The downside to credit card churning

[Exterous]

Had a 4 figure refund go back to a credit card from a purchase this summer. For me this happens to be quite a few credit cards ago. So it took a little bit of time to check my records and then check the 3 possible accounts it could have been given the specific timeframe. Now to request a check be mailed...

 

[deadlyapp]

When I churn, I usually make sure I have had nothing on the card for at least 6-12 months before closing. Most of the cards I churn I make the spend in the first month or two then just sit on them until I near the anniversary (and any annual fees)

 

[MtnMan]

When I churn, I usually make sure I have had nothing on the card for at least 6-12 months before closing. Most of the cards I churn I make the spend in the first month or two then just sit on them until I near the anniversary (and any annual fees)

CC still charge annual fees? Guess I lead a sheltered life with low interest CC's from credit unions, and no fees.

 

[nakedfrog]

CC still charge annual fees? Guess I lead a sheltered life with low interest CC's from credit unions, and no fees.

Usually seems like the fancier ones do, but typically looks like if the things it offers (an airline-associated card giving you one free piece of checked baggage, for example) are something you'll use, you'll save much more than the annual fee costs you.

 

[JM Aggie08]

Quick question while ya'll are here.

Are there any credit score implications for closing down credit accounts?

 

[IronWing]

Quick question while ya'll are here.

Are there any credit score implications for closing down credit accounts?

Yes.


😛

 

[IronWing]

Duration of credit is a factor so closing old accounts that are in good standing can lower one's score. On the other hand, closing accounts that aren't in use can raise one's score by lowering total available credit (but if that increases one's credit utilization ratio too much, that can lower one's score). Personally, I only keep accounts I need and use.

 

[SKORPI0]

What is Credit Card Churning & How Does It Help Travel Hacking?

Credit card churning is a powerful way for cutting travel costs. Learn how to see the world for less with these credit card churning best practices.

youngandtheinvested.com

 

[JM Aggie08]

Duration of credit is a factor so closing old accounts that are in good standing can lower one's score. On the other hand, closing accounts that aren't in use can raise one's score by lowering total available credit (but if that increases one's credit utilization ratio too much, that can lower one's score). Personally, I only keep accounts I need and use.

So for more context, I do not hold a balance on anything. We have 2 car notes (maybe applicable?). I've got an old Discover card and some other store cards that are no longer in use. I'm really just looking for less shit to keep track of lol.

 

[IronWing]

So for more context, I do not hold a balance on anything. We have 2 car notes (maybe applicable?). I've got an old Discover card and some other store cards that are no longer in use. I'm really just looking for less shit to keep track of lol.

If it were me, I'd close everything I wasn't using. Unused open accounts are still susceptible to theft and fraud. For cards in use, all else being equal (rewards/fees), I'd keep the oldest and ditch the rest. I do keep two cards open, a rewards card I use for everything and a backup card for when the main card gets hacked. I use the backup card a couple times a year to keep it active.

 

[Lost_in_the_HTTP]

Always keep your oldest accounts open as long as possible. Use them occasionally to keep them active.


Yes some cards have annual fees. I don't apply for those.

 

[Exterous]

Duration of credit is a factor so closing old accounts that are in good standing can lower one's score. On the other hand, closing accounts that aren't in use can raise one's score by lowering total available credit (but if that increases one's credit utilization ratio too much, that can lower one's score). Personally, I only keep accounts I need and use.

Duration of credit is one of the smaller impacts though. You can have very short average durations and still have a >800 credit score if your other factors are good

So for more context, I do not hold a balance on anything. We have 2 car notes (maybe applicable?). I've got an old Discover card and some other store cards that are no longer in use. I'm really just looking for less shit to keep track of lol.

If your score is good already then likely your biggest consideration would be credit utilization ratio (total credit card credit extended : total balance on credit cards). I'm not sure the ratio trigger points to keep in mind - maybe someone here or on the FICO forums does - but at some point if they get too close to 1:1 then it will hurt your score.

Yes some cards have annual fees. I don't apply for those.

