Getting discounts by opening new CC

[jzunic]

Just curious to others' opinions on opening new (usually store) CC's to get discounts on your first purchase.

Our credit rating is great - we recently bought a house, have a couple of bank CC's, and a car loan we payed off a few years ago. We've NEVER (and I mean never!) been late on a payment, and always pay off the balance in full, so we've also NEVER paid any interest on our CC's. We're very responsible with our spending and CC's, and are way too cheap to ever pay interest on something (except for the house, of course...) The only thing against us on our credit report is our short history, since we moved to the US from Canada in 2002. So we've been working on building our credit up, with a few cards and now the house.

With that said, we often have the opportunity to save $20, $30 by signing up for a store CC. We'd only ever consider it for big purchases - signed up for a Sears card when we bought a Dyson vacuum, an Amazon Chase card when we purchased some exercise equipment on Amazon, and just got a Macy's card to get 22% off a bedding purchase (saved us $50), etc. So now in addition to our bank CC's, we also have a Sears card, a Macy's card, and an Amazon Chase card. We never have any trouble getting the card, and also typically only use it when it'll save us more money. Again, we never carry a balance on it.

So now I want to buy something on Overstock.com, and if I sign up for an Overstock card, we'll get $30 off. I know we won't abuse the card at all, and it will really just be a way to save some more money. We really will hardly use it, since I've only bought from Overstock once or twice before. Is it worth it to sign up for yet another CC, to save $30? Will it start negatively affecting our credit score (even though it doesn't matter as much now, as we just bought our house...) Can I cancel these cards after opening them (after meeting whatever restrictions they may have...)?

Would love to hear your thoughts on all this!

Thanks!

[Ima saver]

I think it is ok to sign up to get the money off, as long as you pay it off and pay no interest. However, I would not cancel the cards because that will negatively affect your credit score. I would put them away and never use them again, if it was me. Usually the percentage off is only for the first time you use the card.

[Tree0164]

I don't do it. I am not a big fan of credit cards anyways and perfer to pay cash.

If you are responsible and pay it off immediately then that is fine but if you carry a balance, you shouldn't be doing it.

It has also been said that people will spend about 15% more using plastic over cash.

[Gruntina]

A retired lady friend of mine had Macy's card. Its not a one time discount purchase bonus. She often gets further discounts on sales items if she uses her card. She saved a lot of money for retirement mainly so she can go shopping in her golden years and she loves to shop for her children and grandkids. She earns credits on her cards and being with macy long term, all of her gifts are professionaly wrapped with trimings free of charge.

[Diolla]

If you have too much available credit it can hurt you when trying to get a mortgage but as you said you already heve the house.

Closing a card you haven't had long and don't plan to use will not hurt your credit score. If you were carrying debt and you close cards it can damage your score by lowering your "debt ratio" (how much you owe vs how much is available) but that doesn't seem to affect you either since you aren't carrying a balance.

It really sounds to me like as far as credit score goes it is a wash.

However, every time you apply for credit you generate a Hard Inquiry on your report and too many of those can lower your credit score so I would avoid opening one unless you really feel it is worth it.

That said... having alot of open accounts you don't use could make you a higher risk for identity theft. If it was me I would close newer accounts I didn't plan to use and keep open the accounts you have had the longest. Store cards are not really as good for building credit as the majors like Visa, Mastercard etc are.

[pearlieq]

I've only opened a card for the incentives once--it was a Marriott Visa and I got a $100 gift card and enough points for a free room night, which I used on a trip we were taking that spring.

In general, it would have to be a pretty darn big incentive for me to sign up. I don't want to have too many open lines of credit, plus it's just a hassle to keep track of!

[b4freedom]

Originally Posted by pearlieq

I've only opened a card for the incentives once--it was a Marriott Visa and I got a $100 gift card and enough points for a free room night, which I used on a trip we were taking that spring.

In general, it would have to be a pretty darn big incentive for me to sign up. I don't want to have too many open lines of credit, plus it's just a hassle to keep track of!

I open and close the marriott card once a year. I open it in Feb. Use it for a work related business trip, wait 9 months, close it. So far, I get 15,000 points each time. My only question is, "How soon will they stop me from doing this?"

[moni727]

From my understanding, having too many CC accounts open (more than five) can negitavely affect your credit score, even if they have a zero balance.

The theory is that it is possible for you to max all of those cards out if you so chose, and so all of your open credit is taken into consideration when determining your score.

It is best to have no less than three CC, and no more than five. At least one of them should have a high credit limit (say, $10,000 USD) and the rest can be any limit at all.

Also, closing CC negatively affects your score. Not by much, only a few points.

If I were you, I would not open up an Overstock.com card. But then again, you already made your big investment, a house (unlike me). So, if you want to save on your Overstock purchase, it won't be that big of a deal.

[boosami]

Originally Posted by moni727

From my understanding, having too many CC accounts open (more than five) can negitavely affect your credit score, even if they have a zero balance.

The theory is that it is possible for you to max all of those cards out if you so chose, and so all of your open credit is taken into consideration when determining your score.

5 credit card accounts is by no means too many. Personally, I have over 20 credit card accounts (all with no balance), probably around half a million in available credit, and my FICO is superb. FICO does not punish you for having lots of available credit, or lots of accounts. It is simply not a factor they use when calculating your credit score.

Originally Posted by moni727

Also, closing CC negatively affects your score. Not by much, only a few points.

This is another misconception... The act of closing an account is not what harms your score. If the closed account causes your ratio of debt to available credit to go up, it might hurt your score. Closed accounts stay on your report for 10 years, too, so you don't lose that history immediately and that won't hurt you. If you have lots of accounts or little debt and close a few cards, it most likely won't affect your score at all. Unless there's an annual fee, most people don't close accounts because there's really no reason to do so.

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The only thing you want to watch out for when applying for cards to get deals is that you don't apply for too many in too short a period. You are best limiting it to one a year, or if that's not enough for you one every 6 months. If you are thinking of applying for a loan or anything major, don't apply for any other credit for a year prior if possible to ensure the best FICO score on your loan application.

[Caoineag]

I have always done new credit cards for the big store purchases (for discounts) and have never had any problems. Its actually been quite handy. I still have a really good credit score for someone my age.

[rennigade]

I opened an american airlines cc to get skymiles. I believe I got 25,000 skymiles. My gf also opened one at the same time. We cashed them in and are flying from the east coast to Hawaii for a little less than $250 round trip per person.

Best cc deal I ever came accross. The minute the tickets were purchased we both canceled the cards since there was a $60 anual fee. Although the $60 fee included the $250 rt ticket, so it was well worth it.

[Slug]

Originally Posted by b4freedom

I open and close the marriott card once a year. I open it in Feb. Use it for a work related business trip, wait 9 months, close it. So far, I get 15,000 points each time. My only question is, "How soon will they stop me from doing this?"

I just got the Marriott card this year and use it for only Marriott hotel purchases. You're basically going through all that trouble for the equivalent of 1 free night's stay. To me, the cancelling and reopening process isn't worth the time. I'll keep the card. I'll get another free night certificate on each yearly anniversary anyway.

By the way, everything else goes on my Schwab 2% card.