So for all the newbies who don’t know what Credit Card churning is, it’s a term for what several of us do on a frequent basis. It means exploiting all the introductory offers on your new Credit Card and then shutting it without paying the annual fee. Well, that’s what exactly Credit Card churning means.
Several of us have done it and some are tempted to do it. But, no matter how much ever enticing it may feel, it’s not a good idea. If you don’t believe me then read on to get a complete breakdown on how bad it is.
Why is it so enticing?
The main reason is that you get to avail countless offers that you may think as freebies, and we all do love free stuff right? Yes, but only till that bubble bursts.
Why is it such a bad idea?
You’re perhaps questioning that why are we referring to ‘churning’ as a negative word? Well, there are several reasons for that and following are some:
- – Bye bye, Credit Score!
Attaining way too many Credit Card offers comes at a mighty price. Primarily, your Credit Score goes for a toss.
Again, newbies may wonder, why do I need a good Credit Score? It’s super-important, as it defines how well or poorly you’re doing on the financial front. Forget getting your loan sanctioned by any banks or NBFCs if you have a poor Credit Score. So why gamble with your credit score? It’s not worth it.
- – Too Many Cards invite a lot of troubles
‘Too many cooks spoil the broth’ and if you’re into some high-level credit card churning, then obviously you must’ve a lot of cards in your wallet. With so many cards come a plethora of responsibilities, the most important being paying all those bills on time. Also, a reminder, that unpaid credit card bill attracts a lot of interest.
By handling several cards in one go drastically increases the chances of missing those monthly payments. All those introductory offers may seem attractive and fun in the beginning, but it’s definitely not worth in the long run.
- – Annual Fees Storm
An important reminder to self ‘Nothing worth having comes for free.’ If a Credit Card is offering you with many attractive rewards, it will most probably have a hefty annual fee as well.
Credit Card annual fees and rewards are most often than not directly proportional to each other. If lucky, you may get a chance to skip the burden of annual fees during the first year, but there’s absolutely no running after that. If you’re unable to close all those cards on time, then you’ve to man-up and be prepared to pay.
- – You Could Get Blacklisted
Yes, that’s right! Almost every bank out there tend to blacklist Credit Card churners. Simply put down, this will cease your freedom of getting any Credit Cards or Loan approvals in the future. Why dig your own grave by taking such a huge risk for some introductory offers? Word of advice: Don’t do it!
- – All that accumulates is a Pile Of Useless Cards
Credit Card churning is bound to create a big pile of plastic cards at home. And there’s nothing much to do with them.
Instead, why not opt for a Credit Card that’s custom-made for you? You can collect reward points over time and eventually one day you’ll be able to win something massive, like an expensive mobile phone or a dream vacation!
- – Don’t be sad, there’s still hope left
Every grey cloud has a silver lining and keeping more than one credit card isn’t that bad after all. Given, if you use them responsibly and plan your credit card expenses smartly.