This is a touchup of a post I published over 8 months ago with more current information.
Credit card churning, also called “app-o-ramas” are quite popular in the miles and points world. A one sentence definition of credit card churning is that it you are applying for multiple credit cards on one day.
Your Credit Score
Every time that you apply for a credit card, you will get a hard pull (consumer-initiated) on your credit report. In the USA there are three main credit bureaus (TransUnion, Experian, Equifax), so the art of credit card churning (especially if you are hardcore) is timing your applications so that spread your inquiries out over several bureaus, and thus applying for several cards in one day “clumps” your inquiries. It’s similar in Canada except there are only two main credit bureaus (TransUnion and Equifax).
Your FICO (Fair Issac Corporation) credit score is largely what determines whether you’re creditworthy when applying for cards, which has a range between 300 – 850. The higher your score, the lower risk you are and the more likely you’re going to get approved. There are many variables that make up your credit score, each which can be found in your credit report. Each variable is weighted based on importance. Thus if you do your credit card churning correctly, your credit score should not take much of a hit. You can see all the factors in the chart here:
(35%) Payment history
This factor is concerned with you paying bills on time. This is unaffected if you’re churning cards.
(30%) Amounts owed
This factor is related to your credit utilization ratio – that is, the amount of money you’re using relative to the credit limit for the cards you currently have. This means this factor should actually improve given your level of spending stays the same while you have more cards.
(15%) Length of Credit History
Here you want to make sure you keep your oldest credit card active as that is a major factor in how old your accounts are.
(10%) Inquiries (New Credit)
This is the factor that is affected by churning, but it shouldn’t be significant.
(10%) Types of Credit Used
This is calculated from whether you have other credit such as home, school, car, and other secured loans rather than just unsecured credit.
American have it easy being because they can easily get a FAKO (non-official FICO score) online from sites like Credit Karma or Credit Sesame. To my knowledge, if you’re Canadian you can’t access your credit score online without paying. The only free option you have is to get a copy of your credit report from issuers, which does not show your credit score. You can see the relevant forms and sites at Equifax and Transunion Canada. I’m assuming you should have a fairly good knowledge of your accounts, but the free credit report is a good way to catch anything you aren’t aware of such as other people with the same name leeching or dragging your score down before you start credit card churning.
Tips for Credit Card Churning
There are several blanket rules you want to keep in mind:
- 90 Day Cycles
I personally space each round of applications three months apart, and that is what most people in this “field” do. It might be worth it to interrupt your cycle to get a card with a particularily good signup bonus, but it often throws off your rhythm. You want to be doing some prep on what cards you want to apply for, looking for the best offer, finding links to apply, and checking your credit score for anomalies a few days before you start applying.
- One Card Per Issuer
This is a general rule for most issuers, and may not apply for all issuers, but it’s best you check before you apply. You want in your churn to only apply to one card from each bank/issuer – that means for example a simple sample credit card churn would include 1 card from Chase, 1 card from American Express, and 1 card from Capital One.
After the card applications, the score improve again as other factors of your score – credit utilization/payment ratio decrease.
Credit Card Churning in the USA
Credit cards in the USA come with higher signup bonuses, but they also come with higher minimum spends. For example, there’s a Citi AA credit card with a 100,00 points signup bonus with a $10,000 minimum spend. This means, you’ll either need to be able to generate high amounts of minimum spend or manufacture spend. It’s definitely more legwork but I
would do anything would really like to be able to get a green card and churn cards in the USA.
If you’re looking for information on manufactured spend or for a list of potential cards, there are lots of places where you can learn this information but I don’t live the USA, so this is not my area of expertise. Other BoardingArea bloggers should have great posts if you want to get started.
Credit Card Churning in Canada
- Minimum Income Requirements
Canada also has a much “stricter” income requirement than the USA (especially with premium cards requiring a minimum income). Luckily for most issuers they have “household income” so I am personally okay (as a student with a very low income ;)) for most cards.
- Lower Skill Required!
I personally think that credit card churning in Canada is much easier, simply due to the fact that we’re a smaller country population-wise and economically, which makes fewer issuers, fewer types of cards, and generally, less information. As I mentioned earlier, there’s no free way to permanently access your credit score, which means that all churns are done “naked” as in you have basically no idea whether you’re going to get approved or not.
The minimum spend requirements for credit card churning are also significantly lower, I’d say in nearly all cases the average consumer will be able to satisfy those, so there’s no need to familiarize yourself with learning how to manufacture spend. I can also go on and on about the much more limited credit card products we can get, which if you are interested in, you can read about here.
- Different Application Rules
In the US credit card churning has evolved into doing each card over and over again to several different cards every few months. In Canada, thankfully with most cards you can get bonuses more than once, for the most part. This is true with most issuers, especially with AMEX and CIBC. Also with most issuers you can hold duplicate cards at once. So if you don’t really need to cancel the card, you don’t have to and you can always use it as a tool to leverage approvals for new signups.
Key Takeaways for Credit Card Churning
The most important tip I can give you, is to take away is you want to do things at your own comfort level. For example I just mentioned going with credit reports and my specifications for selecting credit cards. Some people may want to keep an eye on their credit score just in case, so then there’s no problem getting a paid credit score report online. Or some people may not want to get so many cards at once, or don’t want to risk getting cards with high minimum spends, or duplicate cards if they’re not absolutely 100% comfortable with it. It is totally up to you.
I personally manage credit card churning for my parents, and I only do the same cards with at least a 6 month period between each card. I also don’t pay for credit scores, so the churns that I do are intelligent guesses that my parents will be approved given they have stellar credit. I also don’t apply for multiple cards from the same issuer at once.
Also, YOU CANNOT BE KEEPING BALANCES ON YOUR CARDS. If this is you, and you can’t manage your finances, this game isn’t for you. Not only do balances wreck your score by keeping your credit utilization ratios high, the interest from payments dwarf any value you get from the miles you earn from signup bonuses and spend. For most people with good credit though, credit card churning will constitute a large part of the mile earnings, so it is a very valuable skill to learn.