Credit card “churning” is a very old practice that involves applying for cards over and over to get repeat bonuses. If you pay off your bills in full and on time, it generally doesn’t have a long-term negative effect on your credit. People who do this view the annual fee as the price of buying thousands of miles at once. However, more banks are creating road blocks that make it difficult to churn their cards.
Citi is the latest example, introducing a rule to most of their cards that prevents customers from receiving a bonus if they’ve previously opened or closed the same card in the last 24 months. According to Doctor of Credit, you can now expect to see more restrictive language in the terms and conditions of new card applications:
Bonus ThankYou points are not available if you have had ThankYou Preferred, ThankYou Premier or Citi Prestige cards opened or closed in the past 24 months.
This language is more restrictive than you might expect at first glance. You can’t get the bonus if you apply for the same card within 24 months. That part is obvious. But you also can’t get the bonus if you’ve closed an account within 24 months. The most interesting point is that you can’t get the bonus when opening a different card that earns the same kind of points. Any card that earns Citi ThankYou Rewards points is subject to this language.
Doctor of Credit has uncovered similar rules for cards that earn American Airlines miles, cards that earn Hilton HHonors points, and cards that earn Expedia+ points. Fortunately business cards seem to be excluded.
Other banks have even more restrictive rules that make Citi still look good by comparison:
Chase has the “5/24” rule that generally results in a denial on new applications if you have received five new cards from any bank in the last 24 months. There are exceptions and ways around this policy, but the fact they look at your entire borrowing portfolio is a problem for people who apply for several cards at once.
American Express has a lifetime rule that still lets you get approved for new cards but denies you the bonus if you’ve ever had that card before. (Being an authorized user on someone else’s card doesn’t count.) Again, there are some exceptions, such as targeted offers that don’t include this language in their terms and conditions.
Future Strategies for Citi Applications
Churning has never been a big deal for me personally. I apply for lots of credit cards but not so many that I’ve run out of options and had to go back to repeat the same offer. I only use so many miles in a year and still prefer to buy many of my tickets with cash. However, this is a big blow to some people. The American Airlines cards were notorious for churning, and some people will constantly switch between different versions of the ThankYou cards after the first year is up on each one.
I always recommend that people start applying for travel rewards cards by focusing on those with good long-term value — the ones that are actually worth paying the annual fee and using for daily purchases. My wife and I are devoted to our Chase Sapphire Preferred (for daily spending) and Alaska Airlines Visa Signature (just for the annual companion fare). At Citi, a prime card might be the Citi Prestige for the 3X points on travel and free hotel nights. After you have these cards locked in, then you can start worrying about how to add more cards to the mix. Don’t let applications for weak cards make it difficult to apply for better cards later on.
Second, be thankful that the limit isn’t lifetime like American Express. You just need to wait two years between cards. You can continue to apply for other Citi cards if you stagger them. When you do want a card in the same “family,” alternate between them. You might get a Citi ThankYou Premier card now, wait two years and get a Citi ThankYou Preferred card, then wait two years and get a Citi ThankYou Premier card again. Don’t cancel an old card until after you get the bonus on the new card since closing an account will also reset the two-year clock. If you only want one version of the card, you’ll have to close it and wait two years to re-apply.
Third, the Devil’s Advocate has argued for spacing out applications over a week, and I’d go further and say you should space them out over months, perhaps only applying when you see an offer that is truly exceptional. Less frequent applications make it easier to satisfy the two-year rule, and if you’re getting better offers then maybe that makes up for less frequent bonuses. I don’t think you should apply for a card every time a window of opportunity opens. Just keep an eye on how long you have until the next annual fee hits on your current cards because you may want to apply for a new card in the same family before you cancel.
Finally, some cards are worth getting even without the bonus points. This might apply to the Citi Prestige, for example, because the airline fee credit lowers the net cost of the card’s annual fee and the fourth free hotel night is very valuable to those who use it well.
These new rules from Citi will make it more difficult to receive large sign up bonuses for new credit card applications. However, they remain more generous than similar language from Chase (which prevents you from opening new cards altogether) or American Express (which will never let you get the same bonus again).
People most affected by the new rule will be those who repeatedly apply for the same card within a short window. Most travelers will not be impacted. Even people who apply for lots of credit cards in general can continue to earn bonuses from Citi by being careful about which cards they apply for and when.
However, it will be difficult for people to “downgrade” or “upgrade” by canceling one card and immediately applying for a new one that earns the same type of miles or points — something that I think is a little more common among average consumers. To accomplish this and still get a bonus, make sure you apply for the new card at least two years after the first one, and don’t close the old card until you’ve received the new bonus.