Question 1

What does it mean to churn credit cards

Accepted Answer

Credit card churning is a strategy to earn a lot of points as fast as possible. You apply for a credit card, make the spend to get the bonus offer and then cancel it. Cards with big bonus points offers also often feature a discounted first year annual fee, so you avoid the full annual fee you'd pay in the second and subsequent years. This is done on a rinse and repeat basis. People who credit card churn are also known as credit card flippers, point hackers or credit card churners.

Question 2

Can anyone start credit card churning?

Accepted Answer

Before considering credit card churning in Australia, here are some key points to keep in mind:

Credit Score Impact: Opening and closing multiple credit cards in a short period can negatively impact your credit score. Lenders may view frequent credit applications as a sign of financial instability.
Issuer Policies: Different credit card issuers may have varying policies on how they view multiple applications and closures. It's essential to read and understand the terms and conditions of each credit card agreement.
Credit Card Rewards: While some credit cards offer attractive sign-up bonuses and rewards, it's important to consider the overall benefits and costs associated with each card. Annual fees, interest rates, and other charges should be factored into your decision.
Responsible Financial Management: Credit card churning should not be a substitute for responsible financial management. Make sure you can manage your credit responsibly and pay off balances on time to avoid accumulating debt.
Legal and Ethical Considerations: Ensure that your actions comply with the laws and regulations governing credit and banking in Australia. Engaging in fraudulent or unethical practices can have serious consequences.

Before embarking on credit card churning, it's advisable to research and understand the specific policies of the credit card issuers you are considering, as well as the potential impact on your credit score. It may be beneficial to consult with a financial advisor to assess whether this strategy aligns with your overall financial goals and situation.

Question 3

How much can I earn credit card churning?

Accepted Answer

The potential earnings from credit card churning can vary widely based on several factors, including the credit cards you choose, the sign-up bonuses offered, your spending habits, and your ability to manage multiple credit cards responsibly. Here are some factors to consider:

Sign-Up Bonuses: Credit card issuers often entice new customers with sign-up bonuses, which may include cash back, points, or miles. The value of these bonuses can vary significantly. Some cards may offer a few hundred dollars in cash back, while others may provide travel rewards worth several hundred or even thousands of dollars.
Spending Requirements: To qualify for sign-up bonuses, credit card issuers typically require cardholders to spend a certain amount within a specified timeframe. Make sure the spending requirements align with your regular spending habits to avoid unnecessary expenses.
Annual Fees: Many premium credit cards come with annual fees. While the sign-up bonuses and rewards can offset these fees, it's essential to consider whether the benefits justify the costs. Some cardholders may choose to close or downgrade a card before the annual fee is due.
Interest and Fees: It's crucial to pay off credit card balances in full each month to avoid interest charges. Carrying a balance can quickly erode any rewards earned. Additionally, late fees and other charges can diminish the overall value of credit card churning.
Credit Score Impact: Frequent credit card applications and closures can impact your credit score. A lower credit score may result in higher interest rates on loans and other financial products.
Ongoing Rewards: Beyond sign-up bonuses, credit cards often provide ongoing rewards for specific spending categories. Consider whether the card aligns with your spending patterns and if the long-term rewards justify keeping the card open.

It's challenging to provide a specific dollar amount for potential earnings from credit card churning because it depends on individual circumstances. Some enthusiasts may earn significant rewards, while others may find the effort and associated risks less appealing.

Before engaging in credit card churning, carefully research and compare credit card offers, and be sure to understand the terms and conditions. Additionally, consider consulting with a financial advisor to assess the impact on your credit score and overall financial situation. Responsible financial management should always be a priority when exploring credit card churning strategies.

Question 4

Is credit card churning illegal?

Accepted Answer

No, Credit card churning is not illegal. It may be frowned upon by credit card providers, however there is nothing in their terms and conditions to state that you are not allowed to cancel a credit card as soon as you receive your rewards.

