We’ve heard of the responsible way for managing credit cards by spending carefully, paying them off on time and in full. However, what if there was a way to be responsible with credit cards and use them to earn us awesome travel rewards at the same time? Enter the practice called credit card churning, specifically discussed in a Reddit churning community (r/churning).
For those looking to travel hack their way to dream destinations on a shoestring budget, best practices can be found on how to credit card churn on Reddit. Read more on how travel hacking works, what you can do to maximize your chances for doing it successfully, how to minimize your credit impact with hard inquiries, and how to use the Reddit Churning (r/churning) community to your advantage.
What is Travel Hacking?
With all the great credit card rewards programs out there, there has been a rise of people using these perks to offset the costs of everyday life. Many programs offer cash back rewards, travel points, or other member features which make customers attracted to enrolling.
If these cards are used wisely, they can help you travel the world and the seven seas. Travel hacking involves working within program rules established by airlines, credit card companies, hotels, rental car companies and more and using them to dramatically cut the cost of travel. This can include flights, lodging, food, and other available upgrades.
Despite the illicit nature of the term “travel hacking”, it is in fact entirely legal. Even better, it is quite simple to do and earning free flights, hotel deals, rental cars, or other desirable travel-related amenities is within reach of many able to navigate the available offers with a discerning eye.
The “hacking” part simply accelerates the process for accumulating those available points received through credit card rewards programs and sign-up offers. Whether you want to travel the world alone, with those you love, or even travel the world for a job, travel hacking is a smart way to do it.
What are Credit Card Rewards Programs?
Credit cards offer you access to a line of credit when you need it. If you pay your balance each month, you incur no interest charges and can build a robust credit history showing you worthy of having access to more credit.
Some credit cards also come equipped with credit card rewards programs which offer the card holder benefits related to any number of things. Popular examples include cash back programs where the card holders receive a percentage of qualified purchases back as an account credit to use at their leisure, or travel rewards points which can be redeemed to travel the world at little cost.
Depending on your card issuer, they can partner with several companies to offer travel points or rewards credits to be redeemed toward travel-related purchases or in lieu of paying for items altogether.
What is Credit Card Churning?
Now that you know more about travel hacking and how credit card rewards programs can earn you travel points, miles, or other units redeemable for travel rewards, you will need to understand how to accelerate your rewards balance accumulation.
Credit card churning is straightforward yet can be difficult to do if you aren’t sure of where best to look for the best credit card offers. Simply put, credit card churning works like this:
- Find credit card offers. Look for several available credit card offers you have interest using. Examples include credit cards with airline miles rewards programs, hotel stay points, or other attractive travel amenities. What’s key is assessing their sign-up bonus in their marketing messaging.
- Apply for those credit cards. Once you’ve identified the applicable programs of interest, you need to execute. Apply for the cards and prepare to spend enough money to qualify for the sign-up bonus.
- Spend the necessary minimum to receive sign-up bonus. This is the part where some may struggle because each card almost always comes with mandatory minimum spending requirements to receive the sign-up bonus. To meet these limits, you can either bunch together many purchases you already needed to make and would be eligible for credit card payment, manufacture your spending, or a combination of both. However, if you make a lot of money, this might not be as hard. To meet these limits, you can either bunch together many purchases you already needed to make (and use Earny to get refunds) and would be eligible for credit card payment, manufacture your spending, or a combination of both. Many people choose to wait until they have many purchases to make at once, like at Christmas, or near other major events.
- Cancel the rewards credit card. After you’ve spent the required minimum using organic or manufactured spending and received the sign-up bonus in your applicable travel account, you can cancel the credit card before you pay any annual fees.
- Rinse and repeat. If you found this to be useful for receiving a decent travel benefit, why stop after one attempt? So long as you can meet the minimums and find the sign-up offers worthwhile, continue credit card churning so you can rack up rewards more frequently than you would by using only one or two credit cards. However, you should be mindful of the overall impact on your credit score, discussed more below.
What is Manufactured Spending?
Manufactured spending is a process to fabricate spending solely for the purpose of meeting the mandatory minimum spending requirements for credit card sign-up offers. This is a way of avoiding extra spending for the sake of meeting minimums and not having you waste money in order to earn a card’s sign-up offers.
The process works by buying items with a credit card which can then be converted to cash.
A popular practice is purchasing a gift card and using this to make purchases at your leisure with a store or retailer already intended to be visited regularly. From here, the credit card holder pays the card with cash and earns the sign-up offer without spending any extra money.
Looking at this from a cost/benefit standpoint, you can quickly assess whether the rewards earned outweigh the fees incurred. If you have a net benefit, you can consider this process manufactured spending. Some other common examples of manufactured spending include making Amazon payments, reloading existing gift cards with the credit card in question, funding bank accounts and other financial accounts, etc.
