Card issuers impose limits on rewards card churning
Tougher to sign up for big bonuses but duck the annual fee
By Tony Mecia
Dear Cashing In,
I have been credit card churning for six years, which has allowed us to travel much more than we could have afforded in retirement. Credit scores for both me and my wife are about 775. We have taken out about 65 cards in six years, canceling cards after receiving the bonus points. In the last seven months, a couple of applications have not been approved. Any suggestions? – Don
For better or worse, this is the new reality these days, as some issuers are scaling back on rubber-stamp approvals.
Some people would probably be amazed that the two of you could apply and be approved for so many cards in the past six years while keeping excellent credit ratings. But the truth is that your credit will be just fine if you pay your credit card bills in full and on time. Yes, it might dip a little when you apply for new cards or cancel existing cards, but overall, your credit score can remain in the excellent range if you manage your credit wisely.
A separate issue, though, from your creditworthiness is whether issuing you new credit and more rewards is a smart business move by the banks. Clearly, based on your credit scores, they can see that you will pay your bills and do not default on payments.
But given your history of signing up for cards, pocketing the rewards, then canceling before the annual fee hits, you can probably understand why issuers are apparently becoming increasingly reluctant to shower you with points and miles, which are typically worth several hundred dollars to you.
The banks make money off you by collecting annual fees and from the fees merchants pay when customers use cards (interchange fees). I’m willing to bet that banks are losing money on you, and that they are starting to realize that.
It’s not just you. Lots of people in the past few years have discovered these lucrative credit card rewards and are taking the same approach as you, even if on a smaller scale. This popularity is leading banks to enact policies to clamp down on handing over rewards for which they see little, if any, benefit. (Of course, they do see benefits if people hang onto and use the cards, or if they miss payments and pay fees and interest.)
For instance, there are reports that Chase has started limiting approvals of cards for customers who have applied for five or more cards in the last two years. Chase won’t confirm the policy, but told Yahoo Finance: “To continue providing valuable offers that attract those types of customers, we have restrictions related to the number of new cards customers can receive in a period of time.”
American Express has also said that it is no longer giving sign-up bonus rewards to customers who have previously received rewards from the same card.
So it might not just be you. It’s that you and many people like you are reaping rewards that are not profitable for the banks.
What can you do? Not a lot. Three suggestions:
- Instead of dumping your cards the moment the sign-up bonus points post, hang onto them a little bit longer. This might help you seem more appealing to the banks in future applications.
- If you are rejected, call the bank and ask that it reconsider your application. Online card acceptance or rejection is typically an automated process. If you can talk to a human and make a strong case about why you need a particular card, banks have been known to change their decisions.
- Lower your expectations. This one is the least fun, but we should all understand that the heyday of credit card churning and plentiful, easy rewards is probably behind us.
For those just starting or going slower than you have been, there are still plenty of great opportunities out there. But I doubt you will be able to replicate your pace of 60+ cards in six years.
Take the glass-half-full approach, and appreciate all those trips you and your wife have already been able to take.
Meet CreditCards.com's reader Q&A expertsDoes a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.
Published: July 5, 2016
- Redeeming rewards as a statement credit: Many cards allow it – Find out if your credit card rewards program will allow you to allocate your points toward your balance ...
- Reward possibilities soar with Starwood-Marriott merger – If you have points with either of the big chains, you have some great opportunities to take advantage of the rewards ...
- Using rewards miles to fly to Cuba – While there are still restrictions on travel to Cuba, it has cracked open as a travel destination for Americans, and you can use rewards to get there ...