Question 5

How does credit card churning affect my credit score?

Accepted Answer

Credit card churning can have both positive and negative effects on your credit score. Here's a breakdown of how this practice may impact your credit:

Positives Effects:

Increased Available Credit: Opening new credit card accounts can increase your overall available credit, which may positively affect your credit score. This is because it lowers your credit utilization ratio (the percentage of available credit that you are using).
Diverse Credit Mix: Having a mix of different types of credit accounts, such as credit cards and installment loans, can contribute positively to your credit score. Credit card churning may contribute to this diversity.
Improved Payment History: If you manage your multiple credit card accounts responsibly by making on-time payments and keeping low balances, it can positively impact your payment history, which is a significant factor in your credit score.

Negative Effects:

Credit Inquiries: Each time you apply for a new credit card, the issuer performs a hard inquiry on your credit report. Too many hard inquiries in a short period can have a negative impact on your credit score. The effect is generally small, but it can add up if you apply for multiple cards within a short timeframe.
Average Age of Accounts: Closing credit card accounts, especially if they are older, can lower the average age of your credit accounts. A longer credit history is generally seen as positive by credit scoring models.
Credit Utilization Fluctuations: If you're opening and closing credit card accounts frequently, your credit utilization ratio may fluctuate. A sudden increase in credit card balances relative to your credit limits can negatively impact your credit score.
Perceived Risk: Frequent credit card applications and closures might be viewed as risky behavior by creditors and credit scoring models. Lenders may be concerned that you are seeking credit due to financial difficulties.

In summary, credit card churning can have both positive and negative effects on your credit score. It's crucial to weigh the potential rewards against the risks and to engage in this practice responsibly. Frequent monitoring of your credit report and maintaining good credit habits are essential for minimizing negative impacts on your credit score.

Question 6

How many credit cards should I have?

Accepted Answer

The optimal number of credit cards varies from person to person, as it depends on individual financial habits, needs, and responsibilities. There isn't a one-size-fits-all answer. In my personal situation which will be unique to me, 2 credit cards at one time seems to allow me to credit card churn without damaging my credit score.

Question 7

How to get a credit card?

Accepted Answer

Getting a credit card involves several steps, and it's important to approach the process responsibly to ensure that you can manage credit effectively. Here's a step-by-step guide on how to get a credit card:
Check Your Credit Score:

Before applying for a credit card, it's a good idea to check your credit score. Your credit score plays a significant role in the approval process and the terms you may be offered.

Research Credit Cards:

Explore different credit cards to find one that aligns with your needs and financial goals. Consider factors such as interest rates, annual fees, rewards programs, and any specific features that may be important to you.

Prequalify or Preapprove:

Some credit card issuers allow you to check if you prequalify or are preapproved for their cards without affecting your credit score. This can give you an idea of your chances of approval.

Gather Necessary Information:

Before applying, gather the necessary information, including your personal details, employment information, income, and housing status. You'll typically need to provide this information on the credit card application.

Apply Online or In-Person:

Most credit card applications can be completed online through the issuer's website. Some issuers also offer applications in-person at their branches.

Fill Out the Application:

Complete the credit card application form accurately and truthfully. Be prepared to provide information about your income, employment, housing, and other relevant details.

Submit Supporting Documents:

In some cases, the credit card issuer may request additional documentation to verify the information provided in your application. This may include proof of income, identification, or other documents.

Wait for Approval:

After submitting your application, the credit card issuer will review your information. Approval decisions can vary in time, and some issuers may provide instant decisions, while others may take a few days.

Review Terms and Conditions:

If approved, carefully review the terms and conditions of the credit card, including interest rates, fees, and any rewards programs. Make sure you understand how the card works and what is expected of you as a cardholder.

Activate Your Card:

Once you receive your credit card, activate it according to the instructions provided by the issuer. This often involves calling a toll-free number or activating it online.

