Churn question
 

Hello,

For those of you who do the 90-day (or whatever) churn cycle, how many cards do you typically open at a time?

I am not a churner by any means but it seems that most of the heavy churners try to do around 5 every 90 days. I prefer to do that many each year. I sacrifice many points but that is all I feel comfortable with. YMMV.

Question for the heavy churners... if you churn that many cards, do you cancel them right away or hold on to them for the first year then cancel? I guess I'm a "moderate churner" that typically holds 4-6 cards at once, 1 of which is a card I've had for a few years (good annual retention bonus), and the others I usually keep for a year, which nets out to maybe 3-4 new applications every year. I've thought about trying to increase this (to maybe 3-4 every six months vs every year), but not sure if the status of open vs closed accounts has that much effect on approvals/credit rating.

I usually try to do 3 to 4, or 4 to 5 cards every 3 to 4 months.

What bout the cancellation of cards? Do you cancel all of them every 3-4 months? Do you hang on to all of them for a certain amount of time all the while applying and/or adding 3-4 at the same time?

I'm interested in churning and have done a bit, but not at full-speed solely because I do not have a plan or a good strategy in place to open and close cards at an appropriate time (not right or exact time, but at the best possible time to do so) It looks like best possible time to apply for new cards is 3-4 months. What about best possible time for closing cards?

Sorry if the post was long, but I'm truly interested.

BTW... I have been following your blogs and keep on top of it by the way of RSS feed.

Thanks for reading! I usually never close a card unless I have to pay a fee or have to close it to get approved for another card.

Once again, around 4 months works for me, but it may vary for others based on length of credit history, level of utilization etc.

Can the public plastic recycling chatter and take the shop talk to PM. Many of us are still in mourning for the death of metals recycling on July 22 due to an overdose of chatter and publicity.

Recycling is a green business, lets keep that green coming in.

I also follow your blog and have found it informative and helpful, thank you very much. You are not alone with your general recommendation regarding credit card applications and cancellations. Others share your suggestions and IIRC, at the FT University near LGA a few months ago one of your fellow bloggers (the Frugal Travel Guy) advocated a very similar, if not identical, approach. I understand your basic advice yet I hope you don’t mind some further discussion.

Presumably if one is applying for about 4 cards every 3 months and being approved for most of them, one would have 12 new accounts each year. For some of those accounts annual fees will be waived after a phone call. And some will not need to be closed to obtain a new card from the same back, it might only be necessary to transfer some of the credit line. Potentially, including accounts that are kept open for many years to maintain a long history, one could have several dozen open credit card accounts. Is there a number of open accounts that is TOO high, at some point are too many open accounts counter-productive or too difficult to keep track of or too much of a security risk? Or do you find that closing accounts as you suggest (to avoid fees and to open new accounts) keeps the total number of accounts under control? Is there a maximum number of open accounts you would recommend and if so what is that number?

Presumably also, banks will not approve an identical account at the same time as one has an open account. If you have an open ABC Bank XYZ Airlines Platinum card, it would seem unlikely that ABC Bank will approve another XYZ Airlines Platinum card which would seem to go against the basic premise of churning. In other words, to churn the card to get the bonus (again!), it would seem that at some point the account needs to be closed. With the understanding that Citi apparently bases approvals on time since last approval, don’t other banks base approvals for identical cards on the amount of time since the account was closed? If one closes the account at 11 months, instead of 3 months, would that not result in an 8 month longer delay until that card could be churned?

Please do not think I’m being argumentative, I’m just trying to learn more. Thanks very much for your participation and comments.

Thank for the reply. I have read that particular blog few weeks back, and have forgotten about it. Thanks for the link

I like to know as well...

ditto.

good questions!

from my own personal experience, there is no hard and fast rule when it comes to churning.

each individual is assessed differently so there will always be a YMMV when it comes to giving advice.

the best advice anyone can give you is to research and read. Once you've done that, the next step is to ask whether you are comfortable with the risk/reward ratio you have discovered through your readings. if you are comfortable, proceed with your churning. Once you've done it a few times, you'll begin to understand the process that is unique to your situation.

12 posts in and this is the only reference to miles or points. I think this discussion belongs on another forum.

