Credit Card Rewards - Part Deux

[herdjohnson]

Didn't want to hi-jack the other thread, but I was intrigued by MonkeyMama's post about getting a lot of sign up bonuses from credit cards. A few questions (I was going to just message her, but figured I'd open it up for discussion) -

1) What site do you use to monitor for reward cards?

2) Do you keep them all active or close them after you get the reward?

3) What has this done to your credit? I figure whether you keep them open and have a ridiculously high amount of open credit or open and close cards so many times, it's going to damage credit. You may be in a position where this doesn't matter but I'd like to buy a house in the next few years and would like to be in the best possible position for this.

Thanks!

[MonkeyMama]

#1 - I've seen most these rewards mentioned at mymoneyblog.com, BUT these are mass marketed offers. We often get much better offers through direct mail. For example, if some cc company is offering $500 in rewards for spending $3000 in 3 months + annual fee, direct mail offer is usually something like "Spend $1000 in 3 months, no annual fee." Or they may offer a bigger reward. Obviously we have high FICOs to get such great offers.

#2 - I close every credit card I am not using. I usually close them within a month of receiving my reward. (I just don't see the point to keep cards open, these rewards cards generally have fees after the first year, but any credit card is going to change their terms often and I don't have the time to read all that fine print for every card I have ever owned!! Plus, I have some really valid concerns about fraud. I think it's easiest just to close them and not think about them ever again. It's enough to keep track of the 2-3 credit cards I have and use regularly).

#3 - This has done absolutely nothing to my credit. In the short term my FICO dropped maybe 830 to 780. In the long run it doesn't make any difference - will still be 830-ish. (& in the short term, 780 is the same difference as 830). For reference, I am in the middle of a refinance - though we opened and closed about 3 cards each this year - not an issue at all. They salivate at our "780" FICO scores.

The thing about FICO is no one really fully understands it. Besides having a mortgage and never having a late payment in almost 20 years of credit history, I have done everything else "wrong." All we have is credit cards (paid off monthly) and a mortgage on our credit report. We've never even had a car loan. (I also don't have any real length of open credit history since I have refied my home several times and closed any card that is more than 2-3 years old. Obviously the 10 years of *perfect* credit that stays on my credit report counts for much more than how long I keep my credit lines open). I do believe that having a mortgage helps us because our FICO has always been a lot higher ever since having a mortgage.

If you aren't going to buy a house for a few years I would say it honestly probably won't matter much. If it harms your score more because you don't have a mortgage, for example, it would be a very temporary hit, probably. If I were you I would give it a try and then monitor your FICO. If it takes a hit and doesn't recover quickly, I Would leave it at that. I would put it on hold until you get a home. But, you may be surprised to find it won't make much difference. Which is why I think I would give it a try in your shoes. Of course, you won't qualify for these rewards unless you have excellent credit. Which maybe makes this whole discussion kind of moot. If you have a great score, it doesn't really matter? If not, you won't get the rewards anyway?

mymoneyblog.com has a lot of discussion about this too, but keep in mind he has a mortgage. It's hard to compare apples to oranges. Maybe other SA members without mortgages can chime in with their experience.

[twest]

I am so glad you asked this question. Thank you MonkeyMama for the response. I had been wanting to ask the very same question and just hadn't yet.

[herdjohnson]

Thank you for the lengthy response! I opted out of credit card offers a while back so I don't get those direct mailings anymore. I might have to check into getting back on the list.

And I have pretty decent credit for my age, I think. I was planning on buying a home this summer but recently decided to put it off until decided for sure if I was staying in Michigan. The lender I spoke with ran my credit and said it was 765. I figure that's more than enough for most of these offers (I've already cashed in a couple).

[Slug]

The sign-up offers right now are ridiculous compared to the shoddy rewards programs. Seems like the CC companies are thinking very short term here. Honestly, they don't want me long-term since I never carry a balance, but do they really want me to just sign up take the reward and cancel. It was a great way to get my BOSE iPod player for free. I just don't understand the strategy. It's not like I'm going to forget to cancel or actually want to keep their card.

[MonkeyMama]

Originally Posted by Slug

The sign-up offers right now are ridiculous compared to the shoddy rewards programs. Seems like the CC companies are thinking very short term here. Honestly, they don't want me long-term since I never carry a balance, but do they really want me to just sign up take the reward and cancel. It was a great way to get my BOSE iPod player for free. I just don't understand the strategy. It's not like I'm going to forget to cancel or actually want to keep their card.

You'd be surprised - most people are scared to close credit cards, for one.

I think the average person either isn't going to bother to sign up for a card just for the bonus, and if they do, they will probably keep the card. You and I are not average!

But yeah, Chase lost me as a customer. Had really good rewards for years and then stopped the rewards and tried to add an annual fee to my Chase Freedom. I said, "Bye!" I signed up for 2 more Chase rewards cards (for $1500 cash) and then closed them all and told them precisely why. They should want me long term, I charge almost $2000 per month. Though I pay the balance off monthly they made pleny of merchant fees on me - that is for sure. They basically told me they don't want my $24,000+ per year charges, paid in full every month. Their loss...

