Why Churning Credit Cards for Airline Miles Doesn't Always Make Sense

We’ve all done it (guilty as charged).

An airline-branded credit card entices you to sign up with a bonus miles or points offer, typically 30,000 miles but sometimes 70,000 or 100,000, if you make a minimum spend, such as $3,000 in the first three months that you have the card.

And then: you cancel the card, wait 18 months or 24 months, and get the card and miles again.

No doubt, it’s a great way to collect miles.

But airlines and credit card issuers are cracking down on this ploy, and it may not be such a great idea for some consumers.

Credit score dings

The least onerous consequence is that by churning credit card bonus mile offers your credit score will take a small hit. It’s not a huge deal for most people, but for someone on the cusp of a lower rating it could be if done too often.

Impulse purchases

Then there’s the incentive to charge that $3,000. For some people it’s a prod to buy something they otherwise wouldn’t just to get the miles. Credit card companies know this and that’s why they have the minimum spend requirement. And of course they hope you won’t pay off the balance and get stuck with onerous interest rates.

Hefty annual fees

Many of these cards carry a $95 annual fee, whereas other mile-earning cards might have no fee.

One time only please

Some credit card issuers, for example American Express with their Delta co-branded cards, only award the bonus miles one time per customer. It’s in the fine print. So people get the card, spend the minimum, pay the annual fee, and are disappointed that they didn’t get the bonus miles.

You’ve been over-served

And then there’s this: I saw a 70,000-mile offer from United and Chase recently. Since I have never been turned down for a credit card (I have an excellent FICO score and pay balances in full, on time, every month), I went for it. And guess what: I was turned down. Reason? “You’ve opened too many credit cards in the last 24 months.”

Ouch.

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