Churning

[Stargazer]

I have recently taken out a QF NAB signature card - still uploading additional financial information so expect it to be approved??? But I have been reading in the thread that a number of FF are churning cards For the points. I thought this was a difficult proposition as the banks check external providers who provide them with credit applications made over a predefined period. And if too many applications made (this includes all financial products) then it becomes extremely hard for applications to be approved. The idea is restraint in trying to secure finance including credit card applications. So how do you do it?

 

[Human]

The simple answer is that it's a balancing act. I never churn more than 3-4 cards a year (though others churn more).

What you say above is true, to a point. But the whole issue of credit scores, card approvals etc is complicated. The getcreditscore.com.au and clearscore.com.au websites have some good educational material which is worth reading, if you're interested.

 

[levelnine]

Unless you are planning to apply for a mortgage in the next 1-5 years, the number of credit applications/accounts on your file is of little importance in Australia.

How many cards you can apply for without receiving rejections depends on your circumstances — income, history of on time payments, number of open cards, etc.

Many people will find that the limiting factor is their ability to meet the sign up bonuses or the inability to find new cards to sign up for (there's only so many products in Australia) rather than their ability to open new cards.

 

[Stargazer]

The simple answer is that it's a balancing act. I never churn more than 3-4 cards a year (though others churn more).

surely there are limits. Agree with Levelnine that there are only a limited number of credit card providers with significant sign up points. The main 4 banks plus AMEX and Citibank. I haven’t checked but some of the smaller banks might have offers of a more limited nature. I checked Clearscore and there was a comment that a credit inquiry could affect your credit score. Have you found this to be a problem. How often (in what time frame) do you make a new application to a credit card provider you were previously with. Do you wait a year or two? before the next application.

 

[levelnine]

I checked Clearscore and there was a comment that a credit inquiry could affect your credit score. Have you found this to be a problem. How often (in what time frame) do you make a new application to a credit card provider you were previously with. Do you wait a year or two? before the next application.

As I said, credit inquiries are of no relevance to people in Australia unless you are planning on applying for a mortgage in the near future.

You can apply for the same card with the same provider as soon as you are eligible under the terms and conditions of that card. You'll need to read them carefully to understand those terms and conditions, because they are different for each card. Typically it is 12 months since you last closed the card.

 

[Human]

surely there are limits. Agree with Levelnine that there are only a limited number of credit card providers with significant sign up points. The main 4 banks plus AMEX and Citibank. I haven’t checked but some of the smaller banks might have offers of a more limited nature. I checked Clearscore and there was a comment that a credit inquiry could affect your credit score. Have you found this to be a problem. How often (in what time frame) do you make a new application to a credit card provider you were previously with. Do you wait a year or two? before the next application.

Yes, the main 4 banks, Citi, AmEx and St George/BankSA/Bank of Melbourne. More than enough to churn 3-4 cards per year. Yes, credit applications adversely affect credit score but card cancellations positively affect credit score: as a general rule, cancel one card for every card you apply for and you'll be fine.

 

[andye]

My experience is that credit scores are a very small contributor to credit card acceptance in Australia.
Companies seem more interested in total credit balance and income being sufficient to service this.
Obviously defaults are a big red flag and do affect score but defaulters are quite rightly excluded from playing this game

 

[larrymull]

Agree with @andye it is all about serviceability. Remember banks want you to have credit with them, they offer these bonuses to entice you to spend, if they aren't making a buck out of you then they wouldn't be doing it.

 

[Rich]

Agree with @andye it is all about serviceability. Remember banks want you to have credit with them, they offer these bonuses to entice you to spend, if they aren't making a buck out of you then they wouldn't be doing it.

I doubt they make money out of a lot of us churners though and they just hope we stick around.

 

[andye]

True but we are a smaller proportion of applicants than many imagine. The companies aren't likely to lose big by defaults and I guess they just factor in as a cost of doing business

 

[Rich]

True but we are a smaller proportion of applicants than many imagine. The companies aren't likely to lose big by defaults and I guess they just factor in as a cost of doing business

My wife tries to tell people about churning but I tell her not to, as most people glaze over.
A bit like I do reading about status runs.

 

[Human]

My wife tries to tell people about churning but I tell her not to, as most people glaze over.
A bit like I do reading about status runs.

I know, right? I have so many friends, relatives, work colleagues who are quite jealous of the way my wife and I galavant around the world in business class. But when I tell them how easy it is and what I do to get the points, they just stop listening. Go figure.

 

[yojohnny]

I'm on my 10th card this year. Latest trick is to apply for two cards at once. It takes a few days to hit your credit file so each application generally won't see the others. I'll be trying three cards next time.

I'll be applying for a mortage soon. I could care less; all cards will be closed before-hand and I'll show I've been churning. I'm not concerned.

 

[lovestotravel]

My experience is that credit scores are a very small contributor to credit card acceptance in Australia.
Companies seem more interested in total credit balance and income being sufficient to service this.
Obviously defaults are a big red flag and do affect score but defaulters are quite rightly excluded from playing this game

Agree - I have a very high credit score a great salary, 1 credit card (20k limit, $0 owing) and an Amex charge card

St George have declined my recent credit card application as my home loan which is 99% paid off is too large a liability if I was to redraw on it. Despite the repayments only being 25% of my monthly income if I was to max it out again.

I didn't hold high hopes for St George and they have proved me correct

 

[Rich]

St George have declined my recent credit card application as my home loan which is 99% paid off is too large a liability if I was to redraw on it. Despite the repayments only being 25% of my monthly income if I was to max it out again.

On the subject of card applications and home loans, my credit rating suddenly dropped 30 points this month, after being unchanged for 6 months apart from a 2 point increase in Sept. In that time there have been no defaults and no credit enquiries.
I am at a bit of a loss. The only thing I can think of is that increased interest rates could have impacted it, although I didn't think that would be an issue.

 

[lovestotravel]

On the subject of card applications and home loans, my credit rating suddenly dropped 30 points this month, after being unchanged for 6 months apart from a 2 point increase in Sept. In that time there have been no defaults and no credit enquiries.
I am at a bit of a loss. The only thing I can think of is that increased interest rates could have impacted it, although I didn't think that would be an issue.

Mine dropped 20 or so points a few months back for no reason as well

 

[Rich]

Mine dropped 20 or so points a few months back for no reason as well

Another thing I read somewhere (possibly for US) is that the score can drop if your home loan application was over 5 years ago. The theory being that you were assessed as good then, but now that assessment was too long ago so you just have debt (or access to a line of credit). Our loan just ticket over 4.5 years, so maybe that is related.