Personal Finance

Credit card churning advice

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  • Feb 1st, 2015 8:05 pm
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[OP]
Sr. Member
Feb 11, 2013
600 posts
45 upvotes
BC

Credit card churning advice

Hey guys,

I'm not sure if I'm posting in the right forum but forgive me if I'm wrong!

I recently started applying for credit cards in order to take advantage of the sign up bonuses. What I want to know from you guys is that how often can you apply for a credit card without dropping your credit score significantly.

I applied for two credit cards in November and closed one credit card and my score actually went up to almost 775 (from 750)

Im only interested in travel credit cards and applied for TD aeroplan visa back in November. Now I'm thinking of applying for Amex to get the 25k sign up bonus.

When would be a good time to sign up again. What's the rule of thumb? I've heard 6 months a lot but hoping to hear from the experts here!

Thanks!
6 replies
Deal Addict
Oct 25, 2008
2274 posts
294 upvotes
North York
It's a balance of few things:

- Hard credit inquiries: This is how many times you applied for credit card (I would say maximum 3-4 times inquiries in a year is safe, 6 months grace is preferable)

- Number of national cards open: After you open let's say 10 credit cards over the years, this will start to haunt you and lower your credit score. Be prudent - close credit card when you feel you can maintain credit utilization (see below)

- Credit utilization: Closing an account will lower your credit availability and increase your credit usage. To me this is a non-concern as I have more credit than what I needed.

It's really a balance of those three that makes a successful churner! Note I don't mention credit age because simply even when you closed an account that stays with your file for 7-8 years I believe.
[OP]
Sr. Member
Feb 11, 2013
600 posts
45 upvotes
BC
Thanks for the reply! I appreciate the advice!

Would you say that a pre-approved credit card should also count within the 3-4 credit card a year rule? Given that its a soft hit I'm not sure how to treat them.

Do you always close a credit card before registering for a new one or vice versa? I'm trying to figure out what the best time to close accounts with the least impact. My score last time went up since I closed and applied for a card almost the same time. So the damage was offset against the two.
Deal Addict
Oct 25, 2008
2274 posts
294 upvotes
North York
Pursuit2013 wrote:
Jan 31st, 2015 12:55 pm
Would you say that a pre-approved credit card should also count within the 3-4 credit card a year rule? Given that its a soft hit I'm not sure how to treat them.
If it's a soft hit then it wouldn't factor in your credit score - so not part of the count
Do you always close a credit card before registering for a new one or vice versa?
Not really. For credit scoring purposes, it does make little difference when you have one more or less credit cards. When it reaches 8+ then it started to weigh on your credit score. Even then this is not a make or break score - it's a % of credit score calculation. I've seen many RFDers (cough cough) with 10+ credit cards and are able to churn for years.
I'm trying to figure out what the best time to close accounts with the least impact. My score last time went up since I closed and applied for a card almost the same time. So the damage was offset against the two.
Your score most likely went up because you closed an account with lower credit limit and opened with higher credit limit thus lower your credit utilization and little to do with number of credit cards open.

What's a more important thing to pay attention to is credit utilization. If you have $2000 in credit card debt and have $10000 credit limit, when you close a card with $5000 credit limit when you went up from 20% credit utilization to 40% credit utilization which will significantly ding your score instantly.
Deal Expert
Aug 2, 2001
16070 posts
6237 upvotes
You are credit card churning - the benefit of the bonus offers far outweighs the negative affect, if any, of minor drops in your credit score. The real-life implication is that if you have too many of these credit cards open, you may be required to close one before getting a credit product you actually want. Use the credit card you plan on keeping long term and do not close it. I am sure you already have your favourite CC, and you are just using the churning-purