How to Churn Credit Cards Without Getting Penalized

Welcome to Evil Week, our annual chance to delve into all the slightly sketchy hacks we'd usually refrain from recommending. Want to weasel your way into free drinks, play elaborate mind games, or, er, launder some money? We've got all the info you need to successfully be unsavory.

If you churn credit cards the right way, you can maximize your credit card rewards—but make one mistake, and those rewards could get clawed back.

Here’s a really quick overview, in case you’re not familiar with either of those terms: credit card churning refers to the practice of opening multiple credit cards in order to churn through the sign-up bonuses. Clawbacks are when the credit card company decides that you’ve broken one of its occasionally obscure rules and are no longer entitled to your rewards.

Mel Magazine recently published a longread on how serious credit card churners get it done, including churners who go so far as to create fake businesses in order to score those sweet, sweet miles:

I know it’s Evil Week, but I kinda disagree with Erik’s statement that “there’s nothing wrong with” telling a credit card you run a business that doesn’t actually exist. That’s too evil for my blood (and I’m a Scorpio, so that’s saying something).

Luckily, I can warn you that if you do create a fake business for the purpose of opening a business credit card, and the credit card companies find out, the rewards clawback will be the least of your problems. As Mel Magazine explains: “if a credit card company denies you a card, or flags your spending as fraudulent, you might be prevented from opening any new cards for several months.”

So how do you credit-card churn while being just evil enough? Business Insider just featured a story on a couple who has churned through 40 credit cards in the past six years, and here are two of their tips (I won’t be so evil as to list them all):

Know which credit cards don’t fall under Chase’s 5/24 rule. Chase famously refuses to issue credit cards to people who have taken out more than five new cards in the past 24 months. However, Chase doesn’t count certain cards under the 5/24 rule—most notably business credit cards, because they often don’t show up on your personal credit report. (Don’t fake a business just to stay under 5/24, though. We already covered that.)

There’s no official list of which cards don’t apply, but The Points Guy keeps a good eye on that kind of thing, so I’d suggest using that site as a reference.

If you are married or partnered, only one of you should do 5/24. If one partner sticks to the 5/24 rule in order to maximize their Chase bonuses—which are often some of the biggest sign-up bonuses in the credit card market—and the other partner applies for as many non-Chase cards as possible, it’s a win-win. (Just make sure you don’t add your partner as an authorized user on your credit cards, because that can count against 5/24.)

That said, other card issuers are developing similar rules to crack down on credit card churners, so make sure this strategy doesn’t inadvertently lock yourself out of another major credit card company’s products. Go hang out on Reddit’s r/churning if you want the latest news on that kind of thing.

If you’ve gotten into churning, what just-evil-enough hacks have you used to ensure you get your rewards without getting them clawed back later? Have you ever had a credit card company claw back your rewards, and if so, where did your churning strategy go wrong?

Source: Lifehacker.com

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