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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Churning

Definition:

Back in colonial times, before America was the good old U.S.A., colonists would churn cream into butter. Back then, churning involved moving a plunger in a wood bucket over and over and over again. Not exciting, but that's what happens when there's no better technology.

Today, churning is something illegal that brokers do. Churning in the financial sense means making tons of trades in a client's account to get more commissions. It's illegal but sometimes it can be difficult to detect or stop. If you fall prey to a broker who's involved in churning, you'll end up overpaying in commissions, and you might even have to pay extra taxes because of all those trades.