“Churners” share tips online for maxing out freebies from credit card issuers

① Apply for a credit card with a sign-up bonus

② Spend a grand in three months

③ Go to Miami for FREE

④ Cancel the card

Meet the “churners” squeezing credit card issuers for free stuff

“They want no one else to talk about it”

Dan Miller, who’s married with six kids, lives in Cincinnati. Their family reunion was at Lake Tahoe. Getting eight people across the country would have cost a small fortune. So he churned them there.

Miller is a credit card churner, one of thousands of people who try to pry travel, cash, and other perks from credit card rewards programs. Their common traits are a keen eye for deals and an obsessive determination not to pay when they can make somebody else do so. They meet up online to share strategies, including in a Reddit forum that has 42,000 subscribers, double the number a year ago. Miller, a computer programmer, writes a blog about it—one of dozens on the subject.

Still, many churners online urge one another to be secretive about their hobby, worrying that if it gets too popular, card companies will end the freebies. The idea is to take out credit cards that offer generous rewards at sign-up, squeeze out as many perks as possible, pay the bills in full, and then move on. A churner can accumulate dozens of cards in the process.

“I thought there’s no way you can apply for that many cards,” says Frank Leppar, another blogger who’s signed up for 16 cards over the past 16 months and racked up more than 2 million rewards points. He just got back from a free trip to Japan and is planning another to Italy. Getting approved “is not much of an issue,” he says. “They don’t stop you at all.”

With credit card companies offering some of their most generous perks ever, churning is increasingly alluring. It can be risky. There’s the temptation to spend more to amass more rewards; if that leads to carrying a balance, rewards cards tend to levy higher rates than other cards. Having multiple cards means there are multiple chances to trip up and make a costly late payment. Mortgage lenders don’t like to see too many cards. At worst, a would-be churner could let debt spiral out of control and ruin her credit rating.

Churning can start simply. To get a credit card’s sign-up bonus of 30,000 redeemable points, for example, you might need to spend $1,000 on the card in three months. Easy enough. To really pile up the rewards, you need to apply for several, similarly generous cards at the same time. Miller and his wife have 43 cards, not counting more than 20 they’ve opened and closed in the past few years.

The Millers took out two Southwest Airlines rewards cards that came with 50,000-point sign-up bonuses. They did something similar with Chase cards, whose points can be transferred to book Southwest tickets. All that, and a companion pass earned from Southwest’s rewards program, got the eight Millers to Lake Tahoe and back. It was easier to fly out of Chicago, 300 miles from home. So they used points from a hotel credit card to cover overnight stays near the airport before and after their flight.

Banks generally won’t let people take out lots of cards unless they have stellar credit. Even for a diligent borrower, reading the fine print and optimizing so many credit cards and rewards programs can be a huge undertaking. Leppar and Miller say they spend an hour or more a day on their hobby, and that’s after years of practice. Some churners keep spreadsheets to track their cards. On churning forums, “everybody wants in,” says Leppar, who used to help run the Reddit group. “And then when they get in, they want no one else to talk about it.”

Do banks care? “The banks would be happier if it didn’t happen,” says Edward Niestat, a payments consultant at Novantas, a bank advisory firm. “But nobody is losing a lot of sleep about it. These guys think of themselves as bigger heroes in their own mind than the bank ever thinks of them.”

Sean Clark, a senior manager at the Auriemma Consulting Group, says banks are using rewards to compete for a valuable demographic: affluent consumers who travel often and put a lot of purchases on their cards. Churners remain a tiny fraction of this market. Many people don’t want the headache of maxing out dozens of rewards programs, he says. The rewards may simply entice them to put more on their plastic, letting the issuer earn more

interest on balances. According to a Federal Reserve Bank of Boston paper, two-thirds of all card users age 25 to 50 carry a balance.

That said, there are signs the big issuers have had enough of hardcore churners. Churning sites are full of speculation about a new rule at Jpmorgan Chase that they say cuts off new cards to anyone who’s applied for five others in the previous 24 months. Paul Hartwick, a Chase spokesman, says he couldn’t confirm the rule, but adds, “We may decline customers who have applied for multiple cards in a short period of time.”

Churners should still be able to get some nice perks, according to Leppar, but it’s getting harder. “For people who game the system,” he says, “it may be over as I know it.” �Ben Steverman

The bottom line Churners go online to trade strategies for maximizing card rewards. The cost: tons of time and the risk of racking up debt.