Is Credit Card Churning Worth It?

Credit card churning is the act of opening a credit card, redeeming the welcome offer and cancelling the card shortly thereafter.

Here’s what the process typically looks like:

Many credit cards in Canada offer a welcome bonus for new card applicants — typically in the form of cash back or rewards points. The idea of churning might be enticing, but there are serious risks associated with chasing introductory offers. Here’s what you need to know.

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Know the risks before you churn

Excessive hard credit inquiries

When a lender reviews your credit to see if you qualify for a credit card, it usually conducts a hard credit inquiries, which can cause a temporary drop in your credit score. Hard credit checks also stay on your credit report for up to 36 months. Repeatedly applying for new cards means repeated inquiries — this could make it hard for your score to recover.

Financial distress signals

Lenders may notice if you've submitted multiple credit applications in a short amounts of time, as this is often interpreted as proof of financial distress. This might make it harder to get approved for other lending products, like personal loans, mortgages or lines of credit.

Provider penalties

Credit card welcome offers are meant to attract new, long-term clients — not people who will cancel the card as soon as they receive the bonus. Card issuers are generally on the lookout for potential credit card churners and may have regulations in place to help prevent the practice.

Some card providers include a clause in the fine print of their applications that limit welcome bonuses to once per lifetime. This means that if you cancel a particular card, you may be able to open another one later, but you won’t qualify for the welcome bonus again.

Beyond this, there are rumors that card providers may ban or blacklist you if they suspect credit card churning behaviour, which could limit your ability to qualify for credit or banking products from that provider in the future. This is mostly based on anecdotal accounts rather than clear guidance from issuers — but, churners beware.

Volatile credit history and utilization

Cancelling a credit card affects the length of your credit history. The longer an account is open, the more positive its impact on your credit score. Applying for and then cancelling new cards brings down the average age of your accounts, which can negatively impact your credit score.

Additionally, part of your credit score is based on your credit utilization ratio: how much available credit you have versus how much is in use. Cancelling cards and applying for new ones causes this ratio to change, and may push your credit utilization above the recommended threshold of 30%.

Rapid debt growth

Most credit card welcome offers require new cardholders to meet a spending threshold within a set period to unlock the bonus — often thousands of dollars spent over a few months. Unless you intend to spend the money anyway, splashing cash to unlock a welcome bonus is risky financial behaviour that could land you in significant credit card debt.