SoFi

Credit card churning describes when you open and then close a credit card to snag sign-up rewards. Given how much competition there is for your business as a card holder, there are many enticing offers out there of cash, points, miles, and more. Some people may be tempted to try to grab those freebies and bonuses, but this practice comes with pros and cons.

Read on to learn about credit card churning and whether it’s something you should ever try.

What is Credit Card Churning?

Credit card churning occurs when you open and close credit cards for the sole purpose of earning a sign-up bonus. The trick is to do it over and over again, with several credit cards. The end goal is to earn as many rewards as you can. In other words, maximizing your eligibility for points and prizes.


💡 Quick Tip: Some lenders can release funds as quickly as the same day your loan is approved. SoFi personal loans offer same-day funding for qualified borrowers.

Types of Sign-up Bonuses

Of course, there is no such thing as a free lunch or a free reward. Being rewarded usually costs you. In order to earn the credit card rewards, you are typically required to spend a certain amount of money on that credit card, and it has to be done within the first few months (in most cases, three months).

The way you’re lured into a sign-up bonus is by earning a large amount of rewards by spending only a small amount. This usually happens only with a new credit card as a “welcome” offer. If you are careful about what and where you spend, you may be able to save money and get rewarded in the meantime. However, as you’ll learn below, this practice can also have its downsides.

Can You Win at Credit Card Churning?

If you want to try to get rewarded via credit card churning, there are some important best practices to be aware of.

Pay Off Your Balance in Full Each Billing Period

This is a good tip even if you’re not gunning for reward points. If you don’t pay off your balance at the end of the month, the rewards you earn will wind up being a net loss as interest rates take their toll. There is no bigger credit card churning buzzkill than taking months or even years to pay off the debt you accumulate racking up charges to earn a sign-up bonus.

While on this subject, remember that paying off your credit card balance in full every month will keep away the interest charges that accrue when you don’t make a full monthly payoff.

Look at it this way: When it comes to credit card churning, it’s you against the credit card companies. You want to reap their rewards but not open yourself up to suffocating debt and high-interest charges.

Credit card churning can work if the consumer hits the rewards thresholds, but practice responsible spending. If you’re someone who doesn’t manage credit card debt well or tends to overspend just to cash in on the rewards, it might be better to steer clear of credit card churning.

Make Your Credit Card Payment on Time

Don’t be even a day late. Late fees can be a budget buster, and they can damage the credit rating you’ve worked so hard to keep strong. If other credit providers see a pattern of late payments, and they may not be so fast to offer you their credit card, which means no rewards, or give you their best rates.

An excellent way to avoid late payments is to schedule automatic payments through your debit card, or checking or savings accounts. This way, you just set it and forget it!

Have a Plan for Your Rewards

Enjoying the rewards you earn may mean so much more to you when you have a short-term goal for how to use them. Perhaps the points are for airline miles or a vacation destination. Maybe you can use them toward a new wardrobe or the latest electronics. Keeping your eyes on the prize will prevent you from squandering your reward points on something forgettable or regrettable. Stay strong.

Don’t Bite Off More Than You Can Chew

Fight the temptation to get greedy. New credit cards with amazing reward offers are a dime a dozen. They’re like buses: another one will come along soon.

Think about where you may be in a few short months if you take on too many credit cards and too much debt. That won’t be worth any amount of reward points. Only use the number of cards that you can tolerate without sinking yourself.

Focus on Credit Card Fees

Credit card companies tend to be selective about what they promote to you. The reward offer may come with annual fees, transfer fees, and other charges. If your card requires an annual fee, ask yourself if acquiring it is worth the reward points.

Shop Around

Be extremely selective in choosing your rewards-based credit cards. The competition among credit card companies for your business is intensely competitive. Take your time and wait for the best offer.

Be Wary of No-Interest Credit Cards

It certainly sounds tempting to get a credit card that charges zero interest, and as long as you plan to pay off your balance in full every month, you’re already ahead.

However, this type of offer for a balance transfer credit card can bite you on the back end with extremely high-interest rates when the period expires or a “transfer charge” when transferring your high-interest credit cards.

