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There are a lot of people out there who find it fun, and lucrative, to take advantage of credit card welcome offers – applying for, using, juggling, and then ditching credit cards in an effort to maximize their rewards earnings.

This is called “credit card churning” and it’s a hobby for some people. You can’t really make a living off of it, but if you do it enough, it can add up to hundreds or even thousands of dollars a year.

And it’s free money and no one gets hurt by it after all, but what’s the catch?

Credit card churning explained

If you pay attention to credit card advertisements for any length of time, you’ll soon notice that credit cards often come with some pretty enticing welcome offers.

One card will offer 35,000 bonus points, for example, with the first year free. Another may offer 10% cash back for a certain amount of time, up to a particular spend. Others will offer loads of airline miles that can quickly add up to a free trip. Still others will offer bonus earn rates for a specific spending category, or bonus rewards for shopping at participating retailers.

If you do the math, these rewards can add up to real money.

It is. There are no laws against taking maximum advantage of promotional offers like these. The banks and credit card issuers don’t love it (and may go so far as to close your accounts and ban you for life), but it’s not illegal.

But is it ethical?

Here’s the catch: it isn’t actually free money.

Credit card companies spend enormous amounts of money on these promotions in an effort to attract more customers to their services. More loyal customers. Customers who will try their services, find real value in them, and then stick around for the long term.

The credit card churners who take advantage of welcome bonuses are increasing the overall cost of these promotions, and, in the end, everyone ends up paying more.

The credit card companies take a hit, sure, but they inevitably turn around and pass that along to other customers in the form of:

  • higher fees,
  • higher eligibility requirements,
  • lower welcome bonuses, and
  • other things that make credit cards more difficult to get and expensive to use.

So, while credit card churning can be lucrative and it isn’t technically illegal ‒ it also isn’t exactly ethical.

Also, unless you’re very, very good at it, it can:

But let’s dig deeper into the murky world of credit card churning, and see just how all of this ticks.

Credit card churning illustrated

We’ll start with a story to illustrate what it looks like to churn credit cards.

3 cards, 3 welcome offers

Ok, let’s say we have 3 credit cards (that I just invented out of whole cloth):

  • Card A offers 30,000 bonus reward points after you spend $2,000 in the first 6 months you have the card,
  • Card B offers 10% cash back on groceries in the first 120 days, up to a total of $2,500 spent, and
  • Card C offers a bonus 2,000 airline miles after you spend $3,000 in the first 3 months.

We apply for all 3 cards, and hooray! We’re approved for them all (let’s say) on July 1st. Fantastic.

Minimum spend requirements and deadlines

Now, to take full advantage of these 3 welcome offers, we have to spend:

  • $2,000 on Card A by Dec 31st,
  • $2,500 on groceries on Card B by Oct 29th, and
  • $3,000 on Card C by Sept 30th.

Oof, this is already getting a little confusing, but we press on. We make a spreadsheet somewhere and keep track of how much we’re spending on which cards, so we can make sure to hit these minimums.

We manage to do Cards A and C, no problem. Card B is a bit trickier because it turns out we just don’t spend that much on groceries. We only manage to get $1,500 of that spend done in time.

The bonuses arrive

Now it’s the end of January and all our welcome bonuses have (finally) arrived. We now have:

  • 30,000 bonus points from Card A,
  • $150 cash back from Card B, and
  • 2,000 airline miles from Card C.

Pretending that the bonus points are from BMO Rewards and the airline miles are Aeroplan, our rewards are worth:

  • $213 for 30,000 BMO Rewards (0.71 cent per point if redeemed for travel),
  • $150 cash back (in the form of a statement credit), and
  • $50 for 2,000 Aeroplan miles (2.5 cents per mile for flights).

We’ve earned a total of $413 in bonus rewards. That’s great!

But is it really that great?

We had to spend $6,500 in less than 6 months to do this (sometimes on stuff we didn’t really need) and we ended up missing out on a possible extra $100 in rewards.

Let’s say we’re super diligent and have enough money on hand to cover all those charges. We pay everything in full and avoid any interest charges, maximizing our overall value.

Rinse and repeat

But now, since we’re real credit card churners, we’ve already cancelled all of these cards and applied for more.

