What is Credit Card Churning?
Written By: Nick Nguyen | Read full profile
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I’m always into finding new ways to make money. So when I learned that you could do that using credit cards - ka-ching! Hello another stream of income!
Basically, credit card churning is when you open new credit cards with enticingly delectable sign-up bonuses and lucrative points/cashback rewards. Basically, you try to open one every 4-6 months or honestly before an anticipated costly purchase and then charge it to the card so you can quickly fulfill any minimum purchase requirements.
This can be before Christmas, vacation trips, paying for your car/home insurance (hopefully you’re making these payments in a lump sum to capitalize on any potential discounts), or even purchasing a new car*!
*I typically advise all my friends, family, and clients when negotiating car purchases to charge $2500-$5000 - whatever the maximum the dealer allows before charging fees - to a credit card. This is an easy way to gain $25-$100 cash back on top of meeting any purchase requirements!
Doing this a few times a year will let you earn anywhere from $150-$625 in bonus points or cashback on purchases that you were planning on making! If you time it right with the correct credit cards, you may be able to capitalize on extra bonuses on things like restaurants, online purchases, home improvement costs, etc.
Folks who regularly make big purchase transactions will typically take advantage of this to reel in a few extra Benjamins every year or a free flight or two! In 2020, we opened a Chase Sapphire Preferred Card and charged our home insurance, plane tickets, Christmas presents, restaurants, and dental bills to it to earn 60,000 bonus points, which we had earmarked for a free Hyatt Suite in Japan, had it not been for the pandemic.
Anywho, Credit Card Churning is a great way to make an extra $1000 a year or pay for that big vacation that you wanted to take with your friends but didn’t have the cash for.
BUT BE WARNED: This method isn’t for everyone. It works best for people who are disciplined with paying back their credit card IN FULL and not spending more than they have. It’s not worth diving into Credit Card Churning if you end up owing that much or even more in interest because you didn’t pay off your monthly statements completely. This strategy works best if you know your monthly spending habits and can strategically plan all your purchases to go towards the spending minimums to earn the bonus for that card. Else, you might find yourself chipping away at your credit score and screwing up your credit utilization ratio, which isn’t a good thing.
*PROCEED WITH CAUTION. DON’T JUST OPEN A BUNCH OF CREDIT CARDS TO SPEND MONEY ON THINGS THAT YOU DON’T NEED. I’M TALKING ABOUT STUFF THAT IF YOU DON’T HAVE YOU’LL CEASE TO EXIST OR COMFORTS IN LIFE THAT ARE NECESSARY LIKE PLUSHY CHARMIN TP. CREDIT CARD CHURNING IS MEANT FOR PEOPLE WHO ALREADY KNOW THEY’LL SPEND XX AMOUNT OF MONEY ON SOMETHING, AND PUT IT TOWARDS A CARD THAT’LL GIVE THEM A LITTLE EXTRA sum’-sum’in FOR THEIR PURCHASE.
**Nguyening Lifestyles is not a registered financial service provider and is not liable for any decisions you make regarding credit cards or managing your debt. We are simply here to entertain and provide content for educational purposes only. Therefore, we are not liable in any capacity for any actions that may result from reading this post. Proceed with using any type of credit card, credit line, debt, credit reporting company, etc. with caution.
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