credit card churning
The practice of repeatedly opening credit cards to earn sign-up bonuses then closing them — can damage credit score over time.
Example
“Credit card churning earned him $3,000 in rewards but dropped his average credit age significantly.”
Memory Tip
CHURNING — profitable short term, damaging long term if done excessively.
Why It Matters
Credit card churning can significantly impact your credit score because opening multiple cards in a short period triggers hard inquiries and lowers your average account age, both of which are major scoring factors. Understanding this practice helps you weigh the actual long-term costs against the short-term bonus rewards you might earn.
Common Misconception
Many people believe that as long as they meet the minimum spending requirements and close the card after earning the bonus, there will be no negative consequences to their credit. In reality, the damage from multiple hard inquiries and closed accounts can outweigh the value of the sign-up bonuses and may take years to recover from.
In Practice
Someone might open three travel credit cards within six months, each offering a 50,000 point sign-up bonus worth roughly 500 dollars in travel value. However, the three hard inquiries could lower their credit score by 30-50 points each, and closing the accounts after one year reduces their average account age, potentially dropping their score another 40-60 points and resulting in higher interest rates on future loans.
Etymology
From Old English 'cyrin' meaning to agitate — rapidly cycling through credit card accounts.
Common Misspellings
Check your credit score free — no impact
Related Terms
More in credit
Other credit terms you should know
See Also
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