This scheme for racking up credit card rewards and taking free vacations isn’t too good to be true. But it’s not right for everyone.
I recently posted a beginner’s guide to credit card churning, which is a process of applying for multiple credit cards at once, accumulating rewards, cancelling the cards, and then applying to new ones again for more rewards.
People are actually gaming the credit card system, scoring some pretty amazing perks. But as you might suspect, credit card churning does not come without risk. And some of those risks are pretty heavy.
Firstly, credit card debt is not to be taken lightly. It’s a trap that’s easy to fall into but can be nearly impossible to get out of. According to Nerd Wallet, the average American household is spending $6,658 per year on interest alone. If free vacations are your motive, you could squeeze out a couple family vacations with that much money put in savings instead of the pockets of credit card companies.
Secondly, your credit score is everything. You never want to jeopardize it, even for the most tempting of rewards. You end up risking your ability to make any big purchases in the future, such as a house or a car, find a good place to live, and even your employment potential.