Credit Card Rewards Churning: What You Need To Know

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Many banks offer very attractive rewards for new customers who sign up for their credit cards.

Apple iPad, Nintendo Switch, Dyson appliances, and cash of up to S$500 are some examples of credit card signup rewards.

With gifts as attractive as these, many people are enticed to engage in what’s known as “rewards churning”.

This refers to signing up for a credit card to receive the signup reward, cancelling the card after receiving the gift, and then repeating the process.

While this may seem lucrative, there are some points – including a very important one – that you need to know before trying to do this.

In this post, I’ll be talking about the rewards clawback clause, new-to-bank status, and other things to take note of.

1: Clawback Clause

The clawback clause is the most important thing to take note of when participating in a signup promotion, especially if you don’t intend to keep the product.

A clawback clause allows the company to retract the gift or the monetary value of the gift from a customer if the customer breaks this clause.

Usually, this clause involves the customer keeping the product that they signed up for for a certain period.

In the example of credit card sign-up rewards, this means that you will have to keep the card active throughout the specified duration.

For most promotions, this period is 12 months but this can vary between promotions as UOB uses 9 months.

If you cancel the credit card that you signed up for when the clawback clause is active, then the bank has a legal right to exercise the clawback clause.

If that happens, you’ll lose the gift that you signed up for, which you wouldn’t want since that was the whole reason you signed up for the credit card in the first place.

Thankfully, not every signup promotion includes a clawback clause, ie it’s not a standard clause that is always included.

To determine whether a promotion has a clawback clause, you’ll need to look through the terms & conditions (T&Cs).

So far, the signup promotions that I have seen include a clawback clause:

• Citibank credit cards via SingSaver (T&Cs)
• HSBC credit cards via HSBC (T&Cs)
• OCBC credit cards via OCBC (T&Cs)
• UOB credit cards via UOB (T&Cs)
• CIMB credit cards via CIMB (T&Cs)

Here are some examples of what the clawback clause might look like in the T&Cs.

Citibank (via SingSaver):

7. … Successful Applicants must ensure that the Eligible Card is valid and in good standing (not cancelled or blocked) at the point of fulfilment of the Reward and must retain the Eligible Card and not cancel it for a period of 12 months from the date of approval (the “Retention Period”). SingSaver reserves the right to retract, seek the return of and/or otherwise cancel the Reward if a Successful Applicant cancels the Eligible Card before the expiry of the Retention Period.

Source: SingSaver Rewards Promotion Terms and Conditions

HSBC (via HSBC website):

18. … In the event that the Card is voluntarily or involuntarily closed, terminated or suspended for any reasons whatsoever before a Gift is accorded and/or credited to the Qualified Cardholder Cardholder or the Qualified Cardholder voluntarily cancels or terminates the card within 12 months from the card opened date, HSBC reserves the right to forfeit the Gift at its sole discretion.

Source: Terms and Conditions for the HSBC Credit Card Sign up Promotion for 1 September 2023 to 30 June 2024

OCBC (via OCBC website):

18. OCBC Bank reserves the right to claw-back and deduct from any of the Eligible Cardmember’s accounts with OCBC Bank the equivalent value of the Cashback if the Eligible Cardmember closes his/her Eligible Card account during, or within twelve (12) months from the end of, the Promotion Period.

Source: Terms & Conditions Governing the OCBC Credit Card Sign-Up Promotion (Online Exclusive) Promotion 1 December 2023 to 31 January 2024 (the “Promotion”)

If you see any phrase that looks like this, it means that the promotion has a clawback clause, which you need to take note of if you intend to cancel the credit card.

However, even if the T&Cs don’t mention a clawback clause at the time that you participated in the promotion, it doesn’t mean there won’t be one in the future.

Companies that offer promotions have every right to amend the T&Cs of their promotions as they wish.

This means that a clawback clause can be added to the T&Cs of a promotion well after the promotion has gone live.

So, how can you know for sure whether a promotion you participated in has a clawback clause?

The best solution I can think of is to find an online copy of the T&Cs of the promotion and bookmark the page.

This will allow you to easily revisit the T&Cs at a later time to check if a clawback clause has been added.

2: New-to-bank Status

Another important point to note when it comes to credit card sign-up rewards is the new-to-bank (NTB) status.

Usually, only NTB customers are eligible for the attractive sign-up rewards that banks offer.

So, if you’re looking to take advantage of these sign-up rewards, you’ll need to have a good understanding of how each bank defines an NTB customer.

For clarity, an NTB customer refers to a new credit card customer in the context of credit card promotions, which differs from a banking customer.

A credit card customer refers to someone who owns a credit card as a principal cardholder with the bank.

