Credit Card Churning

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.

"An 11-day trip including airfare and hotel stays. We would have had to save up for years and years."

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 rewards 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," said Sean McQuay, Nerdwallet.com.

Credit card experts said banks offer these bonuses to bring in new customers and they don't want you to cancel; now some 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, will likely encounter difficulties."

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

Financial experts say banks are also hoping to cut down on what's known as manufactured spending. For example: buying gift cards with your bonus credit card 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 'cause they're trying to stop that activity from happening," said McQuay.

Manufactured spending also includes when you earn points by paying a friend via a payment app like Venmo, 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?'"

Credit card companies can invalidate any bonus points earned if they think you're trying to game the system. There are also potential hits to your credit; each time you open a card, there's a credit check, which can lead to a drop in your score.