In fact, to maximize efficiency, when we got the welcome bonus for Card C, we cancelled that back in October and applied for another one (Card D, which we’re working on now). Card E should be here soon, and we’ll apply for Card F next week because there’s another sweet deal coming up.

And for what?

After all of that effort, tracking, and money spent, with those first 3 cards we got slightly better than a 6% return on our spending. And it’s not even that useful, coming in the form of:

  • reward points and miles that we have to hang on to until we get a chance to take a trip, or we redeem them for lower value, and
  • a statement credit that ultimately only saved us 10% on groceries.

And that’s if we did it perfectly and paid no annual fees and no interest in the entire time we had the cards.

Frankly, it all sounds exhausting.

Wouldn’t it just be so much simpler to find a good combination of 2 or 3 cards that give you a good, reliable, and permanent rewards earn rate for your existing spending habits?

How credit card churning works

So, long story short, credit card churning is simply a process where you sign up for new credit cards, take advantage of their welcome bonuses, then cancel the cards before any annual fees kick in.

Obviously the illustration above demonstrates that it really sounds more simple than it is, given fine print, spend requirements, and all that other whatnot you have to keep track of while you go. And for cards that aren’t first year free (and there are lots of them), you will have to pay that fee within the first 2 months you have the card.

That said, churning experts have come up with a base set of best practices that will help you get the most out of your churning experience, if you decide to dive in.

18 best practices for credit card churning

So, maybe we’ve talked you out of churning credit cards, but maybe we’ve accidentally talked you into it. If you’re going to embark on this crazy journey, you should at least have some good tools at your disposal.

Here are some of the best practices churning experts have devised over the years.

1. Make sure you meet income requirements

Doing a bit of research about eligibility requirements for a credit card before applying can save you a lot of time and frustration.

Most credit cards have some form of income requirement, and the better the welcome bonus and perks, the higher those requirements are likely to be.

One example is the . This credit card:

But the income requirements for the card are $80,000 personal or $150,000 household. It’s a great card with fantastic rewards, but the eligibility requirements are pretty steep.

If you aren’t somewhere in the ballpark of posted minimum requirements, you’re really better off not applying for the card.

2. Ensure your credit score is high enough to qualify

Similarly, the more premium the card, the higher the credit score you’ll need to qualify.

First off, you have to know what your credit score is. If you have no idea, there are a few different ways to get that information.

  • Equifax Canada will give you free access to your credit report once a year, but you’ll have to pay $23.95 to get your actual credit score.
  • Transunion Canada also gives you free access to your credit report, but your credit score is only available if you’re subscribed to their $19.95/mo monitoring plan.
  • Credit Karma will give you a free credit score (from Transunion), but be warned: they will use your information to market other products and services to you (aggressively).
  • Borrowell Canada also offers a free credit score (this time from Equifax), but they’re also interested in harvesting your personal information for marketing purposes.
  • Scotiabank and RBC both offer bank accounts that come with free credit score information.

Get free credit monitoring with Scotiabank’s Ultimate Package.

Now that you have your score, what does it mean?

We recently did a study in which we analyzed over 6,500 data points to see if there was a clear correlation between your credit score and your chance of being approved for a particular type of credit card.

It turns out there is a correlation, and, perhaps surprisingly, that even an Excellent credit score doesn’t give you a 100% chance of being approved for any particular credit card.

Wondering if your credit score makes the cut? Learn about how your credit score can impact your chances of being approved.

What is a good credit score?

3. Always keep an eye on your credit score

Your credit score is a pretty key part of churning credit cards, as it has a huge impact on how likely you are to be approved whenever you apply for a card.

Hard credit checks

Almost every time you apply for credit, there’s a “hard pull” on your credit information by the lender. These hard pulls can cause a small hit (generally just a few points) on your credit score for a couple of months.

If you’re applying for credit cards all over the place, you’re going to see these add up and cause your credit score to drop. On the other hand, if you currently have a credit card with the issuer, you may not be subjected to a hard check.

Credit utilization

Your score can also drop as your credit utilization goes up. If you’re using 75% of your available credit, your score may be lower than if you’re only using 10% – 15%. If you’re constantly opening, using, paying off, then closing cards, your credit utilization will be all over the map.

