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Question 19

Credit card churning is a strategy where people apply for multiple cards to collect sign-up bonuses, then cancel or stop using the cards after earning the rewards. While this can be profitable in the short term, it carries risks. Frequent applications can lead to hard inquiries, lowering your credit score. Issuers may also track behavior and deny bonuses if they suspect abuse. Some banks enforce rules, like “one bonus per card per lifetime” or “no new card if you’ve opened 5 accounts in 24 months.” Churning requires careful management of annual fees, minimum spends, and account closures. While it can yield free travel or cashback, it’s not without consequences.

What is one of the main risks of credit card churning?

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By Wise Wallet

Diversification reduces company-specific risk but cannot eliminate overall market risk.