These forums can be a good source of anecdotal advice and strategies for earning as many rewards as possible. But because you don’t know exactly who is giving the advice, you need to be wary of placing too much trust in Redditors who may not have much more experience with credit cards than you do.
1. What are the best credit cards?
One of the most popular questions on r/creditcards asks which card is the best one. There’s no one right answer, as the best credit card for each person depends on the type of rewards program you’re looking for and your goals for using the card.
Two Reddit favorites for travel credit cards, for example, are the Chase Sapphire Preferred and the Chase Sapphire Reserve, while some of Reddit’s most popular cash back cards include the Chase Freedom and the Chase Freedom Unlimited.
Chase Sapphire Preferred vs. Reserve
The Chase Sapphire Preferred credit card offers a generous 60,000 bonus points for new cardmembers who spend $4,000 on purchases within the first three months of account opening. This signup bonus is worth $750 in travel credit if you redeem your points through Chase Ultimate Rewards.
You also get double points on dining and travel as well as a 25% bonus when redeeming rewards for airfare, car rentals, hotels, cruises, and other travel with Chase Ultimate Rewards. The card does charge an annual $95 fee in exchange for these perks, though.
The Chase Sapphire Reserve, on the other hand, gives you just 50,000 bonus rewards points after you meet the same spending threshold. You do, however, get 3x points on travel and dining, as well as a 50% bonus when you redeem rewards for travel through Chase Ultimate Rewards.
The Reserve’s annual fee is much higher — $450 — but a $300 annual statement credit each account anniversary might make the fee worth it, especially when you consider the higher overall rewards rate.
Chase Freedom vs. Freedom Unlimited
The Chase Freedom credit card provides a $150 bonus for new cardholders who spend $500 within the first three months of opening their account. The card also offers a 0% introductory APR for 15 months on both purchases and balance transfers, and you’ll get 5% cash back on up to $1,500 in combined quarterly purchases in rotating bonus categories — although you have to remember to activate the bonus. All this comes with no annual fee.
With the Chase Freedom Unlimited, on the other hand, you don’t have to worry about rotating rewards categories. You simply earn unlimited 1.5% cash back on all purchases. The rate is doubled your first year as a cardholder, although it is capped at $20,000. Like the Chase Freedom, the Unlimited card has a 0% introductory APR for 15 months on purchases and balance transfers and charges no annual fee.
2. What is churning?
Churning is the term for maximizing your credit card rewards by repeatedly opening and closing accounts to take advantage of generous signup bonuses for new cardholders. Rather than opening just one card and sticking with it, you’re strategic about which cards you open so you can get the most value for your spending. It’s essentially a form of travel hacking.
Benefits of churning
The benefits of churning are obvious: You can score tons of free miles and, essentially, free money. That’s because some credit cards — such as the Chase Sapphire Reserve — offer signup bonuses worth hundreds of dollars.
If you stay organized, do your homework, and are smart about which cards you open and use, you can end up earning thousands of dollars annually in credit card rewards through churning.
Downsides of churning
Avid Reddit churners are generally very optimistic about your ability to earn huge rewards by embracing churning. But despite the possibility of getting lucrative bonuses for opening multiple credit card accounts, there are some definite reasons you should be cautious about churning.
- Managing several cards can be a lot of work: It takes time and energy to keep track of the spending requirements and time limits associated with different signup bonuses.
- Your credit score could take a hit: Each time you apply for credit, you get a hard inquiry on your credit report that remains there for two years. Multiple inquiries are a red flag for most creditors. When inquiries hurt your credit score, you could end up getting stuck with higher rates on other financial products, thereby increasing your costs of borrowing for years to come.
- You could run afoul of credit card company terms and conditions: Many credit card companies have caught on to churning and have started implementing rules aimed at minimizing the abuse of signup bonuses. Although the rules don’t make churning impossible in all circumstances, they have since made it more difficult.
3. What is the 5/24 rule?
One of the biggest rules that limit churning is the 5/24 rule. The 5/24 rule applies to all Chase credit cards as well as Chase co-branded cards. This includes various Southwest cards; the Chase Freedom and Freedom Unlimited cards; Chase Ink cards; and several United cards, among others.
Under the 5/24 rule, you’ll be declined when you apply for a Chase card if you’ve opened at least five personal credit cards with any card issuer over the past 24 months. Further, some reports indicate that if you apply for too many Chase cards in too short a period of time, your existing Chase accounts could be shut down.
This rule applies only to Chase cards — you can still qualify for other popular rewards credit cards, including the Discover it Cash Back card or the Capital One Venture Rewards card. Although you can apply for cards with other issuers despite the 5/24 rule, hitting this limit might indicate your churning habits are out of control and that you may be doing damage to your credit score by canceling too many cards.
Interesting threads we found on Reddit
Because there are so many Reddit threads related to churning and credit card topics, it’s hard to weed through them all — and some are more helpful than others. Here are a few threads on Reddit we found worth checking out.
A churning flowchart. If you’re interested in churning, this Reddit chart will help you prioritize which card you should apply for next. It can also provide guidance on which card is the right one for you even if the 5/24 rule has kicked in. But if you decide to use the flowchart to start churning, be aware of the possible damage you could do to your credit score.
A Redditor’s treatise on the value of credit cards. Many people simply can’t qualify for a credit card right because of a bad credit score or limited credit history. If that’s your situation, using a debit card is a fine financial choice. However, there are also people who don’t use credit cards because they don’t really understand their benefits or are scared of getting into debt.
If you fall into the second category and just aren’t sure credit cards are right for you, Reddit user u/idealdreams posted this impassioned plea encouraging others to take advantage of credit card benefits, including establishing good credit and earning rewards. The key is to make sure you’re being responsible and not spending more than you can comfortably afford to pay back.
The Redditor who learned the value of picking up the phone. When you apply for a credit card, there are times you’ll receive a denial without an explanation. One Redditor posted a thread about what he did after this happened to him. Instead of taking no for an answer, he persisted with calling the card company — and was finally approved on the fourth call.
This strategy won’t work if you clearly aren’t qualified for a particular card. But this user knew his credit was good enough to get approved, and his persistence was rewarded.
The bottom line
As you can see, there are some interesting credit card threads on Reddit. But remember, your credit score is very important to your financial future, so taking advice from people who don’t have proven expertise can be risky. You can use Reddit as a resource but should also look elsewhere to confirm the information. You don’t want to base big financial decisions solely on advice from an anonymous internet user.