Manufactured Spending Example
As an example, let’s imagine Fred signs up for a credit card which offers 50,000 free skyline miles once he spends $2,000 within 3 months of sign-up. Fred could use his new rewards credit card to purchase a $2,000 gift card from Amazon, a place he frequently shops.
The $2,000 would go toward his credit card spending requirement which he would pay with his bank account. He can then use this Amazon gift card at his own pace knowing he would have spent $2,000 at Amazon anyway over a longer period of time.
Using this Amazon gift card example further, Fred might be able to purchase a gift card from a retailer and use it to pay his credit card bill.
Or, he could go to another store to purchase a gift card using the credit card and use it to pay for money orders. These money orders could be used to pay his credit card bill. Either route avoids having to spend any money.
However, a word of caution before pursuing either of these routes. Credit card issuers have smartened up to manufactured spending and many have put rules in place to prevent you from gaming the system.
Many travel hackers bought reloadable cash cards at office super stores, grocery stores or the like but retailers have changed their practices in response. Many now require most of these cards to be purchased only with cash. Some companies have even instituted specific rules which limit the amount of credit card churning you can do within their credit system, such as Chase’s 5/24 rule.
What is the 5/24 Rule?
Chase Bank prevents widespread abuse of credit card churning by enforcing its 5/24 rule, which limits you to opening a new credit card with Chase bank under certain conditions. Specifically, if you have opened five or more personal credit cards across all banks or credit card issuers in the previous 24 months and apply for another through the bank, you will not be approved for the card.
Chase uses this rule to enforce credit card churners from gaming the system regularly but so far has been the only major bank to limit the practice. Chase recently expanded the 5/24 rule to include all co-branded cards. This information is relatively opaque because Chase never comments on the 5/24 rule, but multiple data points suggest denials due to the 5/24 rule for cards which were previously exempt.
Some cards subject to the Chase 5/24 rule include:
- Chase Freedom
- Chase Freedom Unlimited
- Ink Business Cash Credit Card
- Chase Sapphire Preferred Credit Card
- Chase Sapphire Reserve
- Chase Slate
- Marriott Rewards Premier Plus Credit Card
- Southwest Rapid Rewards Plus Credit Card
- Southwest Rapid Rewards Premier Credit Card
- Southwest Rapid Rewards Premier Business Credit Card
- Southwest Rapid Rewards Priority Credit Card
- Starbucks Rewards Visa Card
- United MileagePlus Club Card
- United MileagePlus Club Business Card
- United Explorer Card
- United MileagePlus Explorer Business Card
Be mindful of applying to these cards too frequently over a 24-month period as doing so could lead to account scrutiny and possible Chase account shutdowns regardless of your 5/24 rule status.
The Chase 5/24 rule isn’t the only factor considered when applying for these credit cards. As is common industry practice for all credit cards, lenders consider your credit score, income, debt levels and many other consumer credit variables related to your ability to repay the card balance.
Related: Best Credit Cards for Teenagers
Does Credit Card Churning Impact Your Credit Score?
It is important to note every credit card application has the potential for lowering your credit score due to your credit report being marked with a hard inquiry. For those unfamiliar with this term, the hard inquiry definition is a credit inquiry where a potential lender reviews your credit score because you’ve applied for credit with them.
Examples include hard inquiries for applying for a home mortgage, an auto loan, or even a cell phone plan. I found out about the last one too late and the hard inquiry stayed on my credit report for two years and only recent fell off my report.
Depending on your credit history, opening a new credit card may cause your credit score to go up if you carry balances on other cards. Opening a new line of credit could decrease your overall credit utilization ratio.
Conversely, it could also make your score go down by lowering the overall average age of your credit accounts. Consistently opening credit cards for the purpose of churning them will leave several new hard inquiries on your credit report and will lower your average credit age.
It can also signal to potential lenders you are desperate for credit and are attempting to open multiple accounts in a relatively short span of time. On the other end of the process, closing an account can affect your score in different ways.
If you carry a balance on other cards and your overall available credit decreases, your credit utilization ratio will increase and could conceivably hurt your credit score. If you have no balance across any of your cards, a 0% credit card utilization ratio on 4 cards results in the same ratio for 3 cards: 0%.
If you have great credit backed up by a long credit history, opening or closing accounts may not have a major impact on your credit score. However, if you have a borderline weak or average credit score, credit card churning can adversely impact your credit score.
Who is Credit Card Churning Not For?
Credit card churning is not for everyone. Churning repeatedly can have impacts on your credit score if not managed wisely. However, aside from the damage to your credit score changes, there are other risks to be aware of before proceeding with credit card churning as discussed on Reddit.
