Constant credit card turnover for points

[Ztaj]

Does anyone know what the drawbacks are for the process of signing up for a new credit card, earning the sign-up FF points bonus, then cancelling the card and applying for a new credit card (with FF points sign-up bonus) at a new bank? To my mind this would mean applying for a new card and cancelling it after three months, so you'd go through the process four or five times in a year.

I would imagine this would be really popular for anyone who's hungry for points, but there must be a reason why more people aren't attempting it. Does it impact your credit score in a massive way? Do banks get a whiff of what you're doing and turn down the application? IS it actually something that loads of people are doing? I'm trying to find the downside before I start applying for a new card every few months.

Any response much appreciated
Z-taj

 

[woodyren]

Not many downsides. The main one is the total amount of the limits on all your open cards may effect your ability to obtain credit.

If you don't plan on taking out a loan then apply away to your heart's (and you salary's) content.

 

[exceladdict]

but there must be a reason why more people aren't attempting it. Does it impact your credit score in a massive way?

Yes, but whether that means anything in Australia is another matter.

Multiple applications at different providers is quoted on most of the free credit access services (credit savvy, get credit score and credit simple) as something that pulls your score down. But if the accounts are closed, does a prospective provider care?

On the other hand, holding accounts for longer and demonstrating a long repayment history may be good for your score. But does the a prospective provider care?

Do banks get a whiff of what you're doing and turn down the application?

They will certainly see this when looking at your credit report. They may consider applying for credit at multiple places in a short period as you being desperate for credit.

But there are some banks where applying, closing, waiting 12 months, repeat seems to cause no issues

IS it actually something that loads of people are doing?

Paging @Dr Ralph

 

[woodyren]

Multiple applications at different providers is quoted on most of the free credit access services (credit savvy, get credit score and credit simple) as something that pulls your score down. But if the accounts are closed, does a prospective provider care?

On the other hand, holding accounts for longer and demonstrating a long repayment history may be good for your score. But does the a prospective provider care?

From my experience it used to pull your score down but in the last few years that has changed.

My running card tally for the last 3 calendar years is

2019: 9 (10 if you include the Amex that came with my Westpac FF card)
2020: 6
2021: 5 (plus another one due to apply for next week once my 12 months is up)

I also have a CBA Awards card that I keep for travel insurance purposes and for regular bills.

I have in general only held each of those cards for the period that it takes me to receive the bonus points.

My credit rating has increased over those 3 years.

The most difficult part of churning is to manufacture the minimum spend at the earliest possible time when you are due for a card(s) again.

I am racing against the time when I don't earn enough to qualify. Next year will be problematic as I plan to be travelling at the time I am due for another round of cards.

 

[exceladdict]

From my experience it used to pull your score down but in the last few years that has changed.

My running card tally for the last 3 calendar years is

2019: 9 (10 if you include the Amex that came with my Westpac FF card)
2020: 6
2021: 5 (plus another one due to apply for next week once my 12 months is up)

I also have a CBA Awards card that I keep for travel insurance purposes and for regular bills.

I have in general only held each of those cards for the period that it takes me to receive the bonus points.

My credit rating has increased over those 3 years.

The most difficult part of churning is to manufacture the minimum spend at the earliest possible time when you are due for a card(s) again.

I am racing against the time when I don't earn enough to qualify. Next year will be problematic as I plan to be travelling at the time I am due for another round of cards.

Very interesting to hear. Is that the score at all 3 bureaus?

 

[woodyren]

Very interesting to hear. Is that the score at all 3 bureaus?

I only ever check on Credit Savvy (832) and Get Credit Score (921). Not sure what bureau they use.

Just checked. Credit Savvy just went down this month. It was 888. Still in the excellent range though so no idea what caused it.

 

[exceladdict]

Credit Savvy = experian - newest, least used by lenders (in my experience), owned by CBA
Get Credit Score = equifax (previously veda) - used by most lenders
Credit Simple = illion (previously dunn and bradstreet) - in my experience used in almost every credit check i've ever had, including telcos and utilities

 

[woodyren]

Well Credit Simple isn't anywhere near the other two.

439 and only average.

On a quick glance it shows 41 credit enquiries.

Citibank managed cards and Macquarie are the only cards I have ever been rejected by and they have been both hit and miss. I only received approval for a new Citi Rewards card this week.

