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Is credit card churning profitable?

Updated: Jan 16

Credit card churning can be very profitable if done correctly.

Each credit card offers very valuable signup bonuses which can be converted into cash or exchanged for flights and other rewards. A list of the credit cards that offer signup bonuses can be found here. This means, that every reward point you earn, holds a monetary value associated with it. On top of rewards points, you can earn cash back and other bonuses like lounge passes and other benefits such as travel insurance.

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.

calculator with credit card churning spreadsheets and cash
Churning credit cards can be very profitable if done correctly

How much profit can you make credit card churning?

The potential profit from credit card churning can vary widely based on individual circumstances, credit card offers, and personal financial habits. Credit card churning involves opening and closing credit card accounts to take advantage of sign-up bonuses, rewards, and other benefits. Here are some factors to consider:

  1. Sign-Up Bonuses: The primary source of potential profit in credit card churning comes from sign-up bonuses. These bonuses can range from cash back to travel rewards and points. The value of these bonuses varies, and some cards offer substantial rewards, especially for meeting specific spending requirements.

  2. Spending Requirements: Many credit card issuers require cardholders to spend a certain amount within a specified timeframe to qualify for the sign-up bonus. Meeting these spending requirements is a key factor in maximizing potential profits.

  3. Annual Fees: Some credit cards come with annual fees. While the sign-up bonuses and rewards may offset these fees, it's important to factor them into your calculations. Consider whether the long-term benefits justify the annual costs.

  4. Interest Charges: To maximize profits, it's crucial to pay off credit card balances in full each month to avoid accruing interest charges. Carrying a balance can quickly erode any gains from sign-up bonuses and rewards.

  5. Credit Score Impact: Credit card churning can impact your credit score. Frequent credit applications may result in hard inquiries, and opening and closing accounts can affect the average age of your credit history. A lower credit score can lead to higher interest rates on loans and other financial products.

  6. Ongoing Rewards: Beyond sign-up bonuses, credit cards often provide ongoing rewards for specific spending categories. Consider whether the card's ongoing rewards align with your spending patterns and whether they contribute to your overall profit.

It's challenging to provide a specific dollar amount for potential profits from credit card churning because it depends on the specific credit cards chosen, the value of their sign-up bonuses, individual spending habits, and other factors. Additionally, credit card churning involves risks, and responsible financial management is crucial.

A hypothetical example can look something like this:

A credit card with a signup bonus of 100,000 points has an annual fee of $295. There is also a cash back offer included which is $100. The 100,000 bonus points have value when it comes to using them for flights or gift cards. Let's say an average conversion ratio is around 1 cent per point. Then the value of these 100,000 points would be worth around $1000 in rewards.

So the total value would be ( 100,000 points x 1 cent ) + $100 cashback - $295 annual fee = $805.

So if anyone asks you if credit card churning is profitable? Let the numbers speak for themselves. For more information, you can also look at the FAQ page and look up the question "How much can I earn credit card churning?"

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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