As title states, so many points offers that always come up.
Are there any downsides to this assuming the Credit card is fully paid off and closed once the bonus points are received?
Any Cons of Credit Card Churning for Bonus Sign-up Points?
Zapped on 20/09/2022 - 10:36
Comments
Thanks for your comments - how much did you churn prior before the knock back from St George?
Understand it might be personal circumstances and each person is treated differently but just curious how many cards you went through in your case?
If you’re not looking to get a loan any time soon, then there are no genuine downside risks. Yes, your credit score will take a hit but who cares? It’s not there to be coddled and preened and taken to the grave with you. It’s there to be used. Think of it as a rubber band that bounces back. In the meantime, draw it back and churn away.
Taking too many business class trips.
This is somewhat the ideal end state - maybe not business class since we are a family of 4 but would be nice for "free flights"!
Point requirements for flights etc have gone up severely post-Covid.
Plus additional taxes for flights booked with Qantas FF have jumped huge amounts for UAE airlines.
Nope, as long as you don't apply for too many at similar times (credit score), it's an easy way to make free money.
Selling the points is generally best use of the points IMO, but if you can book classic rewards they can be better value. Upgrading to business is a waste (would rather $1,000 extra spending money) but some people seem to value that.
This. I too think selling points is best. I think I've made in the ballpark of $30k in the last 5 years.
Business class flights are wasted on me as I prefer the extra cash, than 7 hours in a comfy chair. But to each their own. Despite churning approximately 100 cards in the last 8 years, I had no problems getting a mortgage 5 years ago and then refinancing with a different bank last year (and pocketing a further $4k for my troubles).
My only regret is not discovering this lark earlier.
could you pls share what service you use to sell your points?
In addition to the above, another downside would be over-spending in order to reach the minimum spend.
Everyone knows you book a fully refundable trip 12 months in advance then cancel as soon as the points get credited 🤣
First reply says you get a hit on your credit score. That is correct to a degree.
An enquiry drops your score slightly, but I've found that when you clear and close that churned CC (as you should be doing), you get a score increase that is slightly more than the initial score decrease.
With CCR, credit duration history is now recorded. There's no anecdotal stories of it affecting future applications yet but it can in future. Future lenders will see that you're a churner and may decide to decline accepting you as a customer as they won't receive value after dishing out sign up bonuses and not retain you to recoup the "investment".
For lending banks look at a lot more than credit score too. They're far more worried about your ability to service the loan than your credit history.
Plus it's worse to have no history or records of missed payments than enquiries. Your credit score goes up as you service a credit card, that's a good thing. I just wouldn't go too overboard.
Having churned over 10 cards in the space of 18 months, the only con I would see is the effort. But the reward is well worth the effort. Banks don't seem to care about my card churning history, just refinanced my home loan too without any questions.
Perhaps it's your income or asset being higher than normal people
from what i've heard talking to people who work in loan approvals, they only care about income/asset. That's my point, as long as you can service the card, they will approve it, regardless of how many cards you've had in the past.
One thing you should be weary of is the underwriters to the cards. Citibank used to have a lot of white label cards which have now moved to be owned by NAB (Kogan, Qantas Money etc), and if you make multiple applications in a year for the same underwriter there's a high chance you'll be denied.
Best to stick with a pattern of bank to bank, and then check the white label cards being spread out over time to lower the risk of being denied.
Yes.
You get a hit on your credit score. Mine dropped quite a lot but then came back after a few months.
You may also be rejected for cards in the future. I got knocked back by St George because I was churning.
The only big negative would be if churning impacts your home loan application, which I'm not sure it does.