7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024

Post Published November 1, 2024

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7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - TD Bank's 90-Day Restriction Rule Blocks Multiple Card Applications





TD Bank has implemented a new rule that restricts individuals from applying for multiple credit cards within a 90-day period. This policy change is a significant obstacle for those who aim to maximize their rewards through the practice of credit card churning. This move reflects a growing trend among Canadian banks to tighten their credit card application policies. They are actively trying to discourage excessive applications, likely because it puts strain on their systems or potentially leads to increased credit risk.

For those looking to accumulate travel points or other rewards through multiple credit card applications, it's vital to acknowledge these restrictions. Ignoring the 90-day rule will most certainly lead to rejected applications and potentially even negatively impact your credit score. It seems these changes are driven by banks' efforts to control how people utilize their programs and maximize their points. While credit card churning has been a popular tactic to gather travel benefits, it may require a reassessment in the current landscape. People who wish to continue employing this strategy will need to adjust to these limitations and find creative ways to continue building and leveraging their points and miles.



TD Bank's 90-day restriction on credit card applications introduces a new dynamic for those seeking to strategically maximize rewards programs. After you apply, you cannot submit another application for 90 days. This has reshaped the tactics used by individuals who frequently acquire new cards to take advantage of welcome bonuses.

The bank's motivation is likely multifaceted. They might be attempting to reduce the risk of fraud and identity theft by monitoring application patterns. A rapid influx of applications from one individual raises red flags, so limiting the frequency helps safeguard the bank.

This rule also, perhaps inadvertently, encourages consumers to deeply familiarize themselves with their existing cards. Instead of quickly churning through new cards for bonuses, they're pushed towards a more thorough understanding of the features and benefits already available.

However, there's a possible downside related to a person's credit score. Frequent credit checks can, in a marginal way, impact credit worthiness. Therefore, the 90-day window can be seen as a measure to help manage potential, but not necessarily major, negative impacts on a credit history.

Many credit card users look to earn the points offered by a new card welcome bonus, but TD Bank's rule restricts the ease of this strategy. Their ability to amass a significant number of points might be significantly affected by this restriction.

If enough people are discouraged by this policy, other banks might start to pick up more customers. This competition could lead to modifications in TD Bank's or other banks' reward offerings, potentially with enhanced rewards programs to regain their customer base.

A noteworthy percentage of Canadian credit card holders are actively involved in using multiple cards for rewards, suggesting that TD Bank's policy will have a significant impact on this segment of the market.

Card churning, a popular tactic for many card users, involved applying for a string of credit cards to optimize rewards. TD's rule effectively forces a change in behavior. Users now need to plan their application timelines more precisely, requiring a more strategic approach.


Financial institutions are now leveraging data analytics on a wide scale, which impacts their decisions regarding credit card practices. Banks are tracking consumer trends to identify risks and create new products and services. Banks employ complex algorithms to understand behaviors of credit card users which provide insights into how credit card rewards programs will develop.


This stricter approach from TD Bank reflects a larger trend in the financial sector. We're observing an increasing emphasis on data analysis for risk management and customer management, driving financial institutions to adjust their offerings and policies accordingly.

What else is in this post?

  1. 7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - TD Bank's 90-Day Restriction Rule Blocks Multiple Card Applications
  2. 7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - AMEX Canada's New Income Verification Process Slows Down Applications
  3. 7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - RBC's Stricter Credit Score Requirements - 720+ Score Needed since Oct 2024
  4. 7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - CIBC's Reduced Welcome Bonus for Previous Cardholders Policy
  5. 7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - BMO's New Anti-Churning Algorithm Tracks Application Patterns
  6. 7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - Scotia Bank's 24-Month Cooling Period Between Same Card Applications
  7. 7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - MBNA's Recent Tightening of Minimum Spending Requirements from $1,000 to $3,000

7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - AMEX Canada's New Income Verification Process Slows Down Applications





7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024

American Express in Canada has recently implemented a stricter income verification process for credit card applications, which has unfortunately slowed things down considerably. Applicants are now frequently asked to provide detailed proof of income, such as two years of T4 tax slips or three months of bank statements. This new requirement is now standard practice, even for cards that previously didn't require income verification.

