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Is credit card churning illegal?

Updated: Jan 16

Is credit card churning illegal? This is one of the most commonly asked questions that I get when I tell people about the benefits of credit card churning.


It probably has something to do with how unknown the process is and how much value you can extract from credit card churning. The whole idea can sound strange and so naturally, people tend to think that something illegal is happening or the process of credit card churning is breaking some laws.

Credit card churning itself is not illegal in Australia. Credit card churning refers to the practice of opening and closing credit card accounts to take advantage of sign-up bonuses and rewards offered by credit card issuers.


While credit card churning is not illegal, it's essential to note that there may be consequences, and the practice can have an impact on your credit score and relationship with credit card issuers. Australian financial institutions may have policies and terms of service that address certain behaviors related to credit card usage.


court hammer in court
Credit card churning is not illegal but frowned upon by banks

Why banks don't like credit card churning


It is probably fairly obvious why banks don't like credit card churning. It runs exactly opposite to why credit card companies offer such large signup bonuses and encourage new users to sign up. The banks that issue credit cards like their customers to spend big, max out their credit card, and forget to pay it off by the due date, in turn creating profit for the banks through late fees and interest charges. When credit card churning people are doing the exact opposite and not making the credit card issuers any money. They are paying off the credit card in full and on time and extracting as much benefit as possible. In turn, the banks lose profitable customers. This is not illegal, however, it is frowned upon by the banking institutions. Some even suggest that it is not in good faith.





How banks try to prevent credit card churning


Credit card churning is quite common, many people don't talk about it, especially the banks. For this reason, the banks have come up with several ways to discourage credit card churning in Australia. Advertisers are encouraged not to talk about credit card churning. Some sites that have affiliate relationships with advertisers may even be discouraged from using credit card churning language when talking about specific products.


From the consumer's side, the banks have made it more difficult to credit card churn by placing certain restrictions on credit cards and how often you may apply for them to earn sign up bonuses. There are many ways around these restrictions but some of these restriction are


  • Having a large minimum spend amount makes it harder to claim the signup bonuses and discourages users from applying just for the signup bonuses

  • Not being able to apply for the same credit card in any 12 month period

  • Having to sometimes wait the full 3 months from opening a credit card before receiving any signup bonus

  • Having targeted offers that are mainly for existing customers

  • Minimizing referral bonuses

  • Decreasing signup bonuses or splitting the bonus across two years to force the consumer to hold the card for another year and pay the annual fee twice to receive the rest of the bonus points.

  • Large annual fees



So in summary credit card churning is not illegal. It is looked down upon by many banking institutions for the reasons mentioned above. Worst case scenario it may be against the terms and conditions of some credit card companies and they may not approve your credit card or reserve the right to close your account. This however is extremely rare as credit card companies also want your business and hope they can make money off of their customers. This is why it's important to read the terms and conditions of each credit card. If you have specific concerns or questions about credit card churning in Australia, you may want to consult with a legal professional or financial advisor who can provide guidance based on the most current information and regulations.


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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