Charges like that could equal the same amount of money you would be paying in the interest you thought you were passing by. Be sure you’re aware of the pros and cons of no-interest cards.

Read the Fine Print

Always read the fine print. That amazing offer may have some exclusions and exceptions and other unpleasant surprises. The credit card company may be looking for a certain kind of cardholder, too; after all, they’re in business to make money. You may not be the customer the credit card company is looking for; you may have too many credit cards, to begin with, or have a credit rating that may not be acceptable.

Find out which of the reward rules are subject to change, and if there are any expiration dates or winning rewards. If you are not great at reading the fine print, find somebody who is, or call the credit card customer service line and get your answers.

Protect of Your Credit Score

A credit score is an overview of your credit history and payback behavior. Making timely monthly payments and not defaulting on any of your credit cards or loans, and you’ll be on the right path. It also helps to keep your debt utilization ratio (how much your balance is versus your credit limit) low; no more than 30% at most.

Always consider your credit score before you consider credit card churning. Recognize that if you apply for new credit cards, a hard credit inquiry will be conducted. This will temporarily lower your credit score a bit.

Be Organized

When it comes to credit card churning, always stay organized and aware. Know exactly what the offer is, and what you need to do to get it. Know the deadline for spending the money that will make you eligible for the rewards.

Keep up on your progress toward your rewards goal; how much more do you have to spend and how much more time do you have before the offer expires? Again, avoid the pitfall of impulse spending just to get your reward.

When to Avoid Credit Card Churning

Think of credit card churning possibly as a privilege you have to earn rather than a right that doesn’t require prior deliberation. If you fall into any of these following categories, think twice before opening another credit card.

The biggest takeaway here is if you have credit card debt, it doesn’t make sense to continue to rack up debt in the name of credit card churning. Instead, it’s best to make a plan to get out of credit card debt ASAP.

If Your Credit is Bad

Credit card rewards are meant for customers with good-to-excellent credit, not for customers with late payments or delinquent accounts. Think of this as an opportunity to work up your credit score. Once you do, you may be eligible for some offers.

If You’re About to Take on More Debt

Are you about to sign a mortgage or are on the verge of a car or school loan? Applying for extra credit cards for the sake of their rewards will more than likely affect your credit score, as noted above. Each hard credit inquiry will lower your score temporarily. The constant nature of credit card churning can possibly stand in the way of your loan request or result in you being offered a higher interest rate than you would be with a higher score.

If you’re thinking about credit card churning, wait until after you secure that all-important loan or at least wait until your loan is approved, your payments are underway, and your monthly budget adjusts to the debt increases.

If You Don’t Use a Credit Card That Often

Not over-using a credit card shows reserve, discipline, and smarts. However, your lack of credit card usage may not make sense for a credit card churn. In some cases, credit cards will only grant you rewards if you spend a certain amount of money, which means increasing your spending (and your debt). You might feel “obligated” to use plastic more than you would otherwise.

If You’re Already Earning Rewards on Your Credit Cards

Some credit cards offer travel points and other rewards, without you having to get into a spending contest.

If you are pretty disciplined about your monthly spending and careful about avoiding too much debt, you’ll probably already steadily earn points and rewards on the credit cards you have. Call customer service and ask what you are eligible for.

If This is Your First Credit Card

Usually, getting your first credit card is a chance to prove that you are responsible with credit. You can use that first card to spend wisely and prudently and pay your balance in full each month. This can build your credit score and keep your finances on the straight and narrow.

If you get involved with credit card churning right off the bat, it could lead to trouble that you don’t need when you’re first establishing credit. Fixing credit once it is broken takes a long time and can stand in the way of the things you may want and need to buy. Wait until you’re further along in the credit game, and when you’re earning money to handle a bit more debt.

If You Tend to Overspend

Know yourself. If you’re the type who tends to overdo it when using plastic and can’t resist BOGO sales and the like, proceed with caution. Getting a large number of credit cards can leave you open to running up a tab on many of them and accruing too much debt. In other words, if you are in the habit of overspending, think twice.

