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Banks are cracking down on 'credit card churning'

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Retailers might have chip-enabled machines, but if they have not been certified, you will have to swipe your card. (Source: tuthelens via 123RF) Retailers might have chip-enabled machines, but if they have not been certified, you will have to swipe your card. (Source: tuthelens via 123RF)
(3 ON YOUR SIDE) -

Have you ever opened a credit card just to take advantage of a special offer, and then never used the card?  Banks don't like that.

Stephanie Miley always wanted to go to Hawaii. but she never had the cash. So, she started signing up for credit cards to earn the trip for free.

“For an 11-day trip including airfare and hotel stays, we would have had to save up for years and years," she said.

Miley stacked up the cards earning free flights off one, a free hotel off another. It's a practice known in the banking world as "churning."

Consumers apply for credit cards specifically for large sign-up bonuses like cash, points or miles. Once consumers nab the bonus, it's on to the next card. “Credit card churning can give thousands of points, thousands of dollars in value. They can help you travel for free."

Sean Mcquay of Nerd Wallet says banks offer these bonuses to bring in new customers,  and they don't want you to cancel or "churn."

Now some places are cracking down.

Citibank gives bonus points only to consumers who haven't opened or closed the same card within the last 24 months.

American Express restricts even further, allowing only one bonus per product per lifetime.

And Chase reps tell us "customers who open multiple card applications in a short period of time, regardless of issuer, will likely encounter difficulties."

"They're struggling to find ways to clamp down on churning without really turning off consumers."

Mcquay says banks are also hoping to cut down on what's known as "manufactured spending." 

For example: buying gift cards with your bonus credit cards just to pay off the bill with that same money.

"Banks are quickly clamping down on these. now at many checkouts, you can't buy gift cards with credit cards because they're trying to stop that activity from happening."

Manufactured spending also includes when you earn points by paying a friend via a payment app like Vermo, Paypal or Square.

Then, you have your friend pay you right back.

As for Miley, she says she's fine playing by the rules ¦but she plans to continue flying high with her travel bonuses.

"I think part of the fun is the challenge in it. Finding that deal, finding that great card, and then saying, 'yeah, we got this entire trip on bonus miles.' How great is that?'"

Copyright 2017 KPHO/KTVK (KPHO Broadcasting Corporation). All rights reserved.


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Gary HarperGary Harper is the senior consumer and investigative reporter for 3 On Your Side at KTVK-TV.

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Gary Harper
3 On Your Side

With more than 20 years of television experience, Gary has established himself as a leader in the industry when it comes to assisting viewers and resolving their consumer-related issues. His passion and enthusiasm have helped him earn an Emmy for Best Consumer Reporter from the National Academy of Television Arts and Sciences. He’s also garnered several Emmy nominations

He has negotiated resolutions with companies of all sizes, including some of the biggest corporations in the nation.

Gary has successfully recouped more than $1 million for viewers around the state, making 3 On Your Side one of the most popular segments on KTVK and the station's Web site.

He's best known for investigating and confronting unscrupulous contractors. In fact, many of his news reports have led to police investigations and jail time for those who were caught. Viewers, as well as the companies and people he investigates, regard him as consistently being thorough and fair.

Gary has been with KTVK-TV since 1997. Prior to his arrival in Phoenix, he worked for WZZM-TV in Grand Rapids, Michigan, where he was as an anchor and reporter.

Gary is from Chicago, but launched his television career in Lubbock, Texas, after earning a broadcast journalism degree from Texas Tech University. Following his graduation, he was quickly hired by KLBK-TV in Lubbock, where he enterprised and broke numerous exclusive reports. His aggressive reporting in Texas helped garner him Best Reporter by the Associated Press.

Gary has been married since 1994 and is the proud father of two sons. When he's not helping viewers, Gary is busy catching up on his favorite college and professional football teams as well as cheering on his beloved Texas Tech Red Raiders.

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