While American Express likely wants to improve financial security and potentially combat money laundering, these changes can make it harder for people with lower incomes or those who don't have readily available documentation to get approved for a new card. For folks interested in earning rewards points through credit card churning, this new hurdle could really throw a wrench in their plans. They'll need to be more careful about which cards they apply for and factor this delay into their strategy. It's a change that likely will necessitate adjustments in how people approach credit card applications and points accumulation.

American Express (AMEX) in Canada has introduced a new income verification process that's creating a bottleneck in credit card applications. Applicants now often need to provide solid proof of income, such as a couple of years of tax forms or a few months of bank statements. This requirement is now standard practice, even for cards that previously didn't require income verification.

It seems this change is partly a response to growing concerns around financial security and the potential for money laundering. While this might help maintain the integrity of the financial system, it undeniably makes getting a new card more complex. Applicants with lower or unverifiable income are more likely to be rejected, potentially shifting the credit card landscape towards those with stronger financial profiles.

Credit card churning, where individuals regularly acquire and close cards to capitalize on welcome bonuses, faces an added layer of complexity due to these delays. One of the downsides of churning is accumulating annual fees that can outweigh the benefits, and this new process amplifies the importance of careful consideration when choosing a card. Those focused on maximizing their travel rewards through credit cards need to understand their limits and application frequency to avoid red flags with the issuer.

AMEX tends to prefer those with good to excellent credit scores (generally 700 and above) and a stable income, and these new processes make that preference even more apparent. Despite this and their higher fees, some AMEX cards still entice consumers with their cash back programs and insurance perks.

The longer approval times with this new process could mean some people miss out on time-sensitive welcome offers for travel rewards, impacting their ability to score affordable flights or hotel stays. It might also drive some consumers towards other credit card rewards programs that are more readily accessible. These delays could introduce a new level of friction in the credit card landscape. The longer a person is stuck in the verification process without immediate access to a new card might impact their credit score due to multiple credit checks.

While this change might initially seem like a hassle, it does make a strong case for customers to become more savvy about their credit. They need to understand their credit score, their spending habits and the implications of their applications to reap the rewards in the long term.

Looking forward, we might see the application process become more sophisticated. For example, the industry may embrace innovations like artificial intelligence and machine learning to streamline income checks and accelerate application approvals. This could ultimately lead to a smoother customer experience and faster access to rewards, impacting the overall airline, hospitality and travel markets. Longer approval processes could, in turn, impact the broader economy if fewer consumers feel it's worth it to apply, which could potentially lead to less travel related spending in the long run.



7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - RBC's Stricter Credit Score Requirements - 720+ Score Needed since Oct 2024





RBC has decided to raise the bar for credit card approvals, requiring a minimum credit score of 720 starting in October 2024. This move suggests a wider trend among Canadian financial institutions to tighten their lending practices, possibly due to economic factors or a desire to manage risk more effectively. For individuals who are keen on racking up travel rewards through credit card applications, this shift presents a challenge. Many of the most rewarding cards, often featuring attractive sign-up bonuses and ongoing travel perks, typically favor applicants with good credit. If your credit score isn't at least 720, it might make it significantly harder to get approved for those cards, potentially limiting access to some lucrative travel options. It's a good idea for anyone who is actively trying to gather rewards through credit cards to understand their credit profile and factor this new requirement into their plans going forward. Simply put, if you are planning to apply for a new RBC card and your credit score is under 720, think again.

Royal Bank of Canada (RBC) has decided to raise the bar for credit card approvals, now requiring a minimum credit score of 720, effective October 2024. This shift is significant, as a 720 score falls within the "good" credit range, but it's worth noting that both VantageScore and FICO have slightly lower thresholds for good credit (661 and 670, respectively).

