Churning Credit Cards in Canada

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Churning credit cards in Canada is an open secret where you can travel in luxury for next to nothing. I personally used the strategy to fly Emirates First Class from Dubai to Toronto on the Airbus A380. That flight normally costs $10,000+, but I paid less than $250 thanks to my churning ways.

If you’re unfamiliar with the term churning credit cards, it’s when you apply for new credit cards just to get the sign up bonus. You would then cancel the card within 6-12 months before your annual fee posts. You could continue the process by reapplying later to get the welcome offer again. While this may seem like a simple way to earn points fast, it’s a little more complicated than that. Here’s everything you need to know about churning credit cards in Canada.

Why churn credit cards?

The reason people get into churning credit cards in Canada is for the welcome bonus. Many travel credit cards come with huge welcome bonuses. For example, some of the best Aeroplan credit cards can give you a sign up bonus of more than 75,000 Aeroplan points if you meet the minimum spend requirement. There’s no quicker way to earn that many Aeroplan points.

Since there TD, CIBC, and American Express offer Aeroplan cards, you could quickly rack up enough points for a business class flight just by applying for a few cards. Since some credit cards have a referral bonus and you can now pool your points with Aeroplan Family Plans, it can be quite easy to get a lot of points as long as you plan things out.

If you’re willing to put in the work, you could easily earn 250,000+ points a year. That’s enough for a roundtrip business class ticket to anywhere in the world.

How to churn credit cards

The process of churning credit cards in Canada is easy. Apply for a new credit card and meet the minimum spend requirement so you get your points. After six months of having the card, cancel it. Reapply six months later.

By doing this, you’re essentially getting the welcome bonus every 12 months. You could even try to be more aggressive and reapply every 6 months, but many cards have specific language that prevents you from getting the welcome bonus twice. Since there are usually multiple credit cards that earn you the same type of points, it could be pretty easy to earn a huge number of points with little effort.

How many credit cards you apply for in a year is up to you. Some people are very aggressive while others prefer to limit themselves to 1-2 new cards a year. I used to apply for 5-10 cards, but I’ve greatly reduced that number in recent years. Read my guide on travel hacking for lazy people for more details about using credit cards to your advantage.

Churning mistakes

The one mistake that many people make when playing this game is to focus too much on accumulating as many points as possible. Points can be devalued and welcome bonuses can be reduced at any moment. You should have a specific goal in mind that you’re always working towards.

For example, let’s say you want to take a business class flight to Asia for your honeymoon which is taking place in 18 months. You’ll need a lot of points to reach that goal in a short period of time. All your efforts should be spent on accumulating Aeroplan (or some other loyalty program) points. As soon as you have enough points, book your flights. Earn and burn should always be part of your mindset.

Due to the global pandemic, many credit card providers have also become more strict about approving applications. Even if you have a great credit history, you could be declined which would result in a hit to your credit score.

Do credit card poviders care if you churn credit cards?

It would be silly to think credit card providers are okay with churning. The reality is that churning is abusive behaviour and likely breaks the terms and conditions of your cardholder agreement. Credit card providers are well within their rights to take action.

Over the last few years, a few providers have taken significant steps to block churning. Let’s take Scotiabank as an example, in their terms and conditions, you can only get a welcome bonus once in your lifetime. Although there have been some reports of people getting the bonus more than once, Scotiabank is within their rights to deny you. If you tried to get a bonus with them multiple times, there’s always a chance that you may not get the bonus which is a wasted opportunity.

American Express has been more aggressive towards churners recently and has banned many Canadians. What’s interesting about this approach is that they often quote vague language in the terms and conditions for the ban. Some people think this is unfair, but let’s be realistic, if Amex has banned you, they likely had a good reason even if you disagree.

Points enthusiasts like to say that there’s no downside to applying for 20+ credit cards a year, but there obviously is. Try explaining to your spouse why a financial institution has closed your accounts and banned you from opening any new ones.

Does churning credit cards hurt your credit score?

Whenever you apply for a credit card, a hard inquiry is performed on your credit history which results in a loss of about 10 points on your credit score. If you have a good credit score, then a 10 point hit really won’t matter much. More importantly, after a few months of paying your new credit card bill on time and in full, your credit score will go back up to where it was.

You could apply for one new credit card every few months and it probably wouldn’t be a big deal. Just don’t do it every month, and don’t apply for a ton of cards if you plan on getting a mortgage soon. Lenders will wonder why you need access to so much credit.

If you’re unfamiliar with credit scores, it ranges between 300 and 900. To be realistic, you want your score to be at least 650 since that’s around where you won’t have any issues getting access to credit. If your score is 725+, it’s considered excellent, but it falls under 650, it’ll be harder to get a loan.

My credit card strategy

There have been times where I’ve held more than 15 credit cards at a time, but as mentioned, I’ve cut back. I personally prefer to hold cards where I can take advantage of all the yearly benefits or I can maximize the earn rate, so there’s no reason for me to churn them. Some of those cards include:

That will likely seem like a lot of cards to some readers, but note I do have a business and I’m a frequent traveller which is why I have so many travel cards.

I do apply for new cards whenever I see a good opportunity, but I haven’t done so recently. The new Aeroplan credit cards that come with a Buddy Pass have my attention, but I’m not applying for one until I know I can actually use that perk.

The benefits of churning credit cards in Canada

As stated above, the biggest benefit of churning credit cards is the sign up bonus. Many of the best travel credit cards in Canada have a generous welcome bonus and some waive the annual fee for the first year.

Yes, you’ll need to meet the minimum spend which can be anywhere from $1,000 – $7,000 in the first 90 days, but your signup bonus could be worth anywhere from $200 – $1,000+.

Some of the premium credit cards may not waive their annual fee or they might have a high annual fee, but the signup bonuses might be worth more than those fees so you’ll end up ahead. You just need to do the math to figure out if it’s worth it.

In addition to the sign up bonuses, many credit cards come with additional benefits that make it worth churning specific cards worth it. For example, some credit cards offer a companion fare for a fixed price; that could be a huge saving.

Keep in mind that you don’t need to sign up for a ton of credit cards just to get a lot of points fast. For example, the American Express Business Platinum Card has a welcome bonus worth up to 75,000 points. If you applied just for that card, you’d have enough points for multiple flights.

Final thoughts

It’s not difficult to see why churning credit cards in Canada has become so popular. It’s an easy way to earn points fast, but at the same time, it’s not something that’s foolproof. There’s always a chance that you get banned from financial institutions and that’s something you never want.

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

1 Comment

  1. Ben on February 7, 2021 at 4:56 PM

    Although you can earn lots of points by constantly applying for credit cards, this seems like too much hassle to me. I actually know a friend of a friend who is doing it, but I never got excited by the concept :).

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