What is churning?
Churning is signing up for financial services, typically bank accounts, brokerage accounts, credit cards and so forth, in a way that exploits their offers. In some cases you just hit signup bonuses and then cancel, in others you make good use of loopholes in their rewards points system, it varies. The point is you're in it for the rewards, not the actual service itself.
Where can I find out more about churning?
Testimonial (brag post)
I've been playing with the hobby for about 18 months now and have made about $10,000 doing so. Here's a rough breakdown of what I did.
Amex credit cards signup bonuses for minimum spends
100,000 points Amex Plat
2* 60,000 points Amex Plat Schwab
75,000 points Amex Gold
5,000 points self referral
Total: 300,000 points
Cashout method: Using the Schwab Amex Plat card to convert points into a Schwab brokerage account at $0.0125/point.
Amex credit card benefits
$1,600 travel credits ($200 per Plat, per calendar year, reseting on Jan 1st so you can hit it twice in your first 12 months of holding the card, $100 per Gold)
2* Global Entry valued at $100 each
Cashout method: Applied as statement credits so literal cash payouts.
Amex Delta cobranded cards for Delta travel points
2* 70,000 Amex Delta Plat
2* 60,000 Amex Delta Gold
Total: 260,000 Delta points
Cashout method: 4 return trip flights across the Atlantic to go back to the UK.
2*$100 Schwab account signup bonuses just for opening the accounts (needed these for the Amex points cashout)
2*$250 Wells Fargo checking account bonuses (open account, make 10 debit card transactions, get $250)
$200 Bank of America credit card signup bonus
2*$200 BMO Harris checking account bonus
$150 another checking account I actually use
$450 Amex Travelite cobranded card
Cashout method: They literally give you cash.
25,000 points Chase Freedom
70,000 points Chase Sapphire
Total: 95,000 points
Cashout method: Convert to United skymiles, buy a transatlantic flight, alternatively I could have cashed out for $950
Value: ~$1,300 (no cheap flights at the time)
There are a half dozen others but this covers the main ones. Also some of the cards had fees which haven't been listed but probably collectively add up to about $1,500 across all of them.
Doesn't this ruin your credit score?
Not really. I wouldn't do it if I was planning to buy a house in the next two years but basically, no. Credit score is composed of number of credit lines (more = better), different types of credit (more = better), payment history (this should always be 100%), average age of account (older = better), number of recent credit pulls (lower = better) and utilization percent (lower = better). Churning lowers average age of account and increases the number of credit pulls but also reduces utilization and increases the number of credit lines. You might see small short term decreases in your credit score but for some cards I've also seen increases. Either way it's all short term, after a year the hard pulls drop off and cancelling cards removes them from impacting the average age of account. As long as you're keeping that perfect payment history you're fine.
A high credit score allows you to trade short term reductions in the credit score for money. That's the purpose of the score to you, you want it because it gives you money, money in lower interest rates, in better offers, in this kind of shit. If you refuse to ever use your credit score then it'll get very high but you'll never actually get anything. Whereas if you churn it down from 800 to 750 every now and then for an easy $2,000 and then wait 6 months for it to go back to 800 then you'll never hit 830, but you will have $2,000.
Is this difficult?
Depends on how dumb you are. If you can't manage to pay bills on time then yeah, don't do this. If you can manage things like autopay and keep track of multiple accounts (Mint makes life easy) then it's super easy. I hit most minimum spends just by buying prepaid Visa gift cards and converting them to money orders which I just deposit. Takes a few hours to get a $1,000 or so in points. For checking account bonuses I just reroute my paycheck when needed to meet the bank's direct deposit requirements. All it takes to manage is a spreadsheet, I write down what I open, what the conditions are, what the payout is and then I check when I meet the conditions and check again when they payout. Also I'm not especially good at this, I just muddled my way through doing whatever seemed worth it whenever I saw it. There are some serious churners out there who make this look super small. If I can do this, you can.
So that's churning. Not for everyone but if you're
2) Not an idiot
3) Capable of paying bills on time
4) Not already valuing your time above $200/hr
it's totally worth it to pick up the hobby in your free time.