Closing credit cards can have a negative impact

Similar to credit utilization, closing credit card accounts can have a negative impact on your credit score. It reduces your available credit, therefore increasing your credit utilization, and it can shorten your apparent credit history if you’re cancelling your oldest credit cards.

What to do if your score drops

If you notice your credit score taking more of a hit than you’re comfortable with, pay down the credit cards you have and let things sit for a few months. Temporary dings to your credit score usually clear up in 3 – 4 months, so take a break then check your score again.

4. Only apply for cards with big bonuses

If you’re going to put in this much effort, you should be going for the biggest and most valuable welcome offers you can. Don’t bother with little $25 or $50 bonuses, go big and aim for a $200 value or higher.

5. Find welcome offers with low or no minimum spend

Some credit card welcome bonuses kick in on things like “your first purchase” or after relatively low spend amounts. The bonuses may be relatively smaller on these, so you have to balance the risk (spend limits) vs. the potential rewards (sweet, sweet bonus rewards).

6. Focus on a small number of rewards programs

Figure out which rewards programs make the most sense for you, your family, and your spending habits. If you don’t travel a lot, then maximizing your Aeroplan rewards isn’t the best choice, for example.

If you’re not sure which rewards programs might be best for you, we’ve done a survey of 20+ popular rewards programs in Canada that might set you in the right direction.

Want to learn more about rewards programs in Canada? Which Canadian Rewards Program Is Worth The Most?

Which Canadian rewards program is worth the most?

7. Make sure you can keep the rewards if you don’t use them immediately

An important part of churning credit cards is getting rid of the card before any annual fees kick in. And in some cases, when you cancel a card, there is a chance that you’ll lose any earned rewards if you haven’t used them first.

So, do some research before you sign up for a new credit card to make sure that you’ll be able to either use or transfer any earned rewards before you have to close the account.

8. Don’t miss out because you miss a deadline

Clearly understand the requirements to actually get the welcome bonuses, and make sure you can meet them.

Figure out some way to track how much you’ll need to spend on a card, how much you’ve already spent, and exactly when you need to meet the minimums. There’s no point in signing up to take advantage of a welcome bonus if you mess up and miss the deadlines.

If you’re not used to keeping track of this sort of information, just set a calendar reminder for yourself to check your progress on things every week or so.

And when you set a deadline, give yourself a buffer – if you need to hit a $2,000 spend in 3 months, set a deadline for yourself in 2.5 months, just to make sure.

9. Hit your minimums by buying gift cards

If you’re coming up on a spend deadline, or if you just want to get it all taken care of and out of the way, just buy enough gift cards to hit your minimum and be done with it.

This way instead of pushing hard to make a deadline, you can just get it over with all at once, and then use those gift cards for your regular shopping at your leisure.

Just make sure to check the fine print, since gift cards are a common exclusion from eligible spending (most likely because of credit card churners who use this method so often).

10. Hit your minimums by paying your bills in advance

Not a fan of gift cards? Many utility companies will let you pay your bills in advance. If you can use a credit card to pay these bills, pay as much in advance as you can until you hit your spend minimums. Then you can stop worrying about those and not have to worry about paying your gas or electricity bills for a while. Win win.

11. Hit your minimums by using it as your primary card

If you want to make sure you hit your minimum spend requirements on a particular card, simply use it as your primary credit card until you do so.

Obviously, you can only really have 1 primary card at a time, so this makes more sense if you’re churning cards sequentially rather than in parallel.

12. Hit your minimums by buying everything with your card

Do you usually buy groceries with your debit card, or use cash at the pub? Stop doing that for a while and just buy everything with the card or cards you’re churning. It goes without saying you should be using your credit card for all these purchases anyway to enjoy the rewards you’re otherwise missing out on.

Related: Debit vs. Credit: Which Card Is Better?

13. Hit your minimums by getting supplementary cards for family members

Go even further by getting supplementary cards for other members of your family and have them use it for all of their purchases as well. That way you’ll hit your minimum spend requirements even more quickly and earn that sweet welcome bonus in no time. Just remember many premium cards have fees for supplemental cards, adding to your costs.

14. Only apply for cards that waive the first year fee

If a card has a welcome bonus worth $200 but you have to pay a $150 fee as soon as you get the card, that bonus is really only worth $50. This goes against the “only apply for cards with big bonuses” rule, once you do the math.