Too Much Credit Card Debt?

Credit card churning can be more harmful than it appears on the surface. It can lead to confusion, missteps, and more unmanageable debt. If you do find yourself with considerable credit card debt, you might look into a balance transfer credit card, debt counseling, or repaying the debt with a lower-interest personal loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPL1223018

There are a variety of ways to borrow money when cash is needed. A few common places to start might be traditional banks or credit unions, or maybe a friend or family member who’s willing and able to consider lending.

If none of those options sound appealing, another option might be to borrow money online. Online lenders are becoming a more mainstream, acceptable alternative to traditional banks. What’s behind this increase in online lending, and what are some ways to borrow money online?

Why Have Online Lenders Grown in Popularity?

When lockdowns started in response to Covid-19 in 2020, people had to find different ways to do things they might have been accustomed to doing in person. Banking and other financial transactions were among those things. Brick-and-mortar banks limited access to branches or hours they were open, and retailers were hesitant to accept physical money. But transactions needed to keep happening, so consumers began moving online to complete them.

Familiarity, for Some Customers

A growing proportion of consumers is accustomed to using computers for many aspects of daily life, and making online financial transactions is no different. More people may be looking for things like:

•   Online applications.

•   Streamlined underwriting processes.

•   Automated funds transfers.

A Different Kind of Personal Service

Whereas in the past, personalization meant having a face-to-face relationship with a banker, personalization in today’s world can mean information that is relevant to an individual’s financial needs. This might look like things that can be more quickly accessed online, such as:

•   Personalized financial trends in a portfolio so they can make informed decisions about their financial goals.

•   Insights about their spending and saving so they can budget monthly income and expenses to meet their needs.

Time Saving

Customers may also want an experience that saves time. Automating tasks is a timesaver that can easily be done with online financial tools. In the case of online lending, the option to set up automatic bill payments and automate other tasks are likely to be considerations when a customer is choosing an online financial company.


💡 Quick Tip: Some lenders can release funds as quickly as the same day your loan is approved. SoFi personal loans offer same-day funding for qualified borrowers.

Where to Borrow Money Online

When looking for an online lender, you may want to consider the reputation of the lender, safety precautions the lender has in place, or types of loan products offered. In addition, each person should determine their individual comfort level of doing business with or without personal interaction.

Banks

A traditional bank may be a good option for someone who is more comfortable sharing private financial information at an in-person meeting or who doesn’t know how to borrow money online.

Applying for a loan through a traditional bank might include a visit to a brick-and-mortar branch of the bank along with online components, making this a hybrid approach. Since traditional banks have upkeep costs related to physical locations, their fees or interest rates might be higher than other lending options.

Recommended: How to Get Approved for a Personal Loan

Credit Unions

Similar to banks, credit unions generally have physical locations, but may also have online services. Financial services offered by credit unions are similar to banks and other financial institutions. There are usually specific requirements to be a member of a credit union, such as employment-related or residence in a particular region, or membership in a particular group. Credit unions may offer member benefits such as low fees, high savings rates, and low loan rates.

Peer-to-Peer Lending

Peer-to-Peer (P2P) lending is akin to matchmaking. A prospective borrower submits an application with an online marketplace, which matches the applicant with investors. Some online marketplaces for P2P lending are Prosper, Upstart, and Peerform. P2P lending may be a good place to look for an online loan for someone who isn’t able to qualify for a loan from a conventional lender, or if an alternative funding source is preferred.

Recommended: What Are Personal Loans Used For?

Online Lenders

The lack of brick-and-mortar branches might deter some customers but attract others. The deciding factor for some customers might be how well the process works for them, with less emphasis on having a face-to-face interaction.

Another factor in choosing online lending over in-person may be the speed of the process. Online loans and other financial transactions can sometimes be completed faster than going into the physical location of a traditional lender. This may be important for people looking to borrow money online instantly.

Options to Think Twice About

Along with favorable options for lending that are available, there are some that may not bring about the best financial outcomes.