Meanwhile, a banking customer refers to someone who owns other banking products with the bank, such as a savings account.

In other words, it’s possible to still be an NTB credit card customer even if you have a savings account with that bank.

For example, if I have a DBS savings account but no DBS/POSB credit card, I will be considered as an NTB credit card customer for DBS/POSB.

The exact definition of an NTB customer varies from bank to bank but is typically defined as someone who:

1. does not currently own a <bank name> credit card as a principal cardholder; and
2. has not held a <bank name> credit card as a principal cardholder in the past X months.

X is the “cool down” period for someone to regain their NTB status with a particular bank after cancelling their previous credit card.

For most banks, this period is 12 months, but it is only 6 months for UOB.

For point 2, there are a few nuances to note.

First, the reason for the closure of your credit card account does not matter.

This means that whether you cancelled your card or the bank terminated your card, as long as you held a card during this period, you will not be an NTB customer.

Second, the exact way this point is worded in the T&Cs of a particular promotion varies and will result in slightly different cooldown periods.

Let’s take a look at 3 examples.

Here is how point 2 is defined by HSBC in their credit card sign-up promotion T&Cs:

9. … (II) has not cancelled any HSBC Credit Card# within the last 12 months prior to the Card Account Opening Date

Source: Terms and Conditions for the HSBC Credit Card Sign up Promotion for 1 September 2023 to 30 June 2024

This is the most straightforward definition, where the NTB cooldown period is simply 12 months from the date you cancelled your last HSBC credit card.

In other words, if you cancelled your last HSBC credit card on 19 Jan 2023, you will be considered an NTB HSBC customer on 20 Jan 2024.

Next, here is how point 2 is defined by CIMB in their credit card sign-up promotion T&Cs:

2. b) … An applicant who cancelled his/her CIMB Credit Card within the last 12 months before the month that the new Eligible Card is approved is not an Eligible Customer for the purposes of this Promotion

Source: Terms and Conditions Governing CIMB Credit Card S$188 Cashback Promotion 2023 (1 December 2023 to 31 January 2024)

Notice how CIMB’s definition specifies that the 12-month period must come before the month that the new card is approved.

Using the earlier example of cancelling your last CIMB card on 19 Jan 2023, you will not be considered as an NTB CIMB customer as of 20 Jan 2024.

Instead, you would need to wait at least until Feb 2024 to regain your NTB status with CIMB.

From the T&Cs alone, it’s unclear whether they measure months to the date or if it is just by calendar month.

Finally, let’s look at how OCBC defines point 2 in their credit card sign-up promotion T&Cs:

4. … (ii) has not held an OCBC Credit Card within the last twelve (12) months prior to the commencement of the Promotion

Source: Terms & Conditions Governing the OCBC Credit Card Sign-Up Promotion (Online Exclusive) Promotion 1 December 2023 to 31 January 2024 (the “Promotion”)

For OCBC, their definition specifies that the 12-month period must come before the start of the promotion period.

From the T&Cs, this promotion is scheduled to run from 1 Dec 2023 – 31 Jan 2024.

So, if you cancelled your last OCBC credit card on 31 Dec 2022, you will not be considered an NTB OCBC customer for the entirety of this promotion.

This means that you’ll have to wait for this promotion to end and for OCBC to launch their next promotion to be an NTB OCBC customer.

With the 3 examples I shared above, you should have a good idea of how the phrasing of this point can impact the exact definition of an NTB customer.

The definition of an NTB customer is usually consistent throughout the bank if they run multiple promotions, but it’s always best to check the T&Cs to be sure.

3: Other Things to Note

Now that we’ve gone through the 2 most important things to know about credit card rewards churning, let’s move on to the more minor topics.

Redeem Existing Rewards Points/Rebates

Before you cancel any credit card, you should use up any rewards points or cash rebates that you might have in your account as they will be forfeited.

This way, you won’t be losing out on the rewards that you’ve earned with your credit card while you were using it.

Potential Blacklisting

I don’t know if this happens in practice, but it’s something that could potentially happen.

If you have a habit of signing up for a credit card and cancelling it shortly after, banks might start blacklisting you, making it harder for you to apply for a credit card again in the future.

But how would they know if we do this or not?

Banks can find out about our credit card behaviours when they pull our credit report from the Credit Bureau of Singapore (CBS), which is a centralised source of our credit accounts.

So, there’s no way to hide this information from banks.

Current Signup Offers

If you’re interested in credit card signup offers, here are some of the current promotions.

To summarise,

Being familiar with the clawback clause and NTB definitions of each bank is extremely important if you plan to take part in credit card sign-up promotions for rewards churning.

Paying attention to these points will allow you to understand whether you are or are not eligible for the reward in a given promotion and how long you have to retain the credit card for.