This move by RBC is not entirely unexpected. We've seen other lenders become more stringent in their credit assessments, reflecting a broader trend of tightening lending standards. It's possible they are reacting to economic conditions or perhaps aiming to manage risk in their portfolio more effectively. This shift in credit practices could have a cascading impact on travel rewards strategies.

Many consumers who rely on card churning, the practice of opening and closing credit cards to earn bonus rewards, may find it challenging to achieve the needed 720 credit score, potentially impacting their ability to snag cheap flights or maximize travel points. Furthermore, a higher credit score is often associated with favorable loan terms, such as for mortgages.

Interestingly, research suggests that individuals with higher credit scores often have better spending habits, with lower default rates. This association may encourage more lenders to prioritize applicants with a stronger credit profile, and thus a higher minimum credit score.

It's also likely that some consumers might change their spending behavior in response to higher credit score requirements. If individuals find it difficult to obtain the credit they need for everyday expenses, or for travel rewards, it's possible we could see changes in travel-related spending and a drop in travel.

This stricter credit environment might push credit card companies to innovate. Perhaps we'll see the rise of new products specifically designed for travelers with lower credit scores who still want travel rewards.

Banks like RBC that implement higher credit score requirements might find that consumers seek out institutions with more flexible requirements. Competition among banks could, in turn, lead to innovative and more attractive travel-related reward programs.

Changes like these also might compel a re-evaluation of current loyalty programs by airlines and hotels. It's possible that reward structures might need to be adapted to the new reality of consumers facing tighter credit restrictions. Travel brands might find themselves adjusting their approaches to retain customers and attract new ones.

This move by RBC is a compelling example of how financial institutions are adapting to changing economic conditions. It highlights a trend toward greater emphasis on risk management and data analysis in credit card approval processes. The impact on the broader travel market is worth watching and we could potentially witness some creative developments in the sector as a response.



7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - CIBC's Reduced Welcome Bonus for Previous Cardholders Policy





CIBC has a policy that restricts the welcome bonuses offered to individuals who have previously held one of their credit cards. This means that if you've had a CIBC card before and apply for a new one, you might not get the same generous welcome bonus as someone applying for their first CIBC card. These bonuses often include a large number of points or cash back, which can be very useful for people who frequently use credit cards to accumulate points for travel, especially on flights or hotel stays. This practice of card churning, where people strategically apply for and close cards to take advantage of these welcome offers, is being impacted by this change. This could impact a person's strategy, if they are trying to leverage these welcome offers. With increasing competition among financial institutions in late 2024, credit card users need to be aware of these changes and plan their card applications carefully, keeping track of past CIBC card holdings to avoid receiving reduced welcome offers and potentially losing out on lucrative rewards for their travel plans.

CIBC has quietly introduced a policy that reduces welcome bonuses for individuals who've previously held a CIBC credit card. This can be a surprise to some, as many are unaware that their history with CIBC affects their eligibility for lucrative offers on new cards. While credit card churning might seem like a straightforward way to rack up points, this policy reveals how previous cardholder status can significantly diminish those incentives. It can be frustrating for customers who've been loyal to CIBC, hoping to maximize their point accrual.

This reduced bonus practice goes beyond simply preventing people who churn through multiple cards from different banks. CIBC is also implementing this strategy to discourage those who switch frequently between its own credit cards. This reveals a broader trend within the banking sector, where banks are attempting to foster loyalty by disincentivizing constant card switching and benefit maximizing.

This isn't an isolated phenomenon. Many card issuers are implementing similar practices to curb what they perceive as gaming the system. These policies add complexity to the already detailed planning involved for those who employ credit card churning strategies. These reduced bonuses are another sign of how banks are using data and analytics to create strategies that discourage churn while aiming to encourage more responsible credit card use.

While CIBC's reduced welcome bonuses might deter churning, it could also result in customers finding new ways to maximize their rewards. They might shift to leveraging partnerships with airlines or hotels for higher rewards. It could potentially lead to entirely new consumer behaviors around travel spending.

