Some credit card issuers offer big incentives to get new customers to sign up for their products. Savvy rewards cards users can take advantage of these offers to get free flights, hotel rooms, and cash back. Whether you call it credit card churning or travel point hacking doesn’t matter. The point is you can earn big-time rewards every year by following these four rules.

4 Rules For Credit Card Churning:

My Four Rules for Credit Churning

Rule 1: First Year Free

Any travel rewards credit card worth its salt comes with an annual fee, but to lure in new customers some credit card issuers will waive that fee in the first year. In the world of credit card churning this is known as FYF (First Year Free).

My first rule when it comes to churning credit cards is the first year must be free. The goal is to earn lots of rewards quickly. Since most card issuers charge the annual fee on your first statement, you’ll have to earn significantly more rewards points or cash back to overcome that negative position.

First year free means you get to keep the entire net benefit of the welcome bonus or early spend incentives. It’s free money, and that’s what we’re after.

To complete the ‘churn’ effect, simply cancel the card once you receive all the benefits and before the annual fee comes due in year two.

What I like to do is write a note in my phone with the date I signed up, along with all of the criteria needed to unlock the bonuses and incentives. That way I know when I have to cancel the card, plus some notes in case the card issuer doesn’t fulfill their end of the bargain.

Rule 2: Net Benefit of $250 or More

Credit card churning can be a pain to manage. Not only do you always have multiple credit cards in your wallet, some with early spend conditions to meet, but you also have to keep track of several credit card statement due dates, and know which cards offer the highest return in the various spending categories.

Then there’s the effect that credit card churning has on your credit score. It’s minor, to be sure, because new inquiries only impact 10 percent of your score, but your score will likely take a dip.

That’s why my second rule of credit card churning is the welcome bonus or early spend incentives must be worth $250 or more to make an application worthwhile.

Does this rule limit my options for churning? Sure. But it means I get the best return on my time invested. Think about it. Would you go to the trouble of applying for a card, changing your preferred method of payment for a few months, and then cancelling the card all for just a measly $100?

Not me. That’s why I take a shotgun approach, finding the best of the best credit card offers before pulling the trigger. That might mean churning only 2-4 credit cards each year, but the net benefit on those offers will be worth well over $1,000.

Rule #3: No significant changes to spending

Often when I’m hunting for credit card offers I’ll stumble upon one that meets my first two rules – first year free, and net benefit of $250 or more. But there’s one hurdle that’ll make me pause: When the rewards will only be paid out after three months of significant spending.

Playing the credit card churning game only works if you always pay your credit card bills on time – that is, never pay a dime in interest charges – AND you never get sucked into buying something you don’t need, just to earn more points.

That’s why my third rule is ‘no significant changes to spending’. I’ll shy away from offers that require a high minimum spend for a period of time before they pay out a welcome bonus.

My acceptable threshold for minimum spending over three months is $1,500. Any higher than that and I’m having to think of REALLY creative ways to reach that threshold, which likely means buying things I don’t need.

Rule #4: The ability to convert the points into something useful

I always say that it doesn’t matter how many rewards points you earn if you can’t find a useful way to redeem them. A credit card offer of 30,000 points or more can look tempting, but how easy will it be to extract $300 worth of value from those points?

My fourth rule for credit card churning is that I have to be able to convert the points into something useful. A coupon for dog food is of no use to you if you don’t have a dog. Similarly, if you’re not going to use those hotel rewards or travel points then there’s little point to collecting them.

Flexibility is key, so look for rewards programs that allow you to book any way you want rather than just through their proprietary travel system. The ability to transfer points from one program to another is also a plus.

Credit Card Offers That Pass My Test

Just to prove that I’m not chasing unicorns with these four rules – here are two credit card offers that pass my test, plus one more that also fits the bill:

Scotiabank Gold American Express Card

Scotiabank Gold American Express

This year was my second go-around with the Scotiabank Gold American Express Card.

  • Annual fee of $99 waived in the first year
  • Earn 25,000 bonus points
  • Spend $1,000 in the first three months
  • Apply points to travel

This card passes the test and is a quick way to earn $250 in travel rewards.

American Express Gold Rewards Card

Another popular card for credit card churners, the American Express Gold Rewards Card is worth a look:

  • Annual fee of $150 waived in the first year
  • Earn a welcome bonus of 25,000 points
  • Spend $1,500 in the first three months
  • Transfer points 1:1 to Aeroplan

Capital One Aspire Travel World Elite MasterCard

Capital One Aspire Travel World Elite MasterCard

This is my everyday spending card so it’s one that I haven’t churned myself. That said, you can see how the Capital One Aspire Travel World Elite MasterCard also fits the bill:

  • Annual fee of $150 (not waived)
  • Earn 40,000 bonus reward miles
  • Spend $1,000 in the first three months
  • Redeem for travel, cash, and gift cards

Rule number two is that I need a net benefit of $250 or more. Sure, the $150 annual fee isn’t waived, but a juicy bonus of 40,000 reward miles is worth $400 in travel. Net benefit = $250.

Final thoughts on credit card churning

My take on credit card churning is that it’s a fine way to earn hundreds or even thousands of dollars for free each year by taking advantage of generous sign-up bonuses and incentives.

I’m conscious of my time, plus the impact on my credit score, which is why I’m careful with how many offers I sign-up for in a year. The ones that meet my criteria, though, are fair game and allow me to rack up the travel points so I can earn free flights and hotels even faster.

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