The reason you lump multiple card applications together, and submit them all on the same day, is that the credit card companies then don't see what the "competition" - ie, the other card companies - are doing when you're applying. Plus, if you are applying for more than one card from the same company on the same day, then credit inquiries for that company will be consildated into just one inquiry. So you get only one "pull" for two (or more?) applications. You credit score gets dinged by 4 to 5 points for each pull, so consolidating pulls is advantageous. Example: my wife got targeted for the Amex Gold biz card for 75K MR points after only $500 spend. I also wrangled a referral for her for the new Amex SPG 30K points card. I put the apps thru on the same day - in fact, within 1 second of each other, using two browsers - and she got approved for both, yet only got one inquiry on her credit report.

The reason you wait 90 days (or more) between churns is that many credit card companies will view an inquiry as not recent if it's more than 90 days old. They look less favorably on your credit worthiness with many recent inquiries. Waiting more than 90 days makes the inquiries not quite "recent". This varies, of course.

It helps your credit score if you have long standing accounts. So you should keep at least one or two cards for the long term. Your best bet is to identify a card that would be a good every day spend card, that you will use after you've reached all your new card spend thresholds, and plan to keep that card for a long time. This is the card that will get you good points value independent of the sign up bonus. Many think the SPG card gives great value for everyday spend, and I agree. I also need a Delta Amex Reserve to help me achieve airline status, and a Marriott card because of my hotel needs, but that's just my situation. You need to decide what works best for you. My oldest card is now 14 years old. I have another that is 12 years old. All the other cards I keep until shortly before the annual fee is due, then I cancel. That way my "average age of accounts" (which is a stat that the credit companies look at) is maximized. But if I'm not going to be using a card for ongoing reward benefits - in other words, if I only signed up for it to get the big sign up bonus, then I cancel at the 11 month mark. That gives me room for the next churn.

I churn 3 - 6 cards every 90 days. I keep telling myself I've got all the points I need, and there's no good offers left, and I won't be churning for a good 6 months....but then something new always comes along that I canNOT resist (Hello BA 100K miles!).

Hope this info gives you a useful starting point to develop a strategy. Thefrugaltravelguy wrote a book that helps - all profits go to charity - you might want to check that out. And FT is so huge with info, it can be daunting, but if you keep reading, you'll soak up info.

I respectfully disagree.

That is a valid point, although the theme of the entire thread is churning credit cards to MAXIMIZE MILES AND POINTS. Nevertheless I’ve revised my post to include several specific references to points and miles:

I also follow your blog and have found it informative and helpful, thank you very much. You are not alone with your general recommendation regarding credit card applications and cancellations. Others share your suggestions and IIRC, at the FT University near LGA a few months ago one of your fellow bloggers (the Frugal Travel Guy) advocated a very similar, if not identical, approach. I understand your basic advice yet I hope you don’t mind some further discussion, specifically regarding credit cards and maximizing miles and points.

Presumably if one is applying for about 4 cards every 3 months, to get as many miles or points as possible, and being approved for most of them, one would have 12 new accounts each year. For some of those accounts annual fees will be waived after a phone call. And some will not need to be closed to obtain a new card from the same back, it might only be necessary to transfer some of the credit line. Potentially, including accounts that are kept open for many years to maintain a long history, one could have several dozen open credit card accounts. Is there a number of open accounts that is TOO high, at some point are too many open accounts counter-productive or too difficult to keep track of or too much of a security risk? Or do you find that closing accounts as you suggest (to avoid fees and to open new accounts) keeps the total number of accounts under control? Is there a maximum number of open accounts you would recommend and if so what is that number?

Presumably also, banks will not approve an identical account at the same time as one has an open account. If you have an open ABC Bank XYZ Airlines Platinum card, it would seem unlikely that ABC Bank will approve another XYZ Airlines Platinum card which would seem to go against the basic premise of churning. In other words, to churn the card to get the bonus miles or points (again!), it would seem that at some point the account needs to be closed. With the understanding that Citi apparently bases approvals on time since last approval, don’t other banks base approvals for identical cards on the amount of time since the account was closed? If one closes the account at 11 months, instead of 3 months, would that not result in an 8 month longer delay until that card could be churned?

