Credit card churning, also known as points hacking or points chasing, is a strategy of opening and closing numerous credit cards to maximise the benefits and perks, such as earning bulk bonus rewards points on sign up.

This strategy is popular with credit card customers wanting to earn the most rewards, but it is not without its risks. While credit card churning is not illegal in Australia, it is somewhat frowned upon as card issuers may view the behaviour as risky. When done too frequently, it can risk hurting your credit history and credit score.

Let’s explore how credit card churning works; the rewards Australians are trying to accumulate through card churning; and how to mitigate the risks involved:

How does credit card churning work?

To ‘churn’ means to turn something over at a fast rate – in this case, credit cards. Points hackers are typically not looking to sign up to a credit card to use for years while slowly earning rewards points – the appeal of card churning is the speed at which you can gain benefits.

Once you’ve chosen the type of benefit you want (e.g. rewards points, 0% balance transfer offers etc), you can research the credit card options with the most accessible rewards on offer. It’s also common to seek out a credit card that does not charge an annual fee in the first year (or at all), so you’re spending the least to gain the most back from the card.

Credit card churning generally works as follows:

Find your best deal

The points chaser will research credit cards with generous rewards on sign up that are attainable for the applicant. RateCity’s rewards credit card comparison table may come in handy here, as well as our monthly bulk points articles for rewards points and Qantas frequent flyer points.

Check your eligibility

The points chaser will need to check the eligibility criteria set by the lender to ensure they can qualify for the card. This may include minimum income and employment requirements to earn rewards and perks. Remember that a credit card rejection can affect your credit history and may prevent you from gaining approval for other credit products.

Follow the issuer’s requirements

Credit card sign up offers often involve special terms and conditions. Once the cardholder has gained approval, they will need to ensure they’re following the card’s requirements to qualify for the rewards, such as meeting minimum spending limits each month.

Earn your rewards and perks

Some rewards may not be processed after eligible transactions for up to 30-60 days, so be sure to read the Terms and Conditions of the credit card to see when you can expect to receive the offer you signed up for.

Close the credit card

Once you’ve earned the offer, if you do not want to keep the card long-term, you can choose to pay off any outstanding balance with the card issuer and close the account. Closing the account within the first year of gaining card approval may mean you can avoid any ongoing fees or charges.

Start all over again

This is where the ‘churning’ part of points hacking comes into play. Once you close one account, card churners generally seek new, competitive offers from a different credit card.

What rewards and perks can you earn?

Points hackers are not opening and closing credit cards for the convenience of access to credit. The advantage of churning through credit cards is to gain access to generous rewards and perks offered to new customers on sign up, or to earn more rewards by signing up to multiple cards at once.

You’ll typically need to use the credit card over 3-12 months, meeting spending limits and other conditions, to redeem these sign-up rewards. These rewards and perks can include:

• Bulk rewards points on sign up
• Bulk frequent flyer points on sign up
• Cashback offers

The rewards from points hacking can be useful to the right cardholders. For example, some people use credit card churning for travel; building up bonus reward points to supplement those earned from their spending, so they can enjoy discounted flight upgrades and other perks.

Some cardholders may also look to credit card churning for 0% interest balance transfer offers. When you have an outstanding credit card balance, you may be able to transfer this debt to a new balance transfer card and pay zero interest on the balance for a set period of time. This helps some customers to pay off their card debt in this time frame without accruing more. The balance transfer period can be as short as three to six months, or extend to two years, depending on the card issuer.

The risks of credit card churning

It’s worth keeping in mind that applying for multiple credit cards at once, or opening and closing multiple cards within a short window, may be noted as risky credit behaviour in your credit file by credit reporting bureaus. 

When you apply for any credit products such as credit cards, the lender or provider will perform a hard credit check on your credit report. This is done to assess your creditworthiness based on past behaviour, and how likely you are to struggle to meet repayments.

Unfortunately, multiple credit card applications mean multiple hard credit checks on your file. When too close together, they can make an individual appear ‘credit hungry’. This means you may be more likely to be rejected for any credit product, potentially hurting your credit score.

If you’re considering applying a points hacking strategy to earn benefits and perks from a credit card, it may be worth waiting in between applications to ensure you are in the best financial position to gain card approval. Closing a credit card may also make a negative impact on your credit score in some instances, so it’s worth going about the card churning process carefully. Consider checking your credit scores before and after opening and closing one account so there are no surprises, and you lower your risk of application rejection.

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