Posted by William Charles on November 9, 2014
Credit Cards

Published on November 9th, 2014 | by William Charles


Why Would A Card Issuer Allow You To Churn Credit Card Bonuses?

Question: I read your list of credit cards that are churnable and I don’t understand why a card issuer would let somebody get the sign up bonus repeatedly? Is there something I don’t understand?

– Samantha

Answer: There are a couple of reasons as to why a card issuer might allow a consumer to get the sign up bonus more than once:

  • Their technology department is unable to prevent it. When people think of financial institutions they think they are well tuned finely oiled machines, in reality it’s chaos. You’d think that it would be relatively straight forward to identify a customer using their SSN and not give them the sign up bonus if they were approved before. But what happens if they applied for the card and didn’t reach the minimum spend? What if the bonus amount was different (do you give them the incremental difference or not)? What if the card had changed significantly (e.g it went from a Visa to MasterCard)? Often it’s easier for banks to just not worry about it, because…
  • There aren’t enough “churners” to worry about. Credit cards are big, big business. It’s easy to think that everybody is the same as you and never pays any interest and always maximizes category spend to get the last drop out of value out of your credit card spend. The reality is much different, the majority of people aren’t carefully planning their card applications. People like us are part of a very small minority.
  • They still see value in approving people a second time. Whilst my first point kind of contradicts this, financial institutions are obsessed with running the numbers and drilling down in their stores of data looking to see where to derive more profit. Just because somebody is applying for a card bonus a second time, doesn’t mean they are not a profitable customer. For example, somebody might have cancelled their US Airways card years ago because they changed airline alliance. They are considering getting the card again and would be swayed if they could get the sign up bonus. Assuming that this person was a profitable customer in the past the card issuer would be silly not to approve them and give them the bonus again.

Honestly I wouldn’t worry about why a card issuer might allow or disallow churning. It’s our job to spot these opportunities and to take advantage where possible.

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