Churning is not a very difficult system to understand and master, and the rewards for mastering it are awesome. However, there are some risks involved with churning credit cards, so if you want to dabble, you need to be organized, responsible, and attentive to some basic rules.
- Rule #1: If you can’t follow these rules, stay away from credit card churning. Your credit is one of your most important assets in life, and a few missteps can damage it for extended time periods.
- If you plan to apply for a big loan (mortgage, student loan, equity, etc.) in the next 2 years, it is best to stay away from credit card churning. For an outside perspective, see the US FTC’s guide on how credit scores affect the price of credit and insurance.
- Keep track of your credit cards, both open and closed, using a spreadsheet. Your memory is not good enough to risk your credit score. Go and copy my very own Credit Card Log Template to make your own spreadsheet.
- Always pay your credit card bills on time, in full, systematically, and manually:
- Once every month, go through your spreadsheet and pay off every card manually online. 30 minutes of effort each month is not a high price to pay compared to the price of missing a payment.
- Do not use automatic payments—they are prone to technical glitches (which you end up paying for in interest and your credit score) and they breed complacency.
- Keep tabs on your credit score using the free credit monitoring website Credit Karma. It is not perfect, but it gives you a good idea of your credit score trends.
I have broken up this Credit Card Churning section into sub-sections that should be read in order:
Next page: Intro to Churning