Everything you need to know about credit card 'churning' to earn frequent flyer points

Escape’s points expert, Sabine Leroy, answers your questions about frequent flyer programs.

I’d like to boost my points and I’ve noticed savvy frequent flyers talk about credit card churning. Is it worth it?

In the context of points, credit card churning is where you can sign up to a new frequent flyer credit card, collect the bonus points, ditch and repeat. One of the main reasons people churn credit cards is to quickly accumulate points from programs like Qantas Frequent Flyer or Velocity. A single sign-up bonus can yield anywhere from 50,000 to 150,000 points – enough for a domestic or even international flight.

Credit card churning is one way to boost your points balance. But is it worth it?

But nothing comes for free. To unlock the bonus, card holders usually have to spend between $2000 to $6000 during the first three months of opening the account. Only then will the bonus points come through. Some banks like ANZ have cottoned onto credit card churning and are delaying a portion of bonus points. The ANZ Rewards Platinum card promises 100,000 bonus points – 70,000 after meeting the three-month spend and 30,000 when you keep the card for more than 15 months. 

The benefits

Aside from the juicy boost to your points balance, there are other benefits to changing cards regularly.

A little sweetener

Some credit cards offer credit or vouchers for travel, dining and shopping. For example the Qantas American Express Ultimate Card includes a $450 Qantas Travel Credit per year for eligible domestic or international Qantas flights when booked through American Express Travel.

Skipping fees

By cancelling the card after earning the bonus, you can avoid ongoing annual fees and interest rates.

You could be up in the air quicker with a credit card bonus points offer.

The cons

Impacting  your credit score

Every time you apply for a new credit card, it results in a hard enquiry on your credit file. Multiple applications in a short period can negatively impact your credit score, which may make it harder to apply for loans, mortgages or even other credit cards in the future.

Annual fees

With high rewards come high fees. Some cards have hefty annual fees in the first year, ranging from $150 to over $450.

Higher interest

Typically cards that earn points tend to come with higher interest rates. Savvy shoppers might take advantage of interest-free days and pay off their balance in full to avoid any interest charges. However, those who carry a balance from month to month will face substantial interest costs, offsetting any benefits gained from the points earned. It's important to acknowledge that credit cards aren't suitable for everyone.

Beware of applying for multiple cards when it comes to your credit rating.

Tips for credit card churning

Consider your points goal

This will inform which loyalty program you choose and help determine how you’ll use the points.

Weigh it up

Consider the annual fee, minimum spend, interest rate, interest-free period, fees, terms and conditions, and whether these work for your financial situation.

Make sure you’re eligible for the bonus

Some cards limit sign-up bonuses if you’ve previously held the card or currently have another card from the same issuer. Always check the fine print before applying.

Space out applications

Don’t apply for multiple cards in quick succession. This helps protect your credit score and prevents banks from flagging your activity as risky.

Track your spending

Meet the minimum spend requirement without overspending. Keep an eye on your spend and mark the three-month deadline in your calendar. You might decide to take out the card when you have a big purchase coming up.

Keep tabs on annual fee

Keep an eye on cards with high annual fees. Cancel the card before the fee applies if you’re no longer using it to avoid unnecessary costs.

Have a question about points? Drop Sabine an email at [e-mail]. Personal replies are unfortunately not possible.

Originally published as Everything you need to know about credit card 'churning' to earn frequent flyer points