Churn value is what you keep from a card in year one. Take the value of the points you earn. Take away the fees you pay. That number is the churn value.
It assumes you earn the sign-up bonus, pay every bill in full, and close the card before the next annual fee. That is churning: take the bonus, then move on. I explain the full cycle in Credit Card Churning in Australia — How I Do It.
Every offer page on this site shows a churn value. This post explains the maths in plain words.
A real example
The Qantas Premier Titanium card, at the time I write this:
- You pay $1,200 in first-year fees.
- You spend $5,000 in 90 days on bills you had to pay anyway.
- You get 150,000 bonus Qantas points, plus 6,250 points from that spend.
- That is 156,250 points, worth about $2,500 when used for flights.
So the churn value is $2,500 − $1,200 = $1,300 in flights.
You do not get $1,300 in cash. You get points. You pay the fee in cash. Churn value puts both sides in dollars so you can compare two cards fast.
What counts, and what does not
In the churn value:
- The sign-up bonus points.
- The points you earn from the spend you must do to get the bonus.
- Any cash the offer pays on top.
- Minus all first-year fees: the annual fee and any program fee.
Not in the churn value:
- Points from year two, or a second-year bonus.
- Lounge visits, insurance, and other perks. They can be worth money, but only if you use them. I list them on each offer page, apart from the churn value.
- Interest. The maths assumes you pay in full. Interest at around 21% a year can eat the whole bonus fast.
- The spend itself. The $5,000 is not a cost if it is rent, food, and bills you had to pay anyway. If you buy things you do not need just to hit the target, that extra spend is a real cost, and the churn value is wrong for you.
Points are not one fixed number of flights
There is no such thing as "150,000 points = X flights". It depends where you fly.
From Sydney, 156,250 Qantas points buys about:
| Trip (return, 1 person) | Points | Trips you can book |
|---|---|---|
| Melbourne, Economy | 18,400 | 8 return trips |
| Bali, Economy | 46,600 | 3 return trips |
| Singapore, Economy | 58,000 | 2 return trips, plus 1 one-way trip |
| London, Business | 332,600 | Not yet — 46% of one return trip |
These are Classic Flight Reward prices. A reward seat must be free on the day you want. Airport taxes and fees are extra cash on top of the points.
That is why each offer page gives the churn value in dollars and a table of real trips. The dollars let you rank cards. The trips tell you if the points buy a trip you want.
For the dollar figure, I use a fixed value per point for each program. I explain where those values come from in How We Calculate Credit Card Point Values. A point used well — a Business seat you book early — can be worth more. A point used for a toaster is worth less.
Gift cards work in a more exact way. The shop sets the price, so I show the exact gift cards the points buy, minus the fees. Cashback cards show the cash back at a set monthly spend, minus the fees.
When the fees win
Some cards have a big fee and a small bonus. The rewards do not cover the first-year fees. On those pages I do not show a churn value. I say the fees are higher, and by how much. A churn value below zero is a cost, not a value.
The four rules behind every churn value
- Year one only. Close the card before the next annual fee, or the fee comes out of your value.
- Pay in full, every month. One month of interest can wipe out a small bonus.
- Spend on things you had to buy anyway. Do not buy things just to hit the target.
- Use the points. Points you never spend are worth zero, no matter what the maths says.
If all four are true for you, churn value is a fair, quick way to pick your next card. Compare current offers by churn value and check the "Can I get this?" rules on the offer page before you apply — income rules and waiting periods matter as much as the maths.