I’ve been following the credit card recommendations from this forum, including many of its posts and flowcharts. I know the general advice is not to close credit cards unless there’s an annual fee or if you plan on getting the card promo again in the future.
However, I’m curious about how frequently it’s okay to apply for new credit cards. When people maximize the Chase credit cards over two years, do they just end up with a desk drawer full of cards and keep applying for more? I love taking advantage of the promos but want to make sure I’m doing it wisely.
Closing cards with annual fees that you don’t find valuable makes sense.
Negative Impact on Credit:
Frequently closing cards can negatively impact your credit score, especially cards you’ve had for a long time. The age of your credit history is a significant factor in credit scores, and closing older accounts can shorten your average credit age.
Many credit card issuers, like Chase, offer targeted promotions for new cardholders. It’s smart to take advantage of these offers, especially if there are no annual fees or if the fees are justified by the rewards you earn.
Responsible Management:
The key is to manage your credit responsibly. Don’t open so many cards that you can’t keep track of payments, risking missed due dates, which can significantly hurt your credit score.
Alternatives to Closing Cards
Keep Dormant Cards Open:
Consider keeping no-fee cards open, even if you don’t use them regularly. This can benefit your credit score by maintaining a longer credit history and potentially increasing your total available credit limit, improving your credit utilization ratio (amount of credit used compared to total limit).
Downgrade to a No-Fee Version:
If you have a card with rewards you don’t use or an annual fee you don’t want to pay anymore, see if the issuer offers a no-fee version of the card. You can often downgrade your card and keep your credit history intact.
Additional Tips for Maximizing Credit Card Rewards While Maintaining a Good Credit Score
Track Your Applications:
Be mindful of how many credit cards you apply for in a short period. Multiple inquiries within a short timeframe can negatively impact your credit score.
Meet Minimum Spend Requirements:
Many credit card bonuses require meeting a minimum spending threshold within a set period. Ensure you can realistically meet this requirement before applying.
Pay Your Bills on Time:
This is crucial for maintaining a good credit score and avoiding interest charges.
Consider Overall Credit Mix:
Having a mix of credit cards (e.g., rewards cards, store cards) can be beneficial for your credit score, but prioritize cards that align with your spending habits.
It’s smart to apply for new credit cards carefully to protect your credit score. Too many applications too often might make lenders think you’re not financially stable. Wait a few months between applications to handle credit checks well and keep a strong credit history.