Answers to questions about credit card bonuses, credit scores, closing cards, etc.
Does repeatedly signing up for credit cards hurt my credit score?
Each time you apply for a credit card the bank will perform a “hard pull” on your credit to view your credit profile. This has a small and one time negative effect on your credit score and is easily controlled by how frequently you apply for new cards. In many cases your credit score can actually improve as you credit limit increases from more cards because your overall credit utilization (credit used / total credit limit) decreases. Note: it is also recommended to not apply for a lot of credit cards if you are planning on taking out a large loan or mortgage in the next 6 months as this will give ample time for the temporary effects of applying for credit cards to drop off your credit score.
What if I can’t hit the minimum spend for a sign up bonus?
If you can’t hit the minimum spend, you won’t get the sign bonus. Plan out beforehand whether you can hit the spend and you can some of the tips from this post to help hit those spend requirements.
What about credit card interest?
Never carry debt on a credit card with interest. The interest will eat away any earnings you have gained. Make sure you can pay off your credit card before playing this game.
What about annual fees? Should I close my credit card?
It depends. Many cards with great sign up bonuses have annual fees, but may not be worth keeping beyond a year. If you value the benefits of the card more than the annual fee then you can definitely keep the card or try for a retention offer. If not, then you have two options, close the card or product change the card. Both of these options will allow you to get the sign up bonus for the card again at some point in the future depending on each banks rules.
- Close the card after a year (within 30 days of the annual fee posting). You must keep your card open for a year after signing up in order to keep your sign up bonus. Once the second year’s annual fee posts you have 30 days to close the card and the second year’s fee will not be charged against you. Note: You don’t want to close your oldest card as this can reduce the length of your overall credit history.
- Product change the card to a no fee version after a year. Product changing allows you to keep the credit history of that card open without the annual fees. The downside is that you may not be eligible for the sign bonus of the card you downgraded to (but bonuses for no annual fee cards are often not worth it).
Does closing a card have an effect on my credit score?
It can, but likely not by much. Closing your oldest card can reduce the length of your credit history which is a factor in your credit score so make sure you don’t close your oldest card. Closing cards can also decrease your overall available credit which could increase your credit utilization. However, if you have a large amount of available credit (from having lots of cards) there should be little change to your credit utilization.
Does the annual fee count toward minimum spend?
No.
Do travel credits count toward minimum spend?
Yes.
What about refunds?
Generally no and your bonus could get clawed back if you get a big refund after your bonus is posted. Make sure you can hit the spending requirements without depending on things you might refund.
