Debt: With multiple cards and a drive to meet minimum spending requirements, it’s easy to slip into overspending. If you can’t pay off your balances in full each month, interest charges can quickly eat into any rewards you’ve earned.
  4. Changing Rules and Restrictions: Credit card issuers are well aware of churning and have implemented rules to limit it. For instance, Chase’s “5/24” rule states that if you’ve opened five or more credit cards (from any bank) in the past 24 months, your application will likely be denied. Other issuers have similar policies, and these rules can change, so you’ll need to stay up to date.
  5. Opportunity Cost: Applying for a new card just for the sign-up bonus might prevent you from getting a card that’s better suited to your long-term spending habits. If you reach a card issuer’s limit on how many cards you can have, you might be stuck with cards that don’t offer the best ongoing rewards for your spending.

How Much Can You Make Churning Credit Cards?

Credit Card Churning

Over the years, I’ve saved thousands of dollars on travel expenses. For instance, in one year, I accumulated enough miles for two round-trip tickets to Europe, valued at over $2,500 each.

However, remember that the value of rewards varies greatly by card and redemption method. Also, the more you spend (responsibly, of course), the more you can potentially earn in rewards.

Credit card churning is a great way to double your money in an hour or less.

Is Credit Card Churning Illegal?

Is Credit Card Churning Illegal

The short answer is no, it’s not illegal. The slightly longer answer is that, while not against the law, it is often frowned upon by credit card issuers and could have other consequences.

When you sign up for a credit card, you agree to the card’s terms and conditions, which typically don’t expressly prohibit churning. As such, you’re not breaking the law by applying for a card, earning the sign-up bonus, and then ceasing to use the card. However, issuers are becoming increasingly savvy about spotting churners, and they might choose to close your accounts or deny your applications if they suspect you’re gaming the system.

It’s also worth noting that there are some practices related to credit card churning that could land you in hot water.

For example, “manufactured spending” (where you artificially inflate your spending to meet bonus requirements, such as buying and then reselling gift cards) is generally seen as fraudulent and could lead to your accounts being closed, or even legal action.

Another consideration is honesty in your credit card applications. Misrepresenting your income, expenses, or other personal information on a credit card application is definitely illegal and could result in criminal charges.

So, while the act of churning isn’t illegal, dishonest practices associated with it can be.

Final Thoughts

In the end, credit card churning is a powerful tool if wielded properly.

It’s allowed me to put money back into my pocket and enjoy experiences that would have otherwise been out of reach. But it’s not a strategy to be taken lightly; the risks are as real as the rewards. So tread carefully, plan wisely, and may the rewards be ever in your favor!

Planting Our Pennies

Planting Our Pennies is a site dedicated to helping others reach financial freedom through passive income, investing, and making more money.