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Credit card churning, when to cancel?

Updated: Jan 16

So you have spent the minimum spend on your credit card and have received your sign up bonus, so when do you cancel your credit card? Do you cancel straight away or wait for any other rewards that you may get after holding the card for a year? In this post, the answer to one of the more popular questions will be discussed and all the options will be explored. Remember that the information here does not take anyone's personal situation into account and is general in nature to help readers better understand their options when credit card churning.

Man deciding when to cancel his credit card holding a credit card
When credit card churning, certain times are more beneficial than others when cancelling a credit card

Cancel your credit card or keep it?

When it comes time to cancelling your credit card, it all depends on what someone's individual personal goals and circumstances are. Deciding when to cancel a credit card is a personal decision that depends on various factors. Here are some situations in which someone might consider canceling a credit card:

  1. High Annual Fee: If the credit card comes with a high annual fee and you find that the benefits and rewards no longer justify the cost, it may be worth considering cancelation. Before canceling, you can also explore the option of downgrading to a no-fee or lower-fee version of the same card if available.

  2. Underutilized Card: If you have a credit card that you rarely use and it's not providing significant benefits or rewards, you might consider canceling it. An underutilized card may also be a target for fraud if you're not monitoring it regularly.

  3. Redundant Benefits: If you have multiple credit cards with overlapping benefits or rewards programs, you may consider canceling one to simplify your wallet and focus on the cards that provide the most value for your spending habits.

  4. Change in Financial Situation: If your financial situation changes, and you find it challenging to manage multiple credit cards or if you need to reduce your overall credit exposure, canceling a card could be a sensible decision.

  5. Credit Card Misuse: If you find yourself consistently overspending or misusing a particular credit card, canceling it may help you avoid accumulating unnecessary debt.

  6. Negative Changes to Card Terms: Keep an eye on any changes to the terms and conditions of your credit card. If the issuer makes changes that are unfavorable to you, such as increased fees or reduced benefits, it might be a reason to consider cancelation.

  7. Second year rewards: Some credit cards will offer additional rewards such as bonus points at the start of the second year that the card is still open. These ongoing signup bonuses are usually a fraction of the first year signup bonus. On the other hand, having too many credit cards can restrict the options of opening more credit cards in the future that offer signup bonuses without damaging the person's credit score. So the card holder will have to weigh up what is most important for them when it comes to choosing if these features are important.

Increase frequency: When credit card churning, the sooner the credit card is canceled the sooner an application for another credit card can be made. This allows for a greater number of credit cards to be churned throughout the year if reward signup bonuses are the goal. As each credit card can only be applied once every year or so, this means that more credit cards can be opened and closed within a set period of time as long as it is done responsibly Sometimes the signup rewards can take a full 3 months to be credited which means some cards need to be opened a full 3 to 4 months before closure is even an option.

So keeping credit cards open for a small number of rewards may be a risky strategy.

If you're unsure whether to cancel a credit card, you may want to consult with a financial advisor who can provide guidance based on your individual financial situation and goals.

Like always, if you have any questions, please comment below or contact me. If you don't want to miss out on any new content, then follow me on Instagram or Reddit for more information about everything to do with credit card churning and point collecting.

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