Credit card churning seems to be more and more popular these days. Just like I said in my article the other day – if you are bad with credit cards, then credit card churning is probably something that you do not want to get into.
Credit card churning is where you apply for credit cards that offer rewards (such as cash, airfare, etc.). Then, once you receive the credit card, you spend the amount that you are supposed to spend in order to get the reward bonus. Usually these are between $100 and $800. Then, you just keep repeating this process.
Some problems that you may encounter while churning credit cards.
It can be hard to keep track of all of the cards. If you need to, then you should create an Excel spreadsheet so that you know what needs to be done and where you are. You don’t want to get too close to your credit card limit or even go over it.
You might find yourself spending just to reach the limit. This is bad! You should just be charging your normal expenses onto your credit card. Don’t buy extra things just to reach the limit. It’s no longer a bonus if you are spending money to reach it.
Some of these credit cards may have annual fees. A way to get around this fee is to cancel your card. However, you have to keep in mind that canceling a new credit card may affect your credit score because of the length of time that you had this credit card open. Another way to get around the fee is to simply ask the credit card company if they can waive the fee. Sometimes this works, but sometimes it does not.
You will probably affect your credit score at least a little bit. This is something that you will need to keep in mind. If you are churning a lot of cards, then you will probably affect your credit score.
Do you churn credit cards? Why or why not?