Do you think that the habit of churning credit cards is no longer a thing of the present age? I am honestly guilty of being in the habit of credit card churning since I have become financially independent. If you are wondering whether or not credit card churning still exists, then let me help you find out.
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What You Have to Know Regarding Credit Card Churning Today
You will have to understand that credit cards only started to exist more than six decades ago. Flyer programs, meanwhile, was introduced only four decades ago. The merger of the flyer program and the credit card has truly been a significant development in the financial sector. It has allowed both the customers and the establishments to experience more freedom when it comes to spending their money, getting credit, and enjoying rewards. Even the traditional banking institutions gain high amounts from the interests incurred through late loan payments and also through the commissions from every successful credit card account opening.
Mastercard is among the leading names in the payment industry. The developments that transpired over the years have allowed Mastercard to develop its business networks. It made partnerships with both the airline and the hotel industry which then paved way again for another wonderful chance for these industries to keep customer loyalty. Banks had been seen to buy massive reward points most especially those points that have not been used by the credit card users. The practice benefits all parties such as the financial network Mastercard, the bank, and even the customer.
However, the recession that the country experienced ten years ago resulted to heavier policies in the financial sector. The Dodd Frankwere policy had been introduced which mandated all banks to become more transparent with the transactions made in their establishments. The Durbin Amendment further created a limitation on how much banks could earn as revenue from the debit cards of their customers.
The country’s policymakers became highly concerned with how the national economy could recover by improving various aspects in the financial sector. The policies that have resulted from the legislators’ deliberations have caused deep struggles in the hotel and airline industry. The points that the customers have gained through the rewards cards have immediately been devalued and the hotel businesses have had a difficult time to sustain their profits. Airlines have started to decrease their reward points and bonus offerings to more than 300%.
Is Credit Card Churning Gone?
Definitely not. Although we hear bad publicities about credit cards, we must understand that credit cards still play a major role in the financial industry. Thus, we can expect that the rewards programs will still be here with us to enjoy and benefit from even for decades or centuries more.
However, we have to expect that tighter policies concerning credit card use and issuance could still be in place in order to protect the economy. Fraudulent accounts may be frozen, new accounts may be intensely reviewed, and lower rewards may be implemented.
But then again, the financial sector is a very dynamic industry. Changes happen very fast and businesses race to be the greatest in the game. Because of the competition in the financial industry, credit card companies resort to offering great bonus signups and exciting rewards in order to get more customers in their program.
The Present Credit Card Churning Strategies
How do you make the most of your credit card? I personally think that the best way to use reward points is by spending them immediately on whatever is possible. It would also be good to have more than one credit card because it could help you establish your identity in the credit industry and allow you to build your credit score. You can actually open more than ten credit cards but you will have to be very wise in using them. If wisdom becomes your armor, then you will definitely reap rewards from it. This practice could even allow you to purchase your own home simply because your credit standing is good.
I recommend that you get multiple Chase cards. I personally prefer the Chase Ink and the Chase Sapphire Preferred for my business needs. These credit cards are proven to offer great rewards. Furthermore, Chase has a policy which states that you will be excluded from certain types of credit card application if there are over five hard enquiries on the credit reports of the two preceding years. So if I were you, I would simply start with Chase instead of inquiring on other banks first.
There are other Chase credit card products that can surely make you happier. You could wait until your Chase card increases its bonus points and earn the Sapphire Reserve card. This particular card offers from 50,000 to 75,000 points when making a flight to and from the US.
After getting the Chase card, then I recommend that you go apply for Capital One Spark. Another good credit card option is Citibank. In order to be very successful in the practice of credit card churning, then you will have to get only two applications for the Capital One Spark card in a single year. That’s particularly because Capital One has a 6-month policy against churning credit cards. Once you have successfully gotten your Capital One card, you can start enjoying up to 1,200 USD bonus points in a year. Meanwhile, Citibank has a 24-month policy which restricts credit card churning.
There are a lot of credit card companies out there. It is important at first to establish your own credit score in order to take advantage of different offers. Remember to always be wise in every credit decision that you make. Also, you will have to check out the restrictions set by each credit card product and choose among the best rewards that they offer.