‘The Churn’ Series: Part 3 – Dos and Don’ts
In this series, ‘The Churn’, I will examine the multifaceted aspects of churning credit cards, probably the quickest and most used way to get free flights and other travel credits fast.
Part 3: Dos and Don’ts
After reading the first two parts to this series, you have learned the basics of churning, and what the credit implications are. In this final part to the series, I will provide a list of general ‘dos and don’ts’ that you should consider when partaking in a churn.
Dos
– Apply to all the cards you want on the same day. By churning all on one day, you’re creating a churn cycle, which makes it easier to track and plan for future churn cycles.
– If you are denied for a card during your churn, stop that churn. In all likelihood, you’ve reached the point where you have too many hard inquiries in a short period of time. Don’t worry though, you can do this all again soon.
– Further to the above, try not to meet that maximum credit inquiry threshold. It’s a good idea to save a future inquiry or two for any possible short-term bonuses or mistakes that become available.
– Plan your churn cycle in advance. Some creditors, like Capital One, want to see no credit inquiries for a period before you apply to them. In this case, it makes sense to apply to these type of cards first in your churn cycle.
– 1-2 months after every churn cycle, get your free credit report over the telephone from both credit bureaus (Equifax: 1-800-465-7166 | Transunion: 1-800-663-9980). Sometimes mistakes happen, and this is a free way to identify any issues with your credit bureau so you can fix them.
– As you get the cards in the mail, put a sticker on it that indicates: when you got the card; what the minimum spend is (if any); when you want to cancel the card; and what any bonuses are applicable with the card. This will help you keep track of everything.
– Have a folder or something similar to organize all the cards. Once you’ve met minimum spends on them, store the cards you no longer want in that folder. All the documents you get in the mail relating to the cards should also go into that folder. Periodically, go through that folder to see what the state of your churning affairs are: do you have any cards that need to be cancelled? Are you missing a bonus that you were entitled to?
– If you get denied for a credit card, call the creditor. Sometimes the phone agent in empowered to reconsider your application without an additional credit inquiry.
Don’ts
– Don’t pay for your credit score. The score the credit bureau will give you is a “consumer disclosure score,” and is not very reflective of what your actual score is. Indeed, your credit score is different with every issuer, who apply their own algorithms to quantify your score. Just use the free credit reports as noted in the Dos.
– If you’re denied for a card, called the reconsideration line, and they still said no, don’t apply again for at least 6 months to a year. Many creditor systems have an auto-denial feature if you’ve been denied by them recently, no matter how much your credit report has improved. Just wait.
– Don’t falsify your income on the application. Though I assume repercussions are extremely rare, they do exist. Indeed, in one of my law readings, there was a Canadian case where a lawyer used a falsified income statement on a credit application as evidence of hidden income for child support. Now, you don’t need to be exact about your income (if you make $92,738, you’re probably OK to round it to 90 or 95k). What you can do though, if you don’t make much of an income (like being a student), is many applications allow you to include household income. Technically, I suppose household income might include your spouse and parents (if you live with them.)
– If you’re helping a family member do their churn, don’t pretend to be them on the phone! I know this may sound self evident, but it wasn’t to me. You see, my mum wants points, but she’s inexplicably terrified of customer service agents (or telephones… I’m not sure 😛 sorry mum!). To help her, I tried to pretend to be her on the phone. Oh boy, apparently my voice is masculine enough that I was transferred over to internal security. It was quite a kerfuffle.
That concludes this series on the churn! If you have any more tips, dos or don’ts, please comment or contact me, and I’ll include them in this series.
There’s one point I’m not 100% clear about. I have 2 cc’s I want to cancel, both have been active for more than 6 months and have been 0 balance for some time. I put one transaction through each, so they would be ‘active’ and paid them off. Do I need to wait until the next statement for each before cancelling or can I cancel as soon as the payments clear?
I don’t think it really matters. Your credit line is kept active for awhile after you cancel, where payments and even reoccurring charges can still go through. So long as it’s six billing cycles since you had the card, I think you’re in an optimal situation.