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I just discovered this not to long ago and tried it out multiple times and it actually worked. I was playing as Xian, my third character to build and was killing enemies because my Challenge "YA RLY" was about to hit 10,000 and give me 200,000 xp (challenge level 3/4). I didn't want Xian to get this XP though because challenge's carry over on other characters you play and can't be repeated (or so I thought but more on that later).
I kept killing enemies until I got to 9,999 kills and I started playing Purna at level 1. I go up and kill my first zombie and instant power level to 27. I was done with the game after I used up her skill points so I turned it off and went about my day. Later on I turn on Dead Island with Xian to see what the next xp boosting challenge I was close on was. I scroll down and see "YA RLY" 9,999/10,000. I thought I got lucky, I logged off of Xian and switch to Purna and bam, another 200,000 xp for a single kill. I switched back to Xian just to make sure but it seemed like the kill was permanent and I just got lucky. But I then thought, what if I turn off the game completely? I turned off my game completely, start it back up and sure enough, YA RLY 9,999/10,000.
Challenges won't record points you earn until you reach a checkpoint. So if you turn off your game completely after you get a challenge done then you can effectively get insane xp over and over.
So in conclusion this is the PL guide:
1. Get a challenge up to where its about to finished. 2. switch to a character you want to give the XP to. 3. finish the challenge. 4. IMMEDIATELY turn off the game without getting a check-point. 5. turn on the game. 6. Repeat steps 3-6.
Hope this helps!
PS: You can try to do it also with the challenge Undead Presidents cause if you complete the level 4 of that challenge you will get 1.000.000 XP! so try to reach 9,990,000$ on this challenge, sell weapons for a maximum of 9,980-9,990$ and do this glitch with 1 of the 4 heroes.