 

[Dr Ralph]

Churn and burn forever!

A few points:
1) Why don't more people do it? People don't know about it. People are lazy. People don't think it's worth the effort. People are strange.

2) Does it impact your score? Of course. But, so what.

3) 4 or 5 times in a year? Well, you're doing it wrong!

Since I got onto this, I've never flown less than business class and often fly first class.

Personally I'm very happy that most people don't know about this/can't be bothered.

 

[exceladdict]

Well Credit Simple isn't anywhere near the other two.

439 and only average.

On a quick glance it shows 41 credit enquiries.

Citibank managed cards and Macquarie are the only cards I have ever been rejected by and they have been both hit and miss. I only received approval for a new Citi Rewards card this week.

41, goodness. @Dr Ralph what are your numbers? I'm clearly in the rookie league, yet still have the "you should apply for less to improve your score" warning on all three of the score checking places.

 

[Dr Ralph]

41, goodness. @Dr Ralph what are your numbers? I'm clearly in the rookie league, yet still have the "you should apply for less to improve your score" warning on all three of the score checking places.

Do it until there's a problem is my advice.

I churn every card available. I won't stop until they stop me.

 

[JackMiles]

Dr Ralph, what can you tell me (us) about the "new customers only" clause I see often? Does that mean only that you can't currently have a card with that company, or that you can't have had one ever/recently? In other words, do you just cancel the relevant card before applying for the next one in order to become a "new" customer?

 

[andye]

Dr Ralph, what can you tell me (us) about the "new customers only" clause I see often? Does that mean only that you can't currently have a card with that company, or that you can't have had one ever/recently? In other words, do you just cancel the relevant card before applying for the next one in order to become a "new" customer?

The majority of cards have a waiting period which varies between products. Due diligence required

Some companies have that waiting period on all their products, others allow bonuses for their different brands e.g I have received bonuses for Qantas Premier while holding Virgin Money despite them both being run by Citi

Some cards offer referral bonuses and you may be able perform a duet with a spouse/partner to enhance earning

 

[Dr Ralph]

Dr Ralph, what can you tell me (us) about the "new customers only" clause I see often? Does that mean only that you can't currently have a card with that company, or that you can't have had one ever/recently? In other words, do you just cancel the relevant card before applying for the next one in order to become a "new" customer?

There will be an exclusion period. After that exclusion period you are a new customer again. So, as an example, get a new card, make the required spend. Get the bonus. Cancel card. Wait 12 months (exclusion period). Get the same new card and start the process again. All going well in this example I've got the points within about 6 weeks of getting the first card.

As you can do this concurrently for multiple new cards, using this strategy there is no reason why you can't churn at least 6 cards a year and realistically more than this. Add a partner to this mx and that makes it 12 cards at a minimum, but more likely 20 cards between you. You can see how 1 million plus points can rack up very quickly.

I would add that all of this and much more isn't rocket science, isn't unique to me, wasn't discovered by me and has been discussed in extensive detail in multiple threads on AFF and other sites.

I would say, however, that I wish I'd known about and started down this path decades earlier.

 

[JackMiles]

Very helpful, Dr, thanks ever so much.
One more question, if I may; do you just cop the annual fees as the cost of getting the points or particularly target card offers where the annual fee is waived for the first year?

 

[Dr Ralph]

Very helpful, Dr, thanks ever so much.
One more question, if I may; do you just cop the annual fees as the cost of getting the points or particularly target card offers where the annual fee is waived for the first year?

The game is always changing. Previously $0 annual fee was the norm. Now it's rare. It's the cost of 'buying' the points.

I don't discriminate. I churn every card available.

 

[JackMiles]

Right on. Thanks again.

 

[Ztaj]

You're all a pack of freakin' legends for getting back to me on this.

If anyone is able to point me towards other threads on this site that discuss churn and burn, I'd really really appreciate it.

And Dr Ralph, you're my new guru

thanks again!

 

[Dr Ralph]

And Dr Ralph, you're my new guru

I hope not. That would be rather sad.

 

[Big John]

Fully endorse Dr Ralph's advice on adding a partner to the mix. This assumes, of course, that your partner is willing participant !

Have only recently managed to convince Mrs B to apply for a credit card. The cards arrived last week, with me as a supplementary cardholder.

The only down side is she can now monitor all my purchases. This means surprising her with a birthday present is harder than ever !