Are Credit Card Rewards Really Worth It? My Thoughts on SUBs and Cash Back

"A Reddit poster asked this question recently. The Redditor was doing something called "SUB-churning" or opening up new credit cards to try to earn the signup bonus available to new cardmembers for spending a certain amount within a set period of time. The poster was also trying to decide whether it made sense to just get a flat 2% cash back or to sign up for cards that offered bonus cash back on different kinds of spending, like 5% back on gas or groceries."

"First things first: Signing up for a bunch of different credit cards to get a bonus for new cardmembers usually is not worth the effort for a few different reasons. One issue is that credit card companies usually don't like this. Eventually, they will stop approving you for new cards if you're opening too many over time. Some card companies even have specific rules, like limiting you to opening five total cards within a two-year period. Opening up cards too often can also damage your credit score by lowering your average age of credit and resulting in too many inquiries on your credit record. When you go to borrow for something big, like a house or a car, this can come back and bite you, leaving you paying a higher interest rate for a much larger loan. Plus, if you have too many cards, you increase the chances of missing a payment, which can do even more serious damage to your score."

SUB-churning means opening new credit cards to capture cardmember signup bonuses by meeting initial spending requirements. Some cardholders consider whether to accept rotating/category bonus rewards or opt for a simple flat 2% cash-back card. Credit card issuers may restrict approvals for frequent applicants and impose specific limits, such as a cap on cards opened within two years. Opening many cards can lower the average age of accounts and generate multiple credit inquiries, harming credit scores and increasing borrowing costs for large loans. A larger card portfolio also raises the chance of missed payments and more severe credit damage.

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