Credit card churning is the act of maximizing the credit card’s generous benefits and then canceling the card after all the benefits have been extracted. For instance, if a travel card offers bonus miles, a credit card churner would spend enough to get the rewards and cancel the card. It is not illegal and there are people who research credit cards and various deals to accumulated unbelievable miles and other perks. Although I admire the ingenuity of credit card churners, there are some downsides.

First, it is not free. The credit card churners obtain these benefits in expense of the other card holders. The credit card companies are not stupid and they will make up the loss with other credit card holders.

Second, too many credit card churners will eventually force credit cards to cancel the good rewards hurting all consumers. In essence, the credit cards will no longer offer juicy deals.

Third, credit card churning can be risky because it can really affect your credit score. Also, given all the security hacks, having more credit cards, will increase the risk of your private information being hacked. In addition, one wrong move, like forgetting to close off a credit card or miscalculating the amount that you have to spend to get the reward can cause financial damage.

So should credit card churning be banned or be ashamed? Not really. Credit card churners are exploiting an inefficiency and teaching the credit cards how to come up with better calibrated reward systems. However, overexploitation of credit card rewards will break the reward system and as consumers we don’t want that. Hence, if you want to take advantage of good credit card deals, please go ahead. But just don’t over do it.