Those are some of the best ones! 🙂

 

[deadlyapp]

CC still charge annual fees? Guess I lead a sheltered life with low interest CC's from credit unions, and no fees.

Cards without annual fees generally have the least desirable bonuses. Usually a couple hundred dollars value in bonuses and poor redemption. I generally don't churn those. Right now I'm churning United Explorer cards which have a $95 annual but waived the first year. Previous cards I've churned are Chase Inks ($95), Citi Preferred ($95), etc. I generally haven't churned the high value cards (Chase CSR, Amex Plat) but have eyes on them in the future.

Always keep your oldest accounts open as long as possible. Use them occasionally to keep them active.


Yes some cards have annual fees. I don't apply for those.

As mentioned above, those are the best ones! Even if you take a $100 hit the bonuses are usually well worth it. Even the high cost ones (Chase CSR, Amex Plat, etc) usually pay something like $1000+ in benefits in the first year against a $400-500 annual fee.

 

[zinfamous]

Duration of credit is one of the smaller impacts though. You can have very short average durations and still have a >800 credit score if your other factors are good



If your score is good already then likely your biggest consideration would be credit utilization ratio (total credit card credit extended : total balance on credit cards). I'm not sure the ratio trigger points to keep in mind - maybe someone here or on the FICO forums does - but at some point if they get too close to 1:1 then it will hurt your score.



Those are some of the best ones! 🙂

I recall that keeping credit utilization below 30% or so is where you want to be before the big bad agencies start raising their eyebrows.

For me, it's usually less than 1%.

 

[Exterous]

As mentioned above, those are the best ones! Even if you take a $100 hit the bonuses are usually well worth it. Even the high cost ones (Chase CSR, Amex Plat, etc) usually pay something like $1000+ in benefits in the first year against a $400-500 annual fee.

The Amex platinum is up to $695/year now but still has enough value for us that I keep it.

Out of morbid curiosity I totaled it up and we've paid a little over $2,100 in credit card annual fees this year. While that is a lot I do scrutinize the cards every year for cost benefit ratio and there are only a few I keep for more than a year. The ones we keep give us things like trip insurance, medical evacuation coverage, a free IHG night for the $49 annual fee, $300 annual travel credit etc

 

[deadlyapp]

The Amex platinum is up to $695/year now but still has enough value for us that I keep it.

Out of morbid curiosity I totaled it up and we've paid a little over $2,100 in credit card annual fees this year. While that is a lot I do scrutinize the cards every year for cost benefit ratio and there are only a few I keep for more than a year. The ones we keep give us things like trip insurance, medical evacuation coverage, a free IHG night for the $49 annual fee, $300 annual travel credit etc

It's hard to justify multiple ultra premium cards over a long time period because splitting your spend and utilization really impacts the benefits. It's one of the reasons why I haven't gone CSR + Amex Plat. I almost exclusively fly United and have status, so going Amex+Delta splits my loyalty spend. Similarly with Marriott & Hilton (although I'm less tied to that one).

I could probably switch to flying Delta exclusively and still get benefit from the CSR booking Delta flights through their portal and using Amex for transferring to Delta for award flights, but I don't know if I want to go through gaining status all over again.

 

[Exterous]

It's hard to justify multiple ultra premium cards over a long time period because splitting your spend and utilization really impacts the benefits. It's one of the reasons why I haven't gone CSR + Amex Plat. I almost exclusively fly United and have status, so going Amex+Delta splits my loyalty spend. Similarly with Marriott & Hilton (although I'm less tied to that one).

I could probably switch to flying Delta exclusively and still get benefit from the CSR booking Delta flights through their portal and using Amex for transferring to Delta for award flights, but I don't know if I want to go through gaining status all over again.

It depends a bit on how you derive your value from them. I don't put much of any spend on them. Beyond any kind of hotel\travel credit its just the taxes & fees of my award flights on my CSP (many cards require the full fare is charged to cover you with travel insurance while the CSP will cover you just for paying the taxes & fees) and anything that gets me a statement credit on my Amex. All other spending goes towards sign up bonuses for new cards. But I keep them because of the non-spending related benefits