Credit card churning in Australia — churn, baby, churn

What is credit card churning?

Some credit cards come with very generous sign-up bonuses to entice new customers. Some cards will give you 100,000 bonus Qantas or Velocity Points if you spend a certain amount in the first few months.

Credit card churning involves taking out a card, meeting the spending criteria, getting these bonus points, then taking out another card with a similar offer. Some people take out several cards at once, while others "churn and burn" by cancelling one card then getting another.

A great way to earn points, but…

It's a clever strategy with some obvious risks: if you take out too many credit cards your credit score will plummet. Banks and card companies will reject your application if you have too many cards.

How does credit card churning work?

1. Apply for a credit card. Start by looking at the current reward and frequent flyer offers on the market. Look for a card that offers a generous amount of points (80,000 to 100,000). Look at the annual fee and check the fine print on the eligibility criteria too. Make sure you can meet the spend critieria for the bonus points.
2. Meet the bonus point spending requirements. Most bonus points offers require you to spend a certain amount in the first few months. This can be $3,000 or more. A good tip is to get a credit card just before you're about to make a big purchase (or several purchases).
3. Wait for your points to land. As a general guide, most bonus point offers say you should allow 6–10 weeks from when you meet the spend requirement for the points to land in your account.
4. Pay off the card and cancel it. When you see the bonus points have landed in your rewards or frequent flyer account, make sure the balance is paid off and cancel the card. The main goal here is to avoid paying the second-year annual fee.
5. Apply for another bonus point offer. If you're churning cards, you would typically apply for another introductory credit card offer after you cancelled the previous card. But you can only do this a few times before your credit score takes a big hit.

Our expert says: How to make credit churning work for you

"I'm a big fan of credit card churning: it helps me continually boost my frequent flyer points balance. If you're going to churn cards, make sure you only change every 12-18 months – more frequently than this is likely to impact your credit score – and always pay your balance off in full each month, to avoid expensive interest bills."

Sarah Megginson

Head of editorial

Is credit card churning still a viable strategy in 2024?

It definitely is. But churning cards is a little harder now than it used to be. Most Australian banks and credit card companies have a couple of tricks to make churning less effective:

• New customers only. Many introductory offers are only available for new customers. For example, most American Express bonus point offers are only available if you don't currently have an Amex card and haven't had one in the past 18 months.
• Eligibility requirements. Some cards only credit your bonus points to your account after you've had the card for 12 months. Some give you a portion of the points after 3 months and the rest after 12 months. This means you can't get all the points quickly and then cancel the card. You'll also have to pay the annual fee in the second year, which is another disincentive to churn.

Which are the best credit cards for churning?

Credit card churning is a points hacking strategy. The best credit cards to churn are usually frequent flyer credit cards with large bonus points offers. These cards give the best bang for your buck because 100,000 Qantas or Velocity Points can be redeemed for multiple reward flights, worth hundreds of dollars (or more).

If you redeemed 36,800 Qantas Points for a return business class flight from Sydney to Melbourne, you'd get around $1,400 value from the points.

Can you churn for cashback offers?

You could churn credit cards with cashback offers. These offers have a clear dollar-value, such as $400 when you spend $4,000 in the first 3 months. But points have the potential to offer more value.

Does credit card churning affect your credit score?

Credit card churning can have a big impact on your credit score. When you apply for a new credit card (or other loan), an inquiry is listed on your credit report. A lot of inquiries in a short amount of time can have a negative impact on your credit score.

And each inquiry can stay on your credit file for up to 5 years, so any potential lenders will be able to see how frequently you're applying for new credit cards or loan products.

Churning can hamper your ability to build good credit

Having multiple credit cards at once also lowers your score. And while churning involves cancelling old cards and getting new ones, this can harm your credit score too. Having a credit card with a long history of regular repayments can actually help you build good credit.

Multiple cards you've held for a short time won't have the same positive effect.

Is credit card churning a good idea?

Credit card churning works if you...

• Have a decent income. Unfortunately, the most lucrative sign-up offers are for more expensive credit cards aimed at borrowers with solid incomes.
• Aren't about to buy a house. Churning will lower your credit, even if just by a little bit. If you own a house and aren't thinking of refinancing or getting a car loan any time soon, you might decide churning is worth it.
• Are disciplined. Managing multiple credit cards with different annual fees and bonus offer conditions is tricky. You can end up overspending or getting into credit card debt. Churning is a strategy for well-organised people who can keep track of their finances and never miss a card repayment.

More frequently asked questions

• Is credit card churning illegal?

  No. Credit card churning is not illegal. Credit card providers don't like it, because they want you as a long term customer. But there's no law against having multiple credit cards over a short period of time.

  Having multiple credit cards will impact your credit score. And a card company may reject your application for a new card if you've churned and burned through multiple cards in a short time.

• Is credit card churning worth it?

  If you're someone who wants to accumulate a lot of frequent flyer points then churning is probably the most effective way to do it. But you do need to be a very well-organised person who is capable of juggling multiple cards without missing repayments, getting the most out of each card and making sure you hit the spend requirements to get the bonus points.

  Churning is really a strategy for more affluent Australians who can afford multiple cards and aren't too worried about hurting their credit scores. This rules out people on low incomes or people who are about to apply for a home loan.

• Will credit card churning get my future card applications rejected?

  Credit card providers rarely give a reason for declining a new application, but getting a lot of cards in a short amount of time is a red flag.

  Even if you have a good credit score, keep in mind that churning is frowned upon by credit card providers. Some lenders might also say that opening and closing credit cards in quick succession doesn't show responsible use of the account/s. And card providers are bound by a government code for responsible lending. So, it's better to wait at least a few months (or longer) before you apply for another card.

Written by

Richard Whitten

Editor

Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio

Richard's expertise

Richard has written 562 Finder guides across topics including:

• Home loans
• Property
• Personal finance
• Money-saving tips

Co-written by

Amy Bradney-George

Editor

Amy Bradney-George was the senior writer for credit cards at Finder, and editorial lead for Finder Green. She has over 16 years of editorial experience and has been featured in publications including ABC News, Money Magazine and The Sydney Morning Herald. See full bio

Amy's expertise

Amy has written 565 Finder guides across topics including:

• Credit cards
• Frequent flyer
• Credit score
• BNPL
• Money management
• Sustainability