15. Pay off your card in full every month

The whole point of churning credit cards is to maximize your rewards while minimizing the cost to you. If you end up paying fees or interest, you’re just doing it wrong.

There are payment grace periods and whatnot, but do yourself a favour and just pay the full balance of every card, every month. The second you start paying interest on your cards, you’re cutting into your own potential profits.

16. Stay organized and track everything

We mentioned this earlier, but make sure you track:

  • your cards,
  • your minimum spend requirements, and
  • spending deadlines.

And do yourself a favour by setting a calendar reminder to check in on progress at least weekly or biweekly.

Make sure you stay on top of things or you could undo all of your hard work by missing a payment or deadline.

17. Don’t overextend yourself

Before you start down the road of becoming a credit card churner, make sure you have the budget to actually hit the minimum spend requirements you sign up for.

If you aren’t going to be able to pay all the cards off in full every month, then you’re going to end up paying interest on something eventually.

Before applying for anything, figure out just how much you can actually afford to spend every month, and only sign up for cards whose minimum spend requirements you’ll be able to meet in time.

18. Never, ever skip the fine print

This is a newbie mistake that you’ll probably only make once, but: be absolutely sure to read through all the fine print in the credit card agreement before you apply.

Credit card companies aren’t stupid. They know all about credit card churners and how much they cost them every year. And most companies will have some stuff buried in the fine print that will make life more difficult for churners.

Take an example

One good example of fine print that often gets missed: Sometimes you can only earn a welcome bonus for a particular card once, ever.

Let’s say you sign up for one of these cards, earn the welcome bonus, then cancel it a few months down the line. That’s great, you got the welcome bonus and all is well and good.

But 4 years later you see that the company is promoting that card really heavily, and has tripled the welcome bonus.

“Great,” you think, “I haven’t had that card in years, I’ll sign up again.”

Only you didn’t read the fine print, or you forgot about it, and you didn’t realize that you can only earn the welcome bonus once in your life.

Sad trombone.

You hit the spend limits and the deadlines and…get nothing.

Never, ever skip the fine print.

And if you’re going to do this seriously, make sure you take notes on those sorts of restrictions in your tracking document, or you’ll forget all about them.

Want to boost your credit card rewards? Here are 25 ways to get the most of your rewards.

credit card rewards tips

3 upsides to credit card churning

At this point, the benefits to credit card churning are pretty obvious.

1. You can earn lots of rewards, really quickly

Credit card companies are super keen on attracting as many new, qualified customers to their services as possible, so welcome bonuses on credit cards can be Very Generous.

If you can take advantage of these offers while avoiding any of the downsides (see below), it can be a great little bonus for not a whole lot of extra work.

2. Cards often have extra perks and benefits you can take advantage of

Churning a card to get the welcome bonus is great, but you can also take advantage of all the perks and benefits of that card while you’re using it. Some examples of these are:

There really are a huge number of credit card perks and benefits, and lots of people rarely take advantage of them.

If you’re churning credit cards, you should definitely take advantage of all the benefits you can. You’re here to get the biggest bang for your buck, after all.

3. You can maximize return for your existing spending

If your regular credit card offers 1% cash back on groceries, but there’s a card that has a welcome bonus of 10% back on groceries for 3 months…that’s an obvious win. Credit card welcome bonuses can give you easy ways to maximize your regular everyday spending, either by earning extra rewards or by saving money.

7 downsides to credit card churning

As you may have noticed by now, there are some pretty serious downsides to credit card churning.

1. You do have to spend money

Most credit card welcome bonuses have some sort of spending requirement. Maybe you have to spend a certain amount by a certain day, or you have to buy things at particular retail partners where you wouldn’t normally shop.

2. You can damage your credit score

A combination of hard credit checks, opening and closing lots of new accounts, having a roller coaster of a credit utilization ratio…all of these things can have a negative impact on your credit score.

And it is possible that you could mess up and end up in a hole, paying interest on credit card debt you can’t really afford, either because you overextended yourself, or you lose your job unexpectedly (hello pandemic), or some other emergency comes up.

Credit card debt is never fun to have hanging around, so it pays to err on the side of caution.

