April 15, 2013

Is Credit Card Churning a Viable Option?

Credit card churning is the practice of applying for credit cards with very attractive signing perks, such as airline miles, bonus points, and other offers.  Then, the consumer runs up a high balance on the credit card in a short period of time to earn the attractive signing perks.  Thereafter, the consumer closes the credit card account and moves on to the next attractive credit card offer to repeat the process and earn more perks.


The dangers of credit card churning are numerous.  First, many of the attractive signing offers are contingent on charging a high balance on the credit card in a short period of time.  With such a high credit card balance required to earn the signing perks, the consumer runs the risk of not being able to pay back the credit card company.  Second, the practice of credit card churning lends itself to opening new lines of credit only to hold them for a short period of time.  Unless the consumer can pay back the balance of the former card, there exists a possibility of simply racking up a large balance of credit card debt across multiple cards.

In short, because earning the signing perks associated with new credit cards necessarily involve charging a high balance on the credit card in short period of time, that signing perk is really not a perk at all.  Those airline miles or bonus points are paid for in interest payments and late fees associated with nonpayment of credit card debt.  If you have found yourself caught in a cycle of credit card churning, call a qualified debt settlement attorney and break the cycle of credit card debt.