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Credit Card Churning

I recently just heard of a new trick to make some extra cash, and it’s done through “credit card churning.

It’s all the rage among those who love to collect rewards. Basically, credit card churning is when you apply for multiple credit cards in order to reap the benefits of the sign-up incentives. All you have to do is charge a certain amount of money within a certain time frame.

You’re able to redeem flights, hotels, vacations, and more for pennies compared to what you would spend if it wasn’t through a rewards program.

Here are some things you might want to know:

You can earn points quickly.
This is the main reason people churn credit cards. You have the ability to earn thousands of points just from signing up, which is a lot more than you’d make if you tried to earn those points yourself.

Annual Fees.
The best part is that yearly fees are usually waived if you’re signing up for the first time. When the year’s up, all you have to do is simply cancel the card to avoid being charged, but keep in mind that:

You can’t sign up, cancel, then sign up again.
Banks are well aware of the practise of credit card churning, so if you plan on cancelling your card just to immediately re-apply, chances are you will get rejected. You may even sign up for a credit card just to find out you don’t qualify for the rewards, but they definitely don’t want people to sign up just to cash in. The rewards are only an incentive to get you to use the credit card on the reg.

If you have to worry about your credit score, this is one game you shouldn’t play.
Applying for rewards cards too frequently makes lenders suspicious and can impact your credit score negatively. This happens because it looks like you’re in desperate need of borrowing funds—so tread carefully.

It requires mad discipline.
You need to stay on top of your payments and be careful not to overspend. People can sometimes apply for more than 20 credit cards, and if you’re not organized, it can be a disaster. Keep track of when you signed up for it and when it expires so as not to be charged the annual fee (unless you still plan on using the card later). You may also start to buy things you don’t need just to earn rewards points, so think carefully if spending $1,000 in 90 days is something you can do, and will ultimately be worth it.

Bottom line: If you’re responsible, it can be well worth your while. You can make some cool things happen by credit card churning, but you should only jump on the bandwagon if you have great credit, are able to pay the balance off each month, and are okay with the spending requirements. Keep in mind that all the bonuses and rewards are worth nothing if it means you’re going into debt, and make sure every card you apply for has a purpose.

Would you ever get into credit card churning? Tell us in the comment section below!

Keep it real,
Gabs

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