When Rewards Credit Card Churning Becomes Dangerous
When you see banks’ advertisements that boast bonus cash rebate and rewards points, it can be difficult to resist the temptation of applying for a new card just to get those welcome bonuses. But is it really a smart financial move to apply for a card simply to get some extra points? The answer, like many others in the realm of credit cards, isn’t a straightforward “yes” or “no.” The idea of applying for a credit card based solely on its bonus isn’t new. Credit card churners have been doing it for years. Churners are individuals who frequently open and close reward credit cards to collect miles, points and cash back from welcome offers. After using up these bonuses, they quickly cancel their cards to avoid incurring further costs in annual fees. In today’s market, this is a highly profitable hobby: Singapore has some of the most generous credit card offers in the world, and reward credit cards are outdoing one another to compete for the business of everyday consumers. Churners are simply taking money that’s sitting on the table. However, this practice of “credit card churning” has its own pitfalls that cannot be taken lightly. Risk #1: Credit Card [...]
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