However, these policies could lead to diminished long-term customer loyalty. If consumers feel that the most attractive offers are no longer available to them, they may shift their banking to institutions offering more compelling reward programs for new cardholders.

With this new reality, it's imperative for consumers to develop a more thoughtful approach to credit card applications. Instead of solely chasing welcome bonuses, individuals might benefit from a longer-term strategy.

CIBC's new approach could change the mental calculations that frequent churners perform when evaluating their travel budget. As bonuses decrease, the perceived return on investment from their travel-related spending might diminish, affecting future decisions.

This dynamic illustrates a wider shift in the financial sector. Banks are increasingly sophisticated in how they track customer behavior, leading to revised credit strategies. This trend has the potential to influence travel demand in the future, as consumers adapt their reward-earning and redemption strategies. It will be interesting to see how this all plays out.



7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - BMO's New Anti-Churning Algorithm Tracks Application Patterns





BMO has implemented a new algorithm specifically aimed at discouraging credit card churning. This algorithm monitors how people apply for credit cards and can identify patterns often seen in those who aggressively apply for cards to get sign-up bonuses and then quickly cancel them to avoid annual fees. Essentially, the algorithm is meant to spot what is perceived as 'excessive' credit card application behavior.

Credit card issuers, including BMO, are becoming more cautious about the practice of churning and are actively trying to reduce the risks associated with it. This heightened scrutiny can have an impact on approval rates for new applications, as some issuers might be less inclined to issue cards to individuals they believe are engaging in aggressive churning strategies.

As the tactics used by credit card issuers are shifting, people who enjoy using credit cards for travel rewards need to be more aware of these changes and how they might impact their strategies. It's likely a new dynamic for many who were able to get the maximum out of these programs before. It might lead to more restrictive credit card policies. It remains to be seen how these changes affect the landscape of travel rewards programs.

BMO has unveiled a new anti-churning algorithm that uses machine learning to monitor how people apply for credit cards. The algorithm's goal is to identify patterns suggesting credit card churning, which involves rapidly applying for new cards, mainly to snag welcome bonuses and then canceling them shortly after to sidestep annual fees. It's a clever way to combat the behavior of some people who view credit cards as a tool to maximize rewards, often neglecting the long-term implications of their activities.

This shift is representative of how banks are increasingly utilizing advanced data analysis to manage risks. Banks like BMO are using these algorithms to reduce the probability of fraudulent applications and to improve the trustworthiness of the approval process, potentially having a noticeable influence on the travel rewards landscape.

Interestingly, this approach also allows BMO to learn how people utilize credit cards. By tracking the application frequency, the bank can tweak their marketing efforts and rewards programs to better serve their customers and foster long-term loyalty. They can even focus on specific regions where card application trends are most prominent, which might impact travel and tourism spending in those places.

The algorithm goes beyond simply identifying churners. It assesses the total rewards earned over time, which impacts the credit limits and interest rates a person receives. This nuanced approach promotes responsible credit usage, as customers with a healthier credit profile reap the most rewards.

The beauty of this approach is the algorithm's capacity for adaptation. As credit card practices evolve, the algorithm adapts to changes in credit market conditions, ensuring that BMO stays on top of managing risk and maintaining a balance in its credit offerings. It's also worth considering that this level of scrutiny of customer behavior could lead to closer collaboration between BMO and travel partners like airlines and hotels. Understanding application trends can help align rewards with what travelers desire, potentially creating new kinds of rewards to meet those needs.

Moreover, the algorithm is designed to differentiate between the actions of individuals who are truly changing their credit needs and those who are frequently churning. This distinction could lead to BMO refining its rewards structure, prioritizing customers with a longer-term relationship with the bank and ensuring they still receive compelling offers.

While a more data-driven process might seem like it slows things down, the potential exists to make applications move faster. Automated risk assessment through analyzing patterns could lead to a swifter turnaround for credit card applicants, making the process more pleasant for those applying.