Be sure to think carefully before proceeding and consider if those credit card rewards are the best strategy if:
- You’re planning to make a major purchase which requires a pristine credit score. Before setting down the credit card churning route, be aware of the credit implications if you want to build good credit. Credit card churning could affect your chances of getting approved for a mortgage, auto loan, business loan, or any other major form of financing. All these financing arrangements require good credit scores to receive favorable loan terms. If you anticipate requesting a major line of credit in the coming two years, think twice before pursuing the credit card churning strategy. Stick to debit cards for the time being.
- You cannot control your credit card usage prudently. If you have a history of managing your spending poorly, having added spending power might not be the best option to have at your disposal. Taking on multiple credit cards and spending thousands of dollars to qualify for rewards points likely isn’t the smartest choice if you have trouble living within your means. In this case, credit card churning isn’t for you. It’s likely best to avoid Reddit to avoid the temptation.
- You lack organization skills. These credit card sign-up reward minimums are no joke. Some of them require you to spend thousands of dollars in very small windows (think fewer than 3 months). If you are not organized enough or have difficulty paying attention to the finer details, credit card churning could quick turn against you. Be sure to track the spending requirements, due dates, and fee schedules for these cards to avoid any negative consequences. Not having these organization skills makes you a poor candidate for credit card churning and following the discussion on Reddit. Look for my free downloadable spreadsheet below to track your credit card churning activity.
For a more robust discussion of why credit card churning might not be for everyone, see this thread on Reddit.
How to Manage Credit Card Churning
When you start your credit card churning journey, you will want to be sure you dot all your I’s and cross all your t’s. Missing minor details like spending deadlines, minimum spending requirements, or payment due dates can wind up costing you significantly in the end.
This is why it is useful to track all of your credit card churning efforts to maximize your rewards without suffering the downside of missing any of the finer details. Doing so could cost you a free international trip or a week long ski getaway.
What is the Reddit Churning sub?
The Reddit Churning community describes itself as a place to discuss the finer details for churning credit cards as a means to profit from sign-up offers and membership rewards. The community is a place to share credit card churning success stories, failures, new credit card offers, and tips and tricks to make the most of your efforts.
10 Ways the Reddit Churning Community Can Help You
The community offers multiple recurring discussion threads to manage the above-referenced topics. Specifically, the sub offers the following threads:
- Daily Discussion Threads. The daily discussion threads contain questions used for debate about credit card churning. There are also separate threads for other items like manufactured spending related to credit card churning.
- Daily Question Threads. These are useful for sundry questions, on-going credit card discussion, or other related topics.
- Manufactured Spending Weekly. A thread entirely dedicated for all things manufactured spending discussion. Here is where you share methods, ideas, pain points, and anything else you can think of related to manufactured spending. Each thread also comes equipped with a link to an Introduction to Manufactured Spending.
- Frustration Friday. A repository for any complications encountered in your credit card churning journey. Topics usually include manufactured spending missteps or roadblocks but can include anything which frustrates you related to credit card churning.
- Storytime Weekly. A weekly digest of everyone’s ups and downs during the week related to credit card churning. The thread collects responses on trip reports, success stories, funny churning stories, and anything else relevant.
- What Card Should I Get Weekly. Think of this as a crowd-sourced decision-making engine. This is where you ask r/churning about which credit card is best suited to your needs. The thread even contains a flowchart to break down the best card for your needs within the rule. It’s best to look at this thorough flowchart before asking the community to avoid getting blowback from members (see below).
- Bank Account Bonus. Since credit card churning has grown in popularity, the sub separated the sign-up bonuses for bank accounts into its own weekly thread. This includes all bank account discussion, including bank account churning mechanisms and data points.
- Data Points Central. The subreddit relies on sharing experiences and data points in order to optimize the credit card sign up offers made available by card issuers. This is a thread which is lacking of structure, though on purpose, and contains weekly data point sharing.
- Mega Threads. If there is a popular subject for discussion or debate, the community can sometimes segregate this topic into its own mega thread. If this happens, these are shown on the Reddit sidebar and all related questions and comments should be posted there as opposed to standalone posts.
- Finding the best credit churning offers for you. This community is great for finding offers useful for helping you save money, travel the world low cost, and earn free money. This subreddit provides you the necessary data points and discussion to optimize your credit card churning efforts.
For the Reddit Churning flowchart see below and click to enlarge.
Pros of Using r/churning
If all of the above sound manageable and you’re still interested in credit card churning, consider visiting the sub. In the community, members share their experiences and data points useful for you to track.
Some primary pros of using the Reddit Churning sub include:
- Multiple sets of eyes are better than one. As is the case with many things in life, having multiple people working on a task can make for less time commitment. Make sure to vet each content submission in the group before proceeding with enrollment.
