The introductory offer for the Chase Freedom Unlimited credit card was too good to pass up. A $200 cash bonus when you spend $500 within the first 3 months of opening the card, plus 5% cash back on grocery store purchases within the first year. I’ve heard about churning for several years but had yet to try it out. This offer seemed like one of the best ones to get my feet wet with, since it has a high payout with easy requirements.
What is churning?
For those unfamiliar with the terminology, churning refers to the practice of opening credit cards, bank accounts, or financial accounts specifically to take advantage of their welcome offers. Once the churner has met the minimum requirements and received their payout, they’ll typically abandon or close the account and find a new offer to pursue. Rinse and repeat. It’s this rapid turnover of accounts that inspired the term churning.
A word of warning: anyone with poor credit or a history of issues with credit card spending should proceed with extreme caution, and likely avoid churning altogether until they’ve gotten their finances under control.
Why I decided to try out churning
Achieving financial success boils down to two simple concepts: spend less, and earn more. To that end, getting paid a decent chunk of change to do something that I was already going to do just makes sense. My typical credit card bill ranges from $400-1,000 per month, so there’s no question that I’ll meet the minimum spend requirements just by shifting my usage towards this new card.
As we’ve been tentatively considering buying a house recently, I’ve been hesitant to open any new accounts for the past few months. Doing so means both a hard inquiry on my credit report, as well as reducing the average age of my accounts. However, my “middle score” that the mortgage lender uses is already 800, and two different credit monitoring tools that I use predicted opening a new card had a -1 to +1 impact on my credit score. That reassured me that it was hardly anything worth worrying about.
Why I specifically went with Chase Freedom Unlimited
As I already mentioned, the $200 bonus when you spend $500 within the first 3 months of opening the card was the main draw. According to Chase, this $200 bonus should post to the account within 6 to 8 weeks of meeting the requirements. Interestingly the rewards can either be withdrawn to a bank account, or applied as cash back to your card balance.
The 5% cash back on groceries for the first year was another great perk. Groceries are typically my third biggest budget line item behind rent and my car. My current credit card earns 2% back on groceries, so the additional 3% that I’ll earn with the Chase Freedom Unlimited is around $75 extra that I expect to earn over the next year.
There’s a 0% introductory APR for 15 months, but this wasn’t a factor that I care about since I pay my statements in full every month.
My girlfriend also already has this card, so she was able to get an easy $100 incentive when I signed up using her referral link. Speaking of referral links, if you’re interested in getting the Chase Freedom Unlimited, I’d really appreciate if you signed up using my link! You get the same great welcome offer that I just outlined, and I get $100 for no effort on your part.
As of September 2020 this website hasn’t earned a dime, and I pay out of pocket to host it. A single referral would cover most of my web hosting fees for the year, so if you enjoy my content and were going to get this card anyway I’d be grateful if you used my referral link above!
My future churning plans
Since I want to be able to purchase a house in the near future, I’m definitely not going to go crazy with churning credit cards. First and foremost I need to ensure that my credit report continues to qualify me for the best mortgage rates. To that end, I will have to carefully weigh the impact of any new credit card accounts that I choose to open.
I’ll probably check out some bank account welcome offers next. Thanks to saving for a down payment, I’ve got a decent chunk of cash that can be moved around to meet any deposit requirements. These offers also become more tempting as interest rates on savings accounts continue to drop across the industry. I need to keep these down payment funds liquid and low-risk, so churning bank accounts could be an alternative method of putting my cash to work. And it won’t impact my credit!
One of my main ground rules with side income activities like this is ensuring that the effective hourly earnings rate is acceptably high. This means considering all of my personal time spent from start to finish on each offer. For the Chase Freedom Unlimited offer, I spent 15 minutes filling out the application and setting up the online dashboard for the card. I’ll probably spend another 5 minutes validating that I met the minimum spend requirements and redeeming my rewards. 20 minutes for $200? Absolutely worth it. But definitely something to keep in mind for each and every offer.
I’m definitely going to start out slow with churning, and probably wait until I complete each offer before starting a new one. If I find any other no-brainer churning offers (high reward with easy requirements) like the Chase Freedom Unlimited, I will be sure to share them!