{"id":774687,"date":"2019-04-29T02:26:05","date_gmt":"2019-04-29T06:26:05","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?p=774687"},"modified":"2024-10-23T11:05:25","modified_gmt":"2024-10-23T15:05:25","slug":"what-is-credit-card-churning","status":"publish","type":"post","link":"https:\/\/www.finder.com\/ca\/credit-cards\/what-is-credit-card-churning","title":{"rendered":"How credit card churning in Canada works"},"content":{"rendered":"

What is credit card churning in Canada? The general goal with credit card churning in Canada is to earn as many bonus points, cash and rewards as possible in a short amount of time, while also keeping your credit card costs down. In theory, as long as you meet the bonus point spend requirements, pay off the balance in full and cancel the card, you can avoid, or limit, the interest charges and annual fees that you\u2019ll face. However, banks often have measures in place to prevent churning so it\u2019s also important to be aware of its risks<\/a>.<\/p>

What is credit card churning?<\/h3>

At a high level, churning credit cards is the process of opening new credit card accounts to reap the benefits of bonus points. Once the rewards have been optimized, the account is closed. Canadian credit card churning processes also involve efforts to reduce the cost of churning credit cards, such as annual fees and interest. While it might sound like a great idea, a credit card churn can lead to negative listings on your credit file, impact your credit score and make it harder to get approved for new cards or loans in the future. Many banks and credit card providers tend to have measures in place to prevent credit card churning too. So, before deciding if you want to collect points through credit card churning, let\u2019s take a look at how this strategy actually works and what risks you\u2019ll face.<\/p>

How does credit card churning in Canada work?<\/h3>

While people who have successfully churned credit cards to earn more points usually have their own tips and tricks on what works, they typically follow a version of the steps below:<\/p>

  1. Compare credit card offers.<\/strong> Usually, you would start by looking at the current rewards points<\/a> and travel rewards offers on the market. This helps you find bonus point offers that suit your rewards goals. As well as the bonus point spending requirements, most people who churn credit cards also look for offers that include no annual fee or an annual fee that is waived in the first year.<\/li>
  2. Apply for the card.<\/strong> Once you\u2019ve chosen one or more cards, carefully read through the eligibility requirements. It can also be a good idea to look at your credit score<\/a> before you apply, as the more competitive offers tend to require higher scores. After that, you can usually apply online in around 10-15 minutes and if you\u2019re approved, you should receive your card within 1 to 2 weeks.<\/li>
  3. Set calendar reminders.<\/strong> Churning credit cards requires precise timing to get the bonus points and avoid extra costs. Most people using this strategy recommend that you set 3 different calendar reminders: one for the minimum spending deadline, one for your repayment due date\/s and one for your card\u2019s anniversary (which is when the annual fee is charged).<\/li>
  4. Meet the bonus point spending requirements.<\/strong> While spend requirements can vary between offers, people experienced at churning credit cards usually go for offers that have a straightforward requirement, such as spending $3,000 on eligible purchases in the first 3 months. This is because more complicated requirements can be more time consuming and increase the risk of interest charges or other costs. Check out our full guide to learn more about meeting bonus point spend requirements<\/a>.<\/li>
  5. Pay off the card\u2019s balance in full.<\/strong> To avoid interest charges, you will need to pay off the full amount owed on the card by the due date on your statement. If the spend requirement extends over the course of a few months, you\u2019ll need to make sure you pay off your balance every month.<\/li>
  6. Check the rewards account.<\/strong> If you\u2019ve met the bonus point spend requirement, it could take a few weeks before the points land in your rewards account. As a point of reference, most bonus point offers say you should allow 6 to 10 weeks from when you meet the spend requirements. After that, you might want to call your provider to follow up, as it\u2019s important you get the points before cancelling your credit card.<\/li>
  7. Cancel the credit card.<\/strong> Once the bonus points have landed in your rewards account, you can cancel the card. The main goal here is to avoid paying the second-year annual fee, which would be charged 12 months from when you opened the account.<\/li>
  8. Apply for another bonus point offer.<\/strong> If you\u2019re churning cards, you would typically apply for another introductory credit card offer after you\u2019ve cancelled the previous card. Each time you apply, an inquiry is added to your credit file, so some people who churn cards recommend waiting a few months between applications to help space these hard inquiries out.<\/li><\/ol>

    Credit card churning example<\/h3>

    To demonstrate how credit card churning works, let\u2019s look at an example.<\/p>

    Through research, you find the following 3 credit card offers*:<\/p>