Start Using Your Card Responsibly:

Use your credit card responsibly by making payments on time, keeping balances low, and avoiding unnecessary debt. Responsible credit card use can positively impact your credit score.

Question 8

Best sign up bonus credit card?

Accepted Answer

To find out what the best signup bonus credit card is, talk to a financial advisor.

Question 9

Can you get cash back with a credit card?

Accepted Answer

Yes, some credit cards will offer cash back on top of a signup bonus if you reach the credit card minimum spend within a certain time period.

Question 10

When should you pay your credit card?

Accepted Answer

The best time to pay your credit card is in full before the due date. Remember that late payments can have serious consequences, including late fees, increased interest rates, and negative impacts on your credit score. Paying your credit card on time is a fundamental aspect of responsible credit management. If you ever encounter difficulties making a payment, contact your credit card issuer as soon as possible to discuss possible solutions, such as payment plans or temporary adjustments.

Question 11

What are the best credit cards in Australia?

Accepted Answer

There are many credit cards in Australia. Most of the banks will offer credit cards with signup bonuses. To find the best credit card for you, do your own research and consult a financial advisor.

Question 12

How to use credit cards to make money?

Accepted Answer

While credit cards can offer various benefits, it's important to approach their use responsibly to avoid accumulating debt. Here are some strategies to potentially make money or benefit from credit card usage:

Cash Back Rewards:

Many credit cards offer cash back rewards on eligible purchases. Utilize a cash back credit card for your regular spending to earn a percentage of your purchases back as cash. Choose a card that aligns with your spending habits.

Travel Rewards:

Travel rewards credit cards can provide points or miles that you can redeem for flights, hotel stays, or other travel-related expenses. If you frequently travel, these cards can offer significant value.

Sign-Up Bonuses:

Take advantage of sign-up bonuses offered by credit card issuers. These bonuses often come in the form of cash back, points, or miles when you meet specific spending requirements within a designated timeframe.

0% Introductory APR Offers:

Some credit cards offer introductory periods with 0% APR on purchases or balance transfers. If you have planned expenses, using a card with a 0% APR offer can save you money on interest charges.

Utilize Rewards Portals:

Many credit card issuers have online shopping portals where you can earn additional rewards or cash back for purchases made through their affiliated retailers. Check if your card offers this feature and use it when shopping online.

Rotating Bonus Categories:

Some credit cards have rotating bonus categories that offer increased rewards for specific types of spending (e.g., groceries, gas). Maximize your rewards by using the card for purchases in these categories during the promotional periods.

Refer-a-Friend Programs:

Some credit cards have referral programs that reward you for referring friends or family members who apply and are approved for the same card. Check if your card offers referral bonuses.

Credit Card Arbitrage (Advanced Strategy):

This strategy involves taking advantage of the difference between the interest rate earned on savings and the interest rate charged on a credit card. It's a more complex strategy and requires careful planning and discipline to avoid risks.

Use Credit Cards for Business Expenses:

If you have a small business, using a business credit card for expenses can help you earn rewards on your business-related spending.

Manage Credit Card Debt Responsibly:

Avoid carrying a balance on your credit card to minimize interest charges. Paying off your balance in full each month ensures that you are using credit responsibly.

It's crucial to note that while credit cards can offer rewards and benefits, they should be used responsibly. Accumulating debt and paying high-interest rates can quickly negate any potential gains from rewards. Additionally, regularly monitor your credit card statements, and be mindful of fees, interest rates, and other terms and conditions associated with your cards. If you're considering specific strategies, it's advisable to consult with a financial advisor to ensure they align with your overall financial goals.

Question 13

How long do Qantas points last before they expire

Accepted Answer

Qantas points are valid for 18 months from the date of your last eligible activity. Eligible activities include earning or redeeming Qantas points, or using your Qantas Frequent Flyer membership to access Qantas or partner services. If you do not have any eligible activity for 18 months

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