Planning My First Credit Card Churn

Planning My First Credit Card Churn

If you regularly read travel hacking blogs, you have probably heard the term “churn” used quite a bit. For the uninitiated, a churn is a strategy used to sign up for new credit cards to maximize signup and bonus offers to rack up a huge number of frequent flyer miles and travel points quickly.

Why to Churn?

***BEFORE YOU START: This is a strategy that will lower your credit score and could lower your chances of getting approved for a car loan or mortgage. Only do this if you have no plans to buy a new home in the next few years.***

Last week, I spent about an hour with an experienced travel hacker trying to sort out a trip to Israel in May. I had a decent starting point, but didn’t have enough miles on any single airline to get to Israel and back.

I was a bit discouraged by that, but not for long. My friend Jason Steele, an awesome travel writer, knew exactly what we needed to do. We combined miles for one-way trips across different airlines and put together our own itinerary.

Final cost for 2 round trip tickets to from Denver to Tel Aviv: $284 (I’ll give more detail on how we got there sometime soon!)

But after the churn, my miles were pretty well depleted. I have some Chase Ultimate Rewards points and some Starwood points left, but nothing else with more than 20,000 points. It is time to do some churning and get some miles!

Before You Churn

The key to a good churn is to apply for the cards quickly, in the same day, and from different banks. Before churning make sure you know what cards offer the best travel rewards, the minimum spend to get any bonus miles, and if the card has an annual fee.

For minimum spend, cards range from $1,000 in one month to $15,000 or more. Don’t sign up for a card and miss the bonus miles. Also, don’t get a card and spend extra to meet the minimum. Remember, you could always buy pre-paid Visa gift cards to help you get over the hump.

If the card has an annual fee and isn’t amazing (I am happy to pay for my Starwood card, but not for many others), mark the date on your calendar so you can call in to get the fee waived or close the account.

Churn Day

Credit cards companies look at your credit report when you apply, and most give an instant approval. If they see a bunch of other recent applications or new cards, though, they are more likely to turn you down. Because there is a delay in updating your credit report, you can get multiple cards in a day before the companies know you applied for the others.

*I am looking at cards from three popular issuers. You can also look to see what Chase has to offer.

For my first churn, here is what I am looking at doing:

First Card: Citi Bank



Powered By Credit Karma

Second Card: American Express


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Third Card: Barclays

(Only Good if Virgin America Serves Your City)
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The Returns

If you sign up for all of those, you can walk away with 30,000 American Airlines miles, 30,000 Delta miles, and 20,000 Virgin America points, or 75,000 points total.

The minimum spend is $1,000 in 3 months for the AAdvantage card, $500 in 3 months for the Delta Skymiles card, and only a first purchase requirement for the Virgin America points.

What Do You Think?

Are you interested in a credit card churn? Would you try to take advantage of free flights by using airline credit card offers?

Image by x-ray delta one / flickr

Comments

    • says

      You might not want to churn right now Michelle, but it might not be a bad idea for each of you to open another credit card each. You will get the benefits from the miles and also open up more available credit. Since you are still a year away from buying a house the inquiry wont be a problem.

  1. Catherine Stirbis says

    Interesting read, and thanks for the disclaimer. I don’t think churning is best for me right now that’s for sure! Lot’s of things on the horizon :) But I can see how it would be useful to others.

    • says

      What’s on the horizon? It is exciting to read what people have coming up and what everyone is doing to improve their financial lives!

    • says

      I read some interesting stories where people did some big churns and their scores went up! I wouldn’t think that is typical or suggest trying, but an interesting read nonetheless.