Please do not think I’m being argumentative, I’m just trying to learn more. Thanks very much for your participation and comments.

i don't do the 3-4 month thing, yet i do apply for a new card roughly every month or two. if it's the same bank, then i will do both the same day, tho.

only one i have been denied is chase sapphire a couple days ago (CO, BA, and PC cards since Feb and two within past 3 months). called to move credit from one to the sapphire and was approved.

fwiw, i've never had to wait to apply for 3-4 cards on the same day. i usually just get them whenever i apply.

keeping them open, even if fee is waived, could backfire if you would be eligible for a new promotion. there are just certain cards i don't really want to keep open after a year, like CO and DL Gold and possibly HHonors Surpass.

Mercy. Once again, I bow down to you people. Way down.

To the professional churners, do most of your offers come in the US mail, or electronically? Just curious.

In the last year, the dh and I have been slammed with offers, mostly by mail. Sometimes the box is stuffed. It's almost too much to get my mind around. But we have begun to cherry pick the airline offers. Not sure what is driving all the offers.

Most of the time, the offers sent in the mail or by email to you directly are not the best offers out there. Keeping an eye on FlyerTalk, you'll regularly see postings about the newest offers available. Some of them are specifically targeted, with no workaround, but most are available generally. Don't ignore what comes in the mail; just use FT as another resource to compare the offers you receive directly with the offers discussed here.

The credit card companies are making all these offers because for the past three years, the consumer credit market has mostly been paying down debt incurred over the boom years rather than building up new debt and opening new cards. The credit card companies have found mile and point bonus offers a powerful incentive for a lot of folks. And most folks on FT, being savvy and in relatively good credit shape, can take advantage of the largesse without sinking themselves into huge debt. And, because to this point, it doesn't appear credit card companies are completely willing to deny credit applications made by churners (there's been some retraction but not a complete course of denial), it's very possible to accumulate a number of cards with great signup bonuses.

An internet resource, if you want to know more: http://www.frugaltravelguy.com/. There are others, but FTG has been at it for awhile and has funded a lot of travel on credit card offers.

No, I don't think you're argumentative, and I like the question!

Yes, I do feel that having too many open credit cards with a bank will hurt your likelihood of getting approved for future cards with that bank. That's because the banks exposure to you is already large, and they may not want the additional lending risk.

I also close accounts if the retention bonus doesn't cover the annual fee. So if I get 2,000 AA miles for not closing my AA account, but have to pay an annual fee of $85, I will close the account.

That results in a lot fewer open cards than I would otherwise have.

Here's my experience so far:

Chase - I haven't been allowed to have more than 5 cards with them. Since most of their reward cards have an annual fee, I either keep the card for ~10 months and then cancel, or I cancel when I am denied another Chase card and want to get approved.

I don't ride very hard with Chase (perhaps 4 new cards a year) because they are cracking down on frequent applications! My last chat with a chase lending analyst was more like an inquisition, but I did get the card approved.

Citibank - Their retention bonuses are weak and I usually wait until the bonus hits my account and then cancel the card. This automatically limits the number of open accounts. I think I've had 6 open accounts with them at one time.

Bank of America - 2 of my oldest cards are with BOA, as are some of the newer cards. I have 4 open BOA cards and still get approved for cards. Of course, there will be a limit, but I'm trying to see what that limit is for me.

American Express - I haven't got more than 2 cards with them at any time.

As others have suggested, this is not an exact science. Most results will vary from individual to individual, and you have to determine what level of risk is agreeable to you.
_________________________________________________
Million Mile Secrets Big Travel. Small Money.

Help
 

I recently applied for the Surpass card. Evidently they have already begun to consider individual income and not household income. I stay at home. When asked my income I was not prepared..Needless to say I was denied. Never been denied a credit card before.

How will this affect me? My credit score? Ability to apply for other cards? Ability to apply for Amex cards? Any information or wisdom would be appreciated. I'm freaking out!

Relax! The only affect it will have on your credit score is that there will be 1 inquiry on your report. That's it. The only people who will know that you were denied is you and Amex (Surpass). Your denial is not part of your credit history, only the inquiry is. And an inquiry typically only lowers your score by 4 to 5 points. No big deal.

