Definition of Churning?
 

I was wondering if there is an official definition for churning.

For the past 5 years or so my wife and I have opened 1 or 2 cards a year to take advantage of mile/point promotions (that we receive in the mail). We typically get the card for it's large opening bonus, spend with it until we reach a desired mile/point threshold for an award, and then close it after about a year before the annual fee comes.

To the best of my recollection, here are the programs we have joined:
2002: 1/2 mile UAL Visa
2003: Delta Amex
2004: AA Mastercard
2005: UAL Visa, Marriott Visa
2006: Starwood Amex, Juniper Usair, AA Mastercard

Would we be considered churners? Or is the term meant for people who open and close 10 cards a year or something like that?

I doubt there is any particular defintion of churning credit cards but I suppose you are right: the term means people who open and close 10 cards a year or something like that?

Yes

The fact that you open and close accounts just for the miles means you are churners. However, the rate that you churn is very low.

It this illegal?

The downside is what this does to your credit rating but if that doesn't bother you, it is taking advantage of their promotion, isn't it?

well everytime you open and close a credit card your credit score takes a hit from 5-10 points. The norm is that if you close a credit card, best to have it be open for 1.5 yrs so that you do not take a hit. Also if you have excessive amounts of credit your score will go down.

I would say that churning means opening, collecting the enrollment or activation bonus, closing, and then reapplying for the same card to repeat the cycle. I don't think the number of cards is relevant.

I believe that the number of new cards _is_ relevant. My credit score came in lower than my partner's and the difference between us is that I added new Citibank cards (several). One of the "dings" on my credit report was "too many accounts open for short period of time". They didn't seem to know or care that I had closed them also. (Well, except for the current "churn" account -- I just do one at a time).

I did not mean that the number of cards would not affect the credit score, only that it is not relevant to what I understand by the term churning.

It is almost never a good idea to close existing credit cards, as doing so brings down your total available credit and average account length, which hurt your credit score. I personally wouldn't close any card that's been open for more than a year.

If the airline/hotel program allows only one open card at a time to qualify for the bonuses, you can simply convert the existing FF card to a non-FF card offered by the same issuer (citi, Amex, etc.) If multiple cards are allowed, you don't even have to convert--just leave the card in your sock drawer and forget about it.

If this were true my credit score would be lower then the 450 FICO bottom.

If you open just one card and close it after the points post then you have churned. Everything else is just rate and volume.

When you close a CC, your credit score does not take any point hit at all.

When you APPLY for a new CC (regardless of whether the application is actually approved and opened), your credit score takes a TEMPORARY 4-5 point hit which disappears after 7 or 8 months.

Correct me if I'm wrong, but it sounds like you could get a bunch of new cards, take a temporary hit to your credit rating, and your rating would be back to its previous level after a year. The only possible harm is if you are applying for a loan or going through some other process involving your credit rating during that year, and even then it's not definite that your lower rating would hurt you.

You are mostly correct. ( I only qualify that sometimes / occassionnally the CC companies do not act rationally.)