Churn

A term used by service providers such as telecommunications or credit card companies for the percentage of customers who leave in any period to use the services of a rival company.

Churners

Churners are often tempted by the free gift offers companies make to attract their business, but they will often move on when the next offer arrives.

Like a milk churn, they may go round in circles, and end up back with companies they have already used.

Churning can be a good way to maintain the lowest possible rates, especially if the balance is frequently transferred from one credit card to another. However, you should be aware of the pitfalls of constant churning:

  • Every time you apply for a credit card, loan or utility, your credit file is checked. Frequent applications will lead other lenders to question why you are applying for so much credit in such a short space of time, and may be reluctant to lend to you, or to provide you with their services.
  • You may wish to try a free services such as Check My File to find our more information about your credit score.
  • Companies are likely to treat their loyal customers better than those who have only been with them for a short period of time. Long standing customers are particularly likely to benefit from increased credit card limits, as the card issuer knows their payment history.
  • Frequently changing your accounts can be a very time consuming process. For a small saving on your monthly phone bill, or an interest rate reduction of a fraction of a percent, then you may wish to ask yourself if it is really worth it.
  • Some companies, such as Halifax Bank or Powergen offer you better deals if you have multiple products with them.
  • Leaving your existing service provider without calling them to ask for a better deal may mean that you lose out on an even better offer than the new provider is enticing you with.
  • Free gifts are often worth much less than they appear to be. If you already have a CD player, how useful is another one?
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