It's important to remember that this trend is likely to influence the types of credit card products we see offered. With a deeper understanding of how people use credit, BMO and other financial institutions might introduce unique products for different types of customers, further affecting how people think about travel rewards programs and, in turn, the travel industry. It's exciting to imagine how the travel industry might be influenced by more data-driven credit card practices.



7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - Scotia Bank's 24-Month Cooling Period Between Same Card Applications





Scotia Bank's decision to implement a 24-month "cooling off" period between applications for the same credit card has created a new hurdle for Canadian points collectors. This change, aimed at curbing the popular practice of credit card churning, can significantly impact a traveler's ability to maximize rewards like cheap flights or hotel stays. Churning, which relies on quickly accumulating welcome bonuses from various cards, becomes less efficient with this restriction in place.

While the bank's motives are likely focused on reducing risk and maintaining a healthy credit environment, it's certainly an obstacle for those accustomed to more flexible application processes. The 24-month waiting period forces individuals to strategize their card applications more meticulously, carefully considering the impact on their ability to earn points and access rewards quickly. They might need to adjust their expectations regarding the total number of rewards they can amass.

This change isn't unique to Scotia Bank; we've seen a similar pattern emerging across Canada's banking sector as institutions refine their policies regarding credit card applications. This shift emphasizes the importance of understanding individual bank rules when aiming for a specific travel rewards goal. Overall, the 24-month cooling-off period demonstrates a greater emphasis on managing risk within the credit card space, influencing the practices of both banks and their customers.

Scotia Bank's 24-month cooling-off period for reapplying for the same credit card is a notable feature in the Canadian credit card landscape. This extended timeframe, one of the longest among Canadian banks, suggests a deliberate effort to discourage frequent credit card applications, a tactic often employed by points collectors to maximize welcome bonuses. While this might limit opportunities for some consumers, it also introduces a level of stability and potentially encourages more thoughtful engagement with the credit card product ecosystem.

It's fascinating to ponder how a 24-month delay between applications influences consumer behaviour. Frequent applications tend to increase the number of "hard inquiries" on a credit report, potentially having a small, but measurable, impact on an individual's credit score. Scotia Bank's approach may help to stabilize the number of credit checks per person, potentially contributing to healthier credit scores. By forcing a pause, consumers are encouraged to focus on leveraging the existing card's features and benefits. Instead of a rush for quick gains with frequent applications, this period can lead individuals to engage with the intricacies of their chosen credit card and its rewards programs.

The idea of 'churning' — a strategy some use to quickly open and close multiple cards to capture welcome bonuses — is directly impacted by this cooling-off period. It becomes far more challenging to rapidly collect these rewards and forces people to adopt a more sustainable strategy. From a fraud prevention perspective, these policies seem prudent. Banks are actively working to mitigate risks associated with large numbers of applications, as excessive activity can often be a red flag for malicious actors seeking to exploit welcome offers or engage in illegal activity.

However, these longer waiting periods might unintentionally benefit competitors in the credit card sector. If enough points collectors are discouraged, other financial institutions may find it an opportunity to introduce attractive products and even more compelling rewards to attract those users away from Scotia Bank. It's also plausible that Scotia Bank is hoping that by making customers wait, it can create a stronger connection between them and the institution, fostering a sense of loyalty.

The concept of this cooling period could change the way Scotia Bank analyzes customer behaviour. Having a detailed history of application timelines and related activity can be extremely helpful in making better decisions about credit product offerings. This increased data visibility can lead to more tailored offerings for specific customer segments, which could be beneficial both for the bank and its customers.


This extended cooling-off period can likely change spending patterns. For instance, people may need to look at existing rewards and loyalty programs with airline and hotel partners more carefully. They might not have access to a particular travel reward at the moment and may be forced to rely on existing rewards. The human aspect of the decision is also relevant. There might be a psychological barrier for some customers to continue their relationship with Scotia Bank. This barrier might encourage some customers to start investigating credit card programs at competing institutions.