Credit Cards

At its core, a credit card is a short-term loan — specifically, a line of credit. If the account balance is paid in full before each month’s due date, it’s a no-interest loan. Financial drawbacks arise, however, when that balance is not paid in full each month, carrying over a balance due.

Credit card interest rates tend to be high, and they accrue on any unpaid balance, compounding what is owed in the next billing cycle. The average credit card annual percentage rate (APR) is currently 24.45% for new credit card offers. Even for existing customers, the APR is high, at an average of 20.68% currently. It’s easy to see how this can lead to a cycle of debt. Paying off a loan over time is probably more efficiently done with other financial tools.

Recommended: Personal Loan Calculator

Predatory Lenders

When people look for fast cash, there is probably someone out there who is willing to lend it to them — at a cost. If it seems like there is no other choice available, some people may take on a loan that can be difficult to pay off. Repeat borrowing is common with these types of loans.

•   Payday loans are short-term loans, typically to be paid off in the borrower’s next payday. Interest rates are extremely high, often 400% or more.

•   Title loans or pawn loans use a borrower’s vehicle or other item of value as collateral. The APR on a title loan can be as much as 300%, and lenders often charge additional fees.

💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

The Takeaway

Choosing a lender depends on different factors for different people. Traditional lenders, online lenders, alternative lenders — each can be a valid choice for different financial needs. With online lenders becoming more commonplace, with established reputations in the financial marketplace, looking at options among them might be a good choice.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPL0623015

A Master of Business Administration (MBA) degree is a popular degree for professionals looking to change their career or industry, move up within their company, and increase their earning potential. An MBA not only opens doors but, during your course of study, you typically have access to a variety of experiential learning opportunities. This can give you a chance to “try on” different jobs and find the industry and role that suits you best.

Reputable business schools also generally have strong job placement rates in multiple industries and tend to attract a wide mix of corporate recruiters. Indeed, MBA graduates frequently enter fields that are dramatically different from the areas they worked in prior to business school.

Whether you’re thinking about going to business school, are in the process of getting your MBA, or already have an MBA, here’s a look at how you can use this degree as a tool for career reinvention.

Exploring Career Change Opportunities

Before pursuing an MBA or using your MBA to change careers, it’s important to fully think through why you want a career change and exactly what you want to do with your MBA degree. Here are some steps that can help you find a career that matches your interest, skills, and core values.


💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

Identifying Interests and Transferable Skills

When considering a career change, it’s often helpful to look at the areas where you’ve achieved success and satisfaction in the past, including both your academic and professional career. Looking at these highlights can provide clues into what interests you, what you’re good at, as well as how you might use those skills in a new field.

As you brainstorm, you may want to speak with friends, family members, and your professional network to bounce off ideas and get input on where they could envision you working and thriving. It might also be helpful to speak with a recruiter at a staffing agency or a professional career counselor.

Researching Industries and Job Markets

You might next create a list of careers you’d consider outside of your current industry, then research what job prospects look like in each area. You can use the U.S. Bureau of Labor Statistics employment projections to discover the fastest-growing jobs, along with sites that track average salaries and list top-paying jobs and companies by industry.

Recommended: Is Getting an MBA Worth It?

Exploring an MBA for a Career Change

An MBA is a comprehensive program that can give you an opportunity to update and enhance your existing knowledge and skills and put them into practice. It can also be ideal for exploring different avenues in business management to identify what works best for you.

While completing your degree, you’ll likely get exposed to a range of different business roles. You may discover that you have a passion for finance, strategy, or analysis, or maybe that you are interested in starting your own business as an entrepreneur.

MBA programs can also offer valuable networking opportunities, since they attract a wide variety of students who will likely go on to have business careers. Most B-schools also offer access to vast alumni networks and career fairs to offer additional chances to connect with potential employers and help build your professional network.

Recommended: Tips on How to Pay for MBA School

Choosing the Right MBA Program

To build a new career path with an MBA, it’s important to find an MBA program that fits your particular interests and goals. You might look for programs that offer specialized concentrations that match your desired career path. You can then take a close look at the curriculum and courses to see if they spark your interest.

