Hey fellow churners in Canada! 👋 Welcome to our weekly discussion thread dedicated to all things churning in the US. This is your space to discuss the latest deals, strategies, and challenges you've encountered while navigating the US churning landscape. Whether you're a seasoned pro or just starting out, we encourage you to share your experiences, ask questions, and learn from each other. Let's dive into the exciting world of US churning!
What is Churning?
For those new to the game, churning refers to the practice of opening credit cards to take advantage of their welcome bonuses, spending the required amount to earn those bonuses, and then either canceling the card or downgrading it to a no-fee version before the annual fee comes due. It's a way to rack up significant rewards points, miles, or cashback, which can then be redeemed for travel, merchandise, or statement credits. However, it's crucial to do it responsibly and strategically to avoid negatively impacting your credit score.
Why US Churning for Canadians?
So, why are we, as Canadians, interested in US churning? Well, the US credit card market often offers more lucrative welcome bonuses and perks compared to what's available in Canada. This can make US churning a very attractive option for those looking to maximize their rewards. Plus, some cards offer benefits that simply aren't available on Canadian cards, such as hotel free night awards or airline lounge access.
However, there are some key considerations for Canadians venturing into US churning. The most significant hurdle is typically obtaining a US credit history and Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). This usually involves having some form of US presence, such as a US address, business, or investment account. Don't worry, we'll delve into these requirements and how to navigate them in more detail below.
Navigating the US Churning Landscape
Key Requirements for US Churning as a Canadian
1. US Address: A physical US address is almost always required to apply for US credit cards. This doesn't necessarily mean you need to own property in the US; you can use a friend's address, a family member's address, or even a mail forwarding service.
2. US Credit History: Building a US credit history is crucial for getting approved for most US credit cards. This can be done by opening a secured credit card or a credit card designed for newcomers to the US credit system. You can also explore options like the American Express Global Transfer program, which allows you to leverage your Canadian Amex history to get approved for a US Amex card.
3. Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN): Most US credit card applications require either an SSN or an ITIN. An SSN is generally only available to US citizens, permanent residents, and those authorized to work in the US. An ITIN, on the other hand, is available to foreign nationals who have a US tax obligation but are not eligible for an SSN. If you have a legitimate reason to obtain an ITIN, such as owning US rental property or investing in US securities, you can apply for one through the IRS.
Popular US Credit Cards for Churning
Now, let's talk about some popular US credit cards that are often targeted by churners:
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Chase Cards: Chase offers a range of cards with excellent welcome bonuses and rewards programs, such as the Chase Sapphire Preferred, Chase Sapphire Reserve, and Chase Ink Business cards. However, Chase has a notorious "5/24 rule," which means you won't be approved for most Chase cards if you've opened five or more credit cards (from any bank) in the past 24 months. This rule makes it crucial to prioritize Chase cards early in your churning journey.
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American Express Cards: Amex is another major player in the US credit card market, offering cards like the Amex Platinum, Amex Gold, and various co-branded cards with airlines and hotels. Amex welcome bonuses can be very generous, but Amex also has its own set of rules, such as the once-per-lifetime bonus rule, which means you can only earn the welcome bonus on each Amex card once.
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Citi Cards: Citi offers a variety of cards, including the Citi Premier and Citi Double Cash. Citi also has its own application rules, such as the 1/8 rule (you can only apply for one Citi card every 8 days) and the 2/65 rule (you can only apply for two Citi cards every 65 days).
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Capital One Cards: Capital One offers cards like the Capital One Venture X and Capital One Venture Rewards. Capital One is known for being relatively strict with approvals, especially for those with limited credit history.
Strategies for Successful US Churning
Here are some strategies to help you succeed in US churning:
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Plan Ahead: Before you start applying for cards, it's essential to have a plan. Determine your goals (e.g., travel rewards, cashback), research the best cards to meet those goals, and develop a timeline for applying for cards and meeting spending requirements.
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Prioritize Chase Cards: Due to the 5/24 rule, it's generally advisable to prioritize Chase cards early in your churning journey before you accumulate too many new accounts.
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Meet Minimum Spending Requirements: To earn the welcome bonuses, you'll need to meet the minimum spending requirements within the specified timeframe. Plan your spending carefully and consider using methods like manufactured spending (MS) to help you reach those targets (more on MS later).
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Manage Your Credit Utilization: Keep your credit utilization low (ideally below 30%) to avoid negatively impacting your credit score. This means keeping your balances low relative to your credit limits.
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Pay Your Bills on Time: Always pay your credit card bills on time to avoid late fees and interest charges, and to maintain a good credit history.
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Be Aware of Bank Rules: Each bank has its own set of application rules and restrictions. Be sure to research these rules before applying for cards to avoid getting denied.
Manufactured Spending (MS)
Manufactured spending (MS) is a technique used to meet minimum spending requirements on credit cards by using methods that generate spending without actually incurring significant costs. Some common MS techniques include purchasing gift cards, using bill payment services, and engaging in other activities that can be converted back into cash. However, it's crucial to be aware that MS can be risky, and some banks may frown upon it. It's essential to do your research and proceed cautiously.
Potential Pitfalls and How to Avoid Them
US churning can be rewarding, but it's not without its risks. Here are some potential pitfalls to watch out for:
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Damaging Your Credit Score: Applying for too many cards in a short period can lower your credit score. It's essential to space out your applications and manage your credit responsibly.
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Getting Denied for Cards: Banks may deny your applications if you have too many recent inquiries, too many new accounts, or a limited credit history. Research the approval criteria for each card before applying.
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Forfeiting Rewards: If you fail to meet the minimum spending requirements or violate the terms and conditions of the card, you may forfeit your welcome bonus or even have your account closed.
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Paying Annual Fees: If you don't cancel or downgrade your cards before the annual fees come due, you'll be stuck paying them. Set reminders to cancel or downgrade your cards in a timely manner.
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Tax Implications: In some cases, credit card rewards may be considered taxable income. Consult with a tax professional if you have any questions about the tax implications of churning.
To avoid these pitfalls, it's crucial to be organized, responsible, and knowledgeable about the rules and risks of churning.
Weekly Discussion Topics
Each week, we'll focus on different topics related to US churning. Here are some examples of topics we might discuss:
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New Card Offers and Promotions: We'll share information about the latest welcome bonuses and promotions on US credit cards.
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Application Strategies: We'll discuss strategies for getting approved for specific cards and navigating bank rules.
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Meeting Minimum Spending Requirements: We'll share tips and tricks for meeting minimum spending requirements, including MS techniques.
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Redeeming Rewards: We'll discuss the best ways to redeem your rewards points or miles for maximum value.
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Troubleshooting Issues: We'll help each other troubleshoot any issues or challenges we encounter while churning.
Let's Get the Conversation Started!
So, guys, what's on your mind this week? Any exciting new offers you've spotted? Any challenges you're facing? Share your thoughts and questions in the comments below! Let's help each other maximize our rewards and travel the world for less!
This week, let's discuss:
- What are the best US credit card offers you've seen lately?
- What are your favorite strategies for meeting minimum spending requirements?
- Have you had any recent successes or challenges with US churning?
Looking forward to hearing from you all! Happy churning! 💳✈️