- Socializing with others interested in the same goal. Discussing the credit card churning process with others can lead you to new ideas, offers, and means of meeting spending requirements. You can discover more efficient ways to manufacture spending or manage your credit card churning efforts.
- Readily available information. Managing credit card rewards spending progress is hard enough, never mind the task of finding contact information for each card issuer if you seek to cancel your card. The r/churning subreddit is filled with contact information useful for managing the credit card accounts you hold.
Cons of Using r/churning
Just as there are benefits to credit card churning and using the sub, there are drawbacks as well. Some prominent ones related to the community and credit card churning in general include:
- Time Commitment. Learning to travel the world for free can be very rewarding as a young professional, retiree, or just about anyone else who’s ever enjoyed traveling on a minimal budget. However, if you must keep track of multiple credit cards, tally your spending on each, and make sure you pay any balances on time, it can be time-consuming. Make sure you set aside time to follow the requirements of each credit card and to be mindful of payment due dates. I’d strongly suggest logging all of your activity in the spreadsheet above much like you would for creating a budget in Excel.
- Credit score impact. As discussed above, credit card churning for travel hacking purposes can lead to deleterious results on your credit score. According to the FICO credit scoring model, new credit inquiries impact your overall credit score. Hard inquiries can remain on your credit report for approximately two years, but only impact your FICO Score for 12 months. While applying for one or two cards is likely to have a minimal impact on your credit score, opening multiple accounts within a short time span could raise a red flag and knock down your credit score accordingly.
- Closing accounts can also be costly on your credit. If you’re not planning to hold the card long-term and wish to close the account shortly after receiving your sign-up bonus, this could backfire for your credit score. This factors into your credit report as well.
- Lead to elevated spending. Using credit card churning can lead to elevated spending which you otherwise wouldn’t have done. Manufactured spending can be a great way to combat this spending bulge but isn’t always as easy since many companies have changed their policies to counter this practice.
This subreddit is useful for finding great credit card churning opportunities. The above are factors for your consideration before proceeding on your travel hacking via credit card churning journey.
The usual advice is offered for anyone visiting a forum:
- Be mindful of others’ thoughts and motivation behind the advice being given
- Not all offers will be relevant to you and your situation; be sure to check the fine print of any offer you pursue
- If you can’t control your own spending habits, avoid r/churning
Travel Hacking Sources Other than Reddit Churning
For those looking to expand their resources for churning beyond just the Reddit Churning community, there are other sites available for your needs. Some popular alternatives include:
- Credit Karma. Credit Karma has long been a source useful for tracking your credit score but has also expanded to other services in recent years. The company primarily makes income from credit card reviews and affiliate links. Recently, many have begun to turn to Credit Karma for taxes and other useful products. The company reports multiple credit scores using the FICO scoring model and the VantageScore 3.0 method from TransUnion and Equifax. While VantageScore credit scores aren’t used as widely as FICO scores for credit decisions, they can still provide a good idea of where your credit stands and how your score may be impacted by pursuing credit card churning ideas.
- The Points Guy. The Points Guy is a site which does a deep dive into nearly everything credit card related. It provides detailed reviews of credit cards, blog posts about credit cards, credit scores, credit metrics, and numerous other topics. If you’re looking for more credit card options and reviews, be sure to visit the site regularly for their latest content.
- Club Thrifty. This site provides numerous reviews for credit cards, bank accounts, and other financial services useful for reaching financial independence. The site also hosts a blog with regular content useful for managing your finances and learning how to handle your money decisions.
What this deep-dive into credit card churning doesn’t contemplate is whether this practice is the right thing to do. I discuss the considerations you should make for your personal circumstances by assessing its impact on your credit score and financial situation, but I don’t explicitly state whether this practice is a good financial choice.
Ultimately, it comes down to your personal preferences around risk, goals, and needs. Personally, my wife and I sign-up for applicable offers occasionally but often choose not to “churn” the credit cards by canceling them. We don’t feel this is a personal finance best practice and don’t recommend this to anyone who can’t manage their spending, payment scheduling, or personal finances.
Also, credit card churning has ramifications for the companies offering these programs to borrowers. Credit card companies offer these sign-up offers to entice customers to remain as clients for the long-term and hope to earn enough money to offset these upfront bonus costs. Remain cognizant of the gaming you’re doing with their offers and know this site does not explicitly endorse the practice given the inherent risks and gaming churners pursue.
With that final disclaimer, you’re now equipped with everything you’d ever need to know before beginning your credit card churning journey. If you think this is the right fit for you and would like to travel for next to nothing, consider using r/churning to your advantage.