Consider it a learning experience, in that the next time you apply for a card, you'll be better prepared to have answers to some of the more common questions you might be asked.

One thing I'm curious about, though: stay at home spouses usually get to have household incomes considered. Did you apply for a business Surpass card?

To my knowledge there is no business version of this card.

Thank you very much. I just visited your blog and I’m about to follow your suggestion and send another secure message to AmEx in an attempt to get a few more points for my 3 month old SPG account. I sent a message a couple of weeks ago when the new offer was by invitation only. Now that it’s available to all I’ll give it another try, or perhaps 3 or 4 tries as you suggested. The worst they can do is say no and sometimes I think they say yes just to get you to go away!

BTW, as a data point, just a few months ago I had 4 different AmEx card account open at one time (Hilton, Gold Rewards, Delta Gold, SPG). The Hilton card had been open for open for a couple of years. I received a Delta offer in the mail and applied by phone, approved immediately. 2 months later I received a Gold Rewards offer in the mail and applied on line again with immediate approval. 4 months later I applied for SPG and was approved. I did not have to move any credit limits around. However they were more difficult regarding repeat bonuses. I did not receive the Delta and SPG bonuses (both of which I had received 1-2 years earlier) automatically and I wrote to them before I received the bonuses this time around.

I thought I read in another thread that you are new to blogging. Best wishes to you for ongoing success. Thanks again.

It was a personal card. Below I've quoted the new rule. Companies don't have to comply until Oct. 1, but obviously some have begun.

"The Federal Reserve on March 18 told credit card companies that they no longer can consider household income when assessing the creditworthiness of an individual who applies for his or her own card. Under the rule, only an individual's own salary or other income -- rather than combined household income -- can be considered.

One major effect of the new regulation: Stay-at-home moms (or dads) without significant outside income no longer will be able to open their own credit card accounts -- and establish their own credit histories to build their credit scores. Compliance with the rule is mandatory by Oct. 1, 2011, though credit card companies can begin operating under it immediately."
From creditcards.com

Yikes. I just assumed the credit card companies would avoid adhering to that rule until the last possible moment.

I wonder what political pressure was behind that particular piece of legislation. Seems to me that, long term, it's only going to cause more problems than it solves.

How so? It makes the person who earns the income responsible for the debt.

Because at some point down the line, there will be many, many stay at home moms and dads who will have no means with which to build their own individual credit histories. When those people become divorced or widowed (or whatever circumstance might befall them), they will be woefully unprepared to conduct their daily financial chores.

On the one hand, I can see the sense of making the one with the income be responsible for the debt. But on the other hand, there are scores of traditional family units where one spouse raises the kids full time. If those households pay their bills on time and manage their credit wisely, does it not reflect on both of them as partners? Doesn't the stay at home spouse get any credit for running a household with some financial discipline?

Update
 

Thanks for the reassurance thegasguru. I was feeling a bit gun shy about applying for other cards. However, I am happy to report that I was approved for two different cards tonight. Gotta love the support on FlyerTalk.

w00t!!

The purpose of this rule appears to be to keep card companies from handing out cards to folks who can't pay the bill. http://www.federalreserve.gov/newsev.../20110318b.htm Not such a bad thing.

And, note that it will likely have close to no effect in community property states.

Yes, but the government is the master of the Law of Unintended Consequences.

See: The Mint

Replace "will not" with "should not.":p

Household vs individual income
 

Someone I know applied for an Amex Gold card yesterday (7/29) listing income as zero. The nice CSR rep told this person that the card can't be approved with zero personal income, but the rules list salary or "other income", asked if the person had any "other income" and casually noted that this number is not verified. This applicant then quoted income on investments for this prior year, that number was entered, and the instant approval was completed.

Most of the CCs with good bonuses in Canada seem to have an annual fee, so if I want to churn them, do I have to wait out the first year (and pay the $120 or whatever) or can I cancel them after x months, keep the bonus, and get a pro-rated refund on the fee? What is x, if something like that is doable?

New to churning, so help would be great :) Thanks.