Not sure how credit scores work, or why you should care about them? Learn more about credit score here.

Credit Score In Canada 101

3. Credit card churning takes a lot of time and attention to do well

If you tend to fly by the seat of your pants, credit card churning may not be for you.

It’s so easy to lose track of cards, spending requirements, deadlines, and other factors (like when those pesky annual fees are going to kick in).

If you’re not a detail-oriented person, you’re probably going to mess up and end up either missing the bonus time limit, getting dinged for fees, or end up paying interest…etc. All of which can turn into a huge mess that’s hard to get out of.

Credit cards should be used wisely and responsibly. Read our list of 12 costly credit card mistakes we all should avoid.

credit card mistakes

4. You can get banned by the credit card issuer

Credit card issuers are here to make money. And if they notice that you’re clearly taking advantage of their welcome bonuses and costing them money in the long run, they can ban you for life.

If they ban you while you have unredeemed rewards? You’ll very likely lose them completely.

And you could get banned with no warning at all.

Alternatively, if they decide you’ve broken enough rules but don’t ban you, they could just claw back any or all rewards you’ve earned.

So be cautious. Don’t go too crazy with opening and closing a bunch of accounts in quick succession. And make sure you read the fine print. There can be some pretty obscure little rules in there, and you don’t want to break any of them by accident.

5. You can harm your relationship with your bank

Banks don’t love this sort of thing. If you have a good long-standing relationship with your bank, you don’t want to damage that. It’s probably more valuable than any credit card rewards you can churn up.

6. You may not get approved anyhow

If your credit score isn’t Very Good or higher, you’re probably going to get denied for most cards that have sign up bonuses that are worth churning.

Do your research first. Make sure your credit score and income put you at least within the ballpark of getting approved, or you’ll just be wasting your time, and your credit score may take a hit for no good reason.

7. And in the end, it’s usually not worth it

For the majority of people, if you do the math, you’re not going to get enough value out of churning credit cards to make it worthwhile.

Your time is better invested doing almost anything else that will make you money, that will save you money, or (better yet) that will make you happy.

Bonus read: Learn how to read your credit card fine print here.

credit card terms explained

The bottom line

Credit card churning can be a fun (albeit ethically questionable) hobby for people who enjoy meticulously tracking details and have enough time and income to pull it off well.

For most of us, however, it’s time consuming and potentially a damaging waste of time.

You’re probably better off looking for a combination of 2 or 3 credit cards that will help you maximize your existing spending habits over a long period of time, and just sticking with those.

That way you only ever have to remember which card you should use at which stores, which very quickly becomes second nature.

Not sure which credit cards might be best for you? We’ve compiled a database of credit cards available in Canada and have analyzed over 126 features for each. Take our 3 minute creditcardGenius quiz, and we’ll make some recommendations based on your particular situation, spending habits, and preferences.

Your turn

Do you churn credit cards? Have you churned in the past?

Do you think it’s worth it, or just a waste of time?

Let us know in the comments!

FAQ

Have a question about churning credit cards? If it’s not already answered here, ask it in the comments below.

Is churning credit cards illegal in Canada?

Churning credit cards is not illegal in Canada. It’s ethically questionable, since it does cause harm and force credit card companies to increase costs for everyone, but it’s not illegal.

What are the upsides to churning credit cards?

If you’re really good at it, you can rack up some serious rewards in record time for very minimal financial cost. The caveat being that you have to be extraordinarily diligent in your record keeping, you have to have a credit score that can support this sort of activity, and you have to have enough income to pay off all those charges before interest or fees kick in.

What are the downsides to churning credit cards?

If you mess up, churning credit cards can damage your credit score, ruin the relationship you have with your bank, put you into (expensive) debt, and get you banned by credit card issuers. It can also be very time consuming, because you need to do your research very carefully before you start, and you have to spend a lot of time keeping track of your spending requirements and deadlines.

I don’t want to put in this much effort. How can I just find a few good credit cards that will work best for me in the long term?

You’re in luck. We have put together a credit card comparison system that makes recommendations based on your situation, spending habits, and requirements. Our database contains cards which we’ve analyzed based on over 126 possible credit card features, and if you take our creditcardGenius quiz, we’ll help you get started. It only takes a few minutes, and there could even be $25 in it for you.