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Should You Be Afraid of Churning Credit Cards?

Churning credit cardsChurning credit cards is something people seem to either love or want to avoid at all costs. I get the apprehension, on many levels, as it’s playing with a tool that if used unwisely can lead to overspending and potentially debt. That makes total sense.

However, for some there is a genuine fear of credit card churning. My wife has had several conversations lately with clients of ours who have expressed fear, or at the very least considerable apprehension, of what might happen to them if they dipped their toes in the waters of churning credit cards. In one case, my wife explained how to use one or two credit cards to fund an expensive trip.

Instead of being excited, her friend reacted with fear, skepticism and hesitation around the entire topic of using a credit card. My wife left the conversation sensing that her friend had a somewhat irrational view of credit cards – which is another issue altogether really. Her conversations got me thinking that it would be interesting to discuss fear and how it relates to credit cards.

Fear of Hurting Your Credit Score

The first thing mentioned by each of these individuals my wife had conversations with was fear; specifically, fear that even using credit cards would hurt their credit score. That fear makes sense, on one level, but is largely an invalid point driven by a lack of knowledge about how a credit score is determined. Each time you apply for a credit card, you generally see anywhere from a two to a five point impact on your credit score. Personally speaking, I have churned about 10-12 cards over the past year or so and my score is still in the 790-800+ range when I check it on Credit Karma. Since anything over 720 is considered good, I’m pretty happy with that.

One of the keys to remember when looking to churn credit cards is to space out your applications. Most will say to space out applications at least once every three months to as far as four to six months to play it safe. I personally go with the fourish month method, applying for multiple cards on the same day and that seems to work well for me. The point is to space them out and apply wisely to have a minimal impact on your credit score. Do this and you should be fine.

The other thing to remember is the importance of building credit. Two of the individuals my wife spoke with didn’t have any credit cards. While they shouldn’t jump head first into churning credit cards, they do need to build credit from nothing and thus likely should get at least one credit card so they can begin to build that score. However, that’s really a separate issue altogether.

Fear of Getting Into Debt

Another fear I hear quite commonly is that churning credit cards will lead to getting into debt. I will say that if you’re afraid that churning credit cards will tempt you to overspend and get into debt as a result then no free trip is worth it – plain and simple. Some might argue this, but I would say this is a valid concern. That is especially the case if you have a history of struggling with debt. In that instance, you need to do what’s best for you.

Maybe it means just getting one card, using it wisely and using it as a means to build your credit. Again, you need to do what’s best for you and your situation. With balance using a credit card can be fine, but you need to be able to sleep at night and if worries about churning keep you up, you should probably avoid it altogether.

Churning Credit Cards Can Be Rewarding

As you can likely tell, I am pro credit card churning as long as it’s done wisely. 🙂 We have used it to fund several trips over the past year or two and have plans to do even bigger and better ones in the near future. Most of these trips would’ve cost us several thousand dollars yet we were able to leverage credit cards to get them for free or for pennies on the dollar. What’s even better is that we have earned these trips through our regular, everyday spending.

With that in mind, if you’re able to maintain that balance there really isn’t too much to fear. Yes, if you’re concerned about debt by all means churning credit cards should be the last thing on your mind. But, if it’s not then you can leverage your wise and planned spending to earn either cash back or free trips. You can start out slow and get a card that will allow you to hit the minimum spend rather simply.

For example, you could get the US Airways Mastercard that gives you 40,000 miles after the first spend. If cash back is your thing you could always start out with something like the Chase Freedom or Discover it card to get you started. Essentially, if you’re interested in churning credit cards, dip your toes in the water with one card and see how it goes.

 

What are some other reasons you can think of not to churn credit cards? Do you churn credit cards – why/why not? What was the first trip you got for free thanks to churning credit cards?

 

 

Photo courtesy of: Lending Memo

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John Schmoll is a Dad, husband and veteran of the financial services industry. He's passionate about helping people learn from his mistakes so that they can live lives free from the shackles of debt and empowered to make their money work for them. You can check out his other sites: Frugal Rules, for ways to improve your financial literacy; and Sprout Wealth for tips on different ways to make more money. John has been featured on Forbes, Lifehacker, Yahoo Finance and US News & World Report and more. If you're wanting to grow your blog, check out my blog coaching services to see how I can help you take your site to the next level.

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16 comments

  1. The only fear I have of churning credit cards is keeping track of all of the deals and spending. It is something that I would really love to incorporate into the plan, I just have to take some time and create a system to organize it. As far as credit scores, I have a few clients who do this and the funny thing is, it improves your score, the available credit and utilization numbers really make a difference on the plus side.
    Shannon @ Financially Blonde recently posted…Music Mondays – FancyMy Profile

    • I had the same concern as well and it does honestly get a little more tricky as you bring on more cards of course. I believe there are some apps/programs out there that can track it for you though I’ve just stuck with a simple spreadsheet I’ve created for us. That is crazy it does that for your scores. I’ve taken the general hit but my score continues to come back because I’m using so very little of what is available to me.
      John Schmoll recently posted…Want to Go to Hawaii for Free? Here’s HowMy Profile

  2. I do churn credit cards as a hobby, and you’re right that it is very rewarding. It can be a huge pain to keep track of things…but I think it’s worth it! =)
    Holly@ClubThrifty recently posted…My Parents Were Frugal, but Sometimes I’m NotMy Profile

  3. I would also have to cite the keeping track of all the card details but a simple spreadsheet would solve the problem. I am not against cc churning and have done it on a couple of occasions to benefit from the rewards. For those who are leery because of former cc debt then definitely they should think about how they are feeling emotionally when it comes to credit cards and spending triggers.
    Kassandra recently posted…The Moment I Outgrew My MoneyMy Profile

  4. I started playing the points game this past summer. I am planning a big trip next year. My trick is to always check my balances online every night or two and pay it off. I think the advent of the apps make it much easier. I also dont spend more that I can, which is where people fail. When I do use it I always think, ” would I use my debit card for this” in order to be sure I have the money. It is a very slippery slope, you have to be very very strict. Watching points grow always helps! If I did not have a goal I would not do it.
    Be careful!

  5. Credit card churning is fun but I think its a “sometimes” game. A lot of the concerns pointed out here are totally valid. I’d be very worried about killing my credit score if I didn’t already have a lot of history and good standing built up.
    MMD recently posted…What is the Minimum Retirement Savings You Could Comfortably Live On?My Profile

  6. I’m not into churning because I just don’t want to keep track of a lot of credit cards. I already have three and a debit card and I think that’s good enough for me. I might change my mind eventually, but I’ll stay away from that game for now.
    Million Dollar Ninja recently posted…Our Trip To Philly – Part OneMy Profile

  7. Balance is the key when having a credit card. I keep one for myself so that all rewards I get will be solely from my only credit card. I actually use it often when it’s still payable. Once everything adds up in the bill and my plan is getting out of the way are the ones I always look out for in order to stop paying it with higher interest.
    Jayson @ Monster Piggy Bank recently posted…What is The Future of Recruitment in AustraliaMy Profile

  8. As Shannon said above, my fear is just keeping track of all of the spending and deals. In other words, not getting into debt. I tend to just keep 2 cards – one that gives me a standard cash back and another with rotating categories. For me it works and I’m not sure I could add any more cards into the mix.
    Jon @ Penny Thots recently posted…The Five Best Money Saving WebsitesMy Profile

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