The Canadian banking industry is in constant flux, and Scotia Bank's cooling-off period highlights the shifting landscape. How this policy will evolve over the coming years and whether it encourages more responsible consumer behavior will be interesting to observe.



7 Common Credit Card Churning Pitfalls for Canadian Points Collectors in Late 2024 - MBNA's Recent Tightening of Minimum Spending Requirements from $1,000 to $3,000





MBNA has recently made a change that could impact those who aim to gather rewards points through credit cards. They've bumped up the minimum spending requirement on new credit cards from $1,000 to $3,000. This means that cardholders need to spend $3,000 within the first three months to earn any welcome bonus points.

This change is significant for those who utilize credit card churning, a practice of opening and closing cards to maximize rewards. It creates a higher hurdle for those who relied on the previous, lower spending requirement to maximize their travel points quickly. With this stricter requirement, card users might need to get more creative with their spending to hit the mark. One could consider pooling spending with friends or family to satisfy this higher minimum.

It's becoming apparent that higher spending limits are often linked to more attractive welcome offers. This is part of a broader pattern among Canadian banks that are implementing more demanding rules in their rewards programs.

It's a changing landscape for those who gather points to travel cheaply. They'll have to be more mindful of the rules and plan their credit card applications and related spending accordingly.

MBNA has recently raised the minimum spending requirement on some of their credit cards from $1,000 to $3,000 to unlock welcome bonuses. This change could noticeably alter the tactics used by those who frequently open and close credit cards to maximize rewards programs.

It's not surprising that many frequent travelers and credit card users who use this strategy may find this adjustment problematic. Meeting a significantly higher spending threshold to earn rewards could potentially force many to shift their spending patterns. Some may find it less appealing to acquire new cards if they are not comfortable with this level of spending. It's plausible that this decision will have an impact on how people choose to travel or what types of travel reward programs they participate in.

Interestingly, this shift might lead to a greater focus on spending on bigger-ticket items to maximize rewards and meet those thresholds. Those looking for inexpensive flights or discounted hotel stays could be forced to accumulate even more points than before, potentially requiring even greater spending than the current $3,000 minimum. The entire landscape of rewards programs could shift as a result, with airlines and travel partners needing to adapt their programs to accommodate these higher minimum spending requirements.

Furthermore, it's worth considering how this change could impact an individual's credit score. A sudden increase in credit utilization could potentially affect credit worthiness if a significant portion of a person's credit limit is used. This is relevant because banks actively monitor credit utilization when deciding whether to extend further credit or provide favorable interest rates.

These types of changes by banks and card issuers could also lead to a reassessment of travel destinations. If consumers find it more challenging to achieve their points targets, they might shift to locations with lower costs or places offering attractive promotional travel deals. Airlines and hotels might recognize these market pressures and offer more compelling deals to offset the higher requirements set by card issuers.

It's reasonable to speculate how these trends will reshape consumer behavior. If enough people are discouraged from card churning, or find it too difficult to accumulate points due to high minimum spending, there may be a decrease in overall credit card related travel spending. The airline and hotel industries, always watching for spending patterns, would certainly observe these changes and may respond with promotional activities or new products that offset some of the challenges.

In the future, this new reality could push MBNA and other banks to partner with retailers and service providers, creating opportunities to earn bonuses with purchases in specific categories. This could reshape consumer behavior and spending patterns. It remains to be seen whether this will encourage more long-term engagement by cardholders or if people will simply shift their spending preferences to other categories. One potential challenge with this shift could be the impact on annual fees. Cards with higher rewards often come with corresponding fees, so consumers would need to carefully consider those additional charges relative to the bonus benefits they expect.

If consumers feel that the rewards and ease of earning points are diminished with higher spending thresholds, it's likely that customer loyalty will decline. This could drive consumers toward other financial products or services that provide more manageable earning paths. It's an evolving landscape where banks are seeking to minimize their risks while consumers try to maximize rewards, an equation that might lead to interesting dynamics in the years ahead.


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