What is credit card churning? Should you? Benefits, risks and how it works

Many credit card users are attracted to them because of the rewards and benefits they offer. Users are often looking for ways to maximize these rewards through credit card spending. Credit card cancellation is one method designed to maximize benefits beyond what a single credit card can offer.

What is credit card churning?

Credit card Churning is a method of strategically opening and closing accounts to take full advantage of rewards, bonuses and other offers provided by the company. credit cards. Aims to earn more rewards and save money through credit cards. Rewards may include joining bonuses, points or cash back that can be redeemed for travel, dining or shopping. However, if not done carefully, it can lead to potential risks and financial mismanagement.

How to do it?

1. To work

Before you plan to opt to use a credit card, make sure you research the various credit card offers well. Choose credit cards that offer the highest sign-up bonuses, awardsand other benefits. Additionally, examine your own financial situation before choosing a credit card.

Once you choose the right credit cards, apply for multiple credit cards quickly.

Many credit cards have a limit beyond which you can access benefits. Meet these conditions to benefit from the benefits of your card.

Once you meet the spending requirements to earn rewards, you can use them according to your needs.

Now re-evaluate all your cards, taking into account their rewards and various fees. Close credit card accounts that are no longer useful and stick with the ones that still earn higher rewards. Repeat this process to get the maximum benefit from credit cards.

Advantages of credit card freezing

1. Greater savings: Various offers available with multiple credit cards can help you save a lot of money in your account. expensesespecially for travel, airport lounge access, hotel accommodation, online shopping, movie tickets, etc. on matters.
2. Personalization: This method helps you customize your credit card rewards according to your needs and lifestyle. You can use it to benefit from the various advantages offered by more than one credit card. Some cards may offer additional points and rewards, while others may offer high discounts. You can use these cards according to your current needs.
3. Bonus: One of the biggest drawbacks to losing a credit card is the sign-up bonuses, which can be very high on some cards. You can earn a large amount of money as a sign-up bonus after switching between multiple credit cards.

Disadvantages of credit card loss

1. Fees and expenses

Most credit cards charge fees annual feesjoining fees and other fees, especially those offering sign-up bonuses. In some cases, receiving a sign-up bonus may not be that beneficial due to the payment of other fees.

2. Affect credit score

Your credit may be negatively affected by opening and closing more than one credit card in a short time. Applying for new credit cards results in hard inquiries on your credit report, which can lower your credit score for a while. Meanwhile, your credit utilization rate may be affected due to the closure of your credit card accounts.

Many banks do not encourage credit card subscriptions. For this reason, they may apply some rules regarding opening and closing credit card accounts within certain time periods. Some restrict sign-up bonuses in certain situations.

Credit card loss can lead to a serious financial crisis if not handled carefully. Opening and closing an account requires strategically important experience and knowledge. Additionally, failure to pay dues on time can lead to further concerns, especially when multiple credit cards are involved.

5. Possibility of overspending

To get the maximum benefits of your credit cards, you may overspend, which can significantly impact your finances. Make sure you spend within your budget, regardless of bonuses and rewards.

Canceling a credit card is a challenging process that involves a lot of research, smart spending, and keeping track of your finances. If done well this can help you reap many rewards, but if done wrong you can damage your finances.