What Is Credit Card Churning?

If you’re relatively new to collecting travel points you may have seen the phrase churning or credit card churning used, but what does it mean? In this post, we want to take a look at what credit card churning is and why people do it!

This is our experience using the points system and is not a recommendation of any financial product. There are other credit cards that can earn you travel points including Tesco Credit Cards (by exchanging Clubcard points for Virgin Points, hotel stays, and more) & Virgin Atlantic credit card. If you use one of our referral links to an American Express card upon you being accepted we or the referrer will receive points, this varies between 5,000 – 12,000 depending on the card you are referred from.

So… what is credit card churning?

Credit Card Churning is the process of taking out credit cards purely to benefit from the various welcome/sign-up bonuses and benefits that the card offers. Once the desired benefit is obtained the card is cancelled (to avoid paying any unnecessary annual fee + it resets the counter for another bonus.) The person then moves on to the next card & repeats. Eventually (unless the card has once in a lifetime bonus) the circle would repeat starting at the first card again.

So the process would work roughly like this…

1. Identify the cards with welcome/sign-up bonuses that you are a) eligible for b) able to meet the minimum spend target on.
   
2. Work out the order that you can apply for them to help maximise your welcome/sign-up bonuses. For example, the order in which you obtain American Express cards can affect the number of bonuses you get. See our examples on fast-tracking to 200,000 Avios, 250,000 Marriott points, or 169,000 Virgin Points.
   
3. Apply for the cards one by one in the order you decided
   
4. Meet the spending target for the sign-up/welcome bonus & take advantage of the increased status benefits on offer. Cancel the card for a pro-rata refund on the annual (if offered) or to minimise the monthly fee paid. (Don’t forget to apply for the next card before this point…Generally, people apply for their next card a few weeks before they cancel the current one.)
   
5. Repeat step 3/4 until you’ve obtained all the bonuses that you can. Then start from step 1 again and repeat (you may need to wait before being eligible for a sign-up bonus again/eligibility rules may change)
   

This process is then repeated as much as possible to obtain as many points as possible with minimum spend.

Is it worth Credit Card Churning?

The changes made a few years ago to the sign-up bonus eligibility for American Express cards made Credit Card Churning a lot less rewarding in the UK. Whilst the changes did affect the number of points churners would be able to earn annually from their hobby it’s by no means ‘unprofitable.’

For example, if someone decides to collect Avios points they may decide to start with the Nectar Credit Card, Switch to the Platinum Card, Followed by the BA Premium Plus Amex & then finish on the Barclaycard Avios Plus. (If you want to gain a 2-4-1 voucher/upgrade voucher at 10K spend you might keep either the BA Amex or Barclaycard Avios until you reach the additional target)

Example (if someone was new to Amex + The Avios Barclaycard OR hasn’t had one for 24 months)…

Nectar Card (no annual fee for 1st year) – 20,000 Nectar Points for spending £2,000 in 3 months + 4,000 Nectar points for spending the 2K. Converts into 15,000 Avios.

Platinum Card (£575 annual fee, pro-rata refunded when you cancel – 30,000 Membership Reward Points for spending £4,000 in 3 months + 4,000 Membership Reward Points for spending the 4K. Converts into 34,000 Avios.

BA Premium Plus Amex (£250 annual fee, pro-rata refunded when you cancel) – 25,000 Avios for spending £3,000 in 3 months + 4,500 Avios for spending the 3K. Another 29,500 Avios.

Barclaycard Avios Plus (£20 monthly fee) – 25,000 Avios for spending £3,000 in 3 months + 4,500 Avios for spending the 3K. Another 29,500 Avios.

If you kept each card for 3 months your total outlay would be £266.25 but would leave you with 108,000 Avios (worth £1080 at our 1p valuation or £864 if converted into Nectar.) You’d also keep Gold status in Hilton, Marriott, MeliaRewards & Radisson Rewards until the end of the year as you took the Platinum Card.

If the eligibility requirements stay the same you could start the same process again (minus the Nectar Amex) in 18 months after canceling the last card if you kept each for 3 months. Don’t forget if you have a partner you could also alternate so that during your ‘break’ your partner churns. Including referral bonuses it’s likely 90,000 Avios + a year could be obtained on average.

You can also join through a referral link to earn extra bonus points. See here for more details – https://pointsuncovered.com/amex-referral-link-uk/

It’s not all rainbows & pot golds of gold…

Don’t forget applying for multiple credit cards will affect your credit rating, this is particularly important if you have something like a mortgage application coming up. Not only this but churning isn’t really something that credit card companies like. If they feel you are a serial churner they could decline any further applications from you leaving it more difficult for you to earn the points that you want!

What do we do?

We stick with our cards, as our spend is quite high we can’t be bothered with the faff of applying and closing cards for bonus points. Your situation may differ however! That’s why we want you to understand all of the different ways people play the ‘miles & points’ game.

Conclusion

Whilst you may be attracted by the large number of points on offer by churning don’t forget to consider your credit & personal circumstances when deciding whether to take part in credit card churning. If you have any doubts or questions you should always seek the advice of an independent financial advisor.