[DRILLINDK]

mark.

[pdweaver]

Originally Posted by MonkeyMama

You'd be surprised - most people are scared to close credit cards, for one.

I think the average person either isn't going to bother to sign up for a card just for the bonus, and if they do, they will probably keep the card. You and I are not average!

But yeah, Chase lost me as a customer. Had really good rewards for years and then stopped the rewards and tried to add an annual fee to my Chase Freedom. I said, "Bye!" I signed up for 2 more Chase rewards cards (for $1500 cash) and then closed them all and told them precisely why. They should want me long term, I charge almost $2000 per month. Though I pay the balance off monthly they made pleny of merchant fees on me - that is for sure. They basically told me they don't want my $24,000+ per year charges, paid in full every month. Their loss...

They started charging you an annual fee for the freedom card???????? WTH

I love my freedom card. I make an average of $20-$40 a MONTH with that card. I am going to be angry if they try and do that to me.

I hate closing cards, but i guess it really isnt the worst thing to do. Your score will be affected, but only because you are decreasing your revolving credit. If you dont maintain balances on your cards, this really shouldnt affect you that much.

[Gina23]

How did you find out that Chase Freedom was going to start with a yearly fee? Did they send you something in the mail?

[MonkeyMama]

Originally Posted by Gina23

How did you find out that Chase Freedom was going to start with a yearly fee? Did they send you something in the mail?

Actually, I saw on mymoneyblog.com they were doing that. They started charging annual fees and phasing out their old rewards, a few years ago. When I got the annual fee notice I called to opt out of the fee. They let me keep my old terms. But yeah - definitely knew it was coming from other cardholders online. They eventually took away my good rewards (as I had been reading online they did to many others over the course of a couple of years). I was lucky since for whatever reason I got to keep my rewards a year or two longer than many.

I was earning about $80/month on the old rewards system. Their *new* rewards were worse than I Could get elsewhere, for my spending patterns.

[jpg7n16]

Is this about a different former version of the Chase Freedom card? I have one, and there's no fee.

Chase - No Annual Fee Credit Cards

[MonkeyMama]

Originally Posted by jpg7n16

Is this about a different former version of the Chase Freedom card? I have one, and there's no fee.

Chase - No Annual Fee Credit Cards

Yes. Consider yourself lucky. They added an annual fee to several of their existing customers starting mid-2009. Maybe it didn't go over well and they backtracked on that. I wouldn't know. I told them if they wanted to keep me as a customer, I wasn't going to pay their fee. So they never charged me a fee. But lord knows they tried to, and I Was definitely not the only one because I heard about it way ahead of time, before they got to me, online from other Chase Freedom customers.

[ecoadapt]

#2 - I close every credit card I am not using. I usually close them within a month of receiving my reward. (I just don't see the point to keep cards open, these rewards cards generally have fees after the first year, but any credit card is going to change their terms often and I don't have the time to read all that fine print for every card I have ever owned!! Plus, I have some really valid concerns about fraud. I think it's easiest just to close them and not think about them ever again. It's enough to keep track of the 2-3 credit cards I have and use regularly).

Clearly stated! I close the card that I am not using anymore! It would be hassle-free for you as well!

[DRILLINDK]

Not to hijack the thread, but what about those 'special" reward offers that cc offer? My cc always wants my to apply for a 3-4 promotion where I would receive 5% back on gas, groceries one 3 month period. The only catch is that I have to activate it. I've never done it, b/c I'm always afraid that it's somehow opening a new line of credit or doing something else detrimental to my credit.

[Like2Plan]

Originally Posted by MonkeyMama

I think the average person either isn't going to bother to sign up for a card just for the bonus, and if they do, they will probably keep the card. You and I are not average!

That's me. I do try to limit it to one new CC per year and I try to close at least one account, but sometimes I like the benefits associated with the card.

For example, I still keep my Disney CC because they have special offers associated with it--like getting a free picture with a character or an occasional discount on merchandise. But, I rarely ever use the card because the rewards are unremarkable. There is no annual fee on this one, so other than keeping track of another card it is no big thing.

I also have a Marriott card which does have an annual fee. But, one of the perks from this card is a "free" cat 1-5 room every year and that would cost way more than the annual fee. DH also has a Marriott card that we use quite often--we really don't need two accounts, but he also gets a cat 1-5 room every year with his account.

[MonkeyMama]

Originally Posted by DRILLINDK

Not to hijack the thread, but what about those 'special" reward offers that cc offer? My cc always wants my to apply for a 3-4 promotion where I would receive 5% back on gas, groceries one 3 month period. The only catch is that I have to activate it. I've never done it, b/c I'm always afraid that it's somehow opening a new line of credit or doing something else detrimental to my credit.

Activating a reward shouldn't have an effect on your credit. I have done this a few times. I think the point is they want you to work for it (versus just making it automatic - so less people partake).