Geographical location of the college is also something to consider, since it’s generally easier to explore jobs or pursue internships in the local area while completing your MBA.

It’s also a good idea to check the employment report of the previous years to know how many students have successfully managed career transitions and which companies tend to recruit from the school. Consider reaching out to alumni to obtain feedback about the program and their experiences.

Recommended: Examining the True Cost of An MBA Degree

Leveraging MBA Internships

An internship allows you to gain practical experience in a new field and see if it’s a good fit for you while also earning a stipend. Completing a summer or in-school internship during business school is important for all business school students, but it’s particularly key for those who are looking to make a significant career change.

Completing an internship in your target industry or function can also help connect you with the relevant contacts that can shape your next career and help you pursue and achieve your goals. For some career-switchers, a B-school internship can turn into a full-time job after graduation.

Tips for Using an MBA for a Career Change

Once you’ve been out in the work world, changing careers can feel like a mountain to climb, even if you have an additional degree. Here are some tips that can help you navigate a successful career transition.

Crafting a Compelling Career Change Story

Before you start writing your resume, cover letter, or LinkedIn profile, you’ll want to have a clear idea of what your career change story is. What are the main reasons why you decided to switch careers? What are the skills and qualities that you have developed or transferred from your previous roles? How do they relate to your target industry or position? What are the benefits or outcomes that you can deliver to your potential employer? Your core message should be concise, consistent, and relevant to your career goals.

Your career change story is likely not one-size-fits-all. You may want to tailor it to the specific needs, expectations, and values of your target employer. You can do this by researching the company, the industry, and the job description. Once you discover their main problems, goals, and priorities, you can tailor your story towards how you can help them address those issues or achieve those objectives.

Defining Your Personal Brand

The term “personal brand” refers to who you are professionally, separate from who you are as an employee of a certain company. If you can find a way to market who you are, then you can communicate why you’d be a strong worker for a different type of job and/or field.

It can be easier to pivot in your career if you’ve consistently marketed yourself and the skills you bring to the table. Here are some suggestions for building your personal brand:

•   Create a personal website or portfolio

•   Prepare an “elevator pitch” about what you do

•   Be active on social media platforms like LinkedIn, Twitter, or Facebook

•   Find ways to network

•   Revamp your resume to reflect your brand

Leveraging Your Degree

Once you have an MBA degree, it’s important to highlight your degree and MBA specialization on your resume so it’s easier for an employer to see where you’re most capable. You can also highlight how you have invested in your professional development, not just through your graduate degree but also through attending workshops, reading books, or joining networks.

If you are making a significant career switch, you may want to let potential employers know how you have applied or practiced what you have learned, such as working on projects, volunteering, or freelancing. Showing your learning and growth demonstrates your commitment, curiosity, and adaptability to the new career.


💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

Covering the Cost of Your Education

Pursuing an MBA program can be a valuable asset for those looking to change careers, but it comes with a significant price tag. The average cost of an MBA in the U.S. is $225,605,which is no small sum.

Fortunately, many business schools award merit-based fellowships, grants and scholarships to help students pay for school. This is funding you typically don’t need to pay back. And, generally, you don’t have to fill out a separate application to be considered for institutional merit aid. Often, you are automatically considered when you apply to a business school.

If you’re working, your employer may offer education benefits that partially or fully sponsor a graduate business degree. Consider reaching out to human resources to see what benefits your company offers and the requirements that come with them.

If you still have gaps in funding, you might consider taking out a federal or private student loan. The federal government offers two types of loans for graduate school students: Unsubsidized Direct Loans and graduate PLUS Loans. You generally want to max out Unsubsidized Direct Loans before turning to graduate PLUS loans, which come with higher interest rates. You might also explore getting an MBA student loan from a private lender. Just remember that, even if you find a private student loan with a lower rate than a grad PLUS Loan, it probably won’t include the same benefits and protections that federal student loans provide.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.