Credit Card Churning

Dave explains what it means to churn your credit card balances, and why Ethan shouldn't bother with it.

QUESTION: Ethan in New York wants to know what Dave thinks about credit card churning. Dave's opinion about this is pretty much the same as with anything else involving credit cards.

Dave's ANSWER: The concept is to run up the credit card balance as high as you can and flip it from card to card to get the points off the cards, whether it's airline miles or whatever.

I've met thousands of millionaires, and I've never met one who said he or she made their money credit card churning or that airline miles put them over the top. You are barking up the wrong tree here; there's no money in this. It's a bunch of crap where people are just spinning their wheels. You might make a little bit on it if everything goes just right, but there are a lot of ways that it could go really wrong.

Here's an idea: With all the energy that you spend on that and the risk you're taking, you could have actually gone and made some money. You want to find out what people who have money do, and do what they're doing. They live on less than they make, they work hard and get better and better at their chosen fields so they make more money. They live on a detailed plan, they save and invest. They stay out of debt and they don't look for some kind of a gimmick or get-rich-quick scheme. These are the common traits of people who have money.

Now, study poor people. What do they do? They do title pawn, lottery tickets, spend everything on Friday night and are broke by Monday morning. Figure out what poor people are doing and do that if you want to be poor, and figure out what rich people are doing and do that if you want to be rich. If you want to be skinny, study skinny people. If you want to have a great marriage, study people who have been married for 30 or 40 years.

My point is for you to mimic success. I look at the credit card churning thing like extreme couponing. If you want to go through all that trouble for that small an amount of money, you could. But it seems like a dumb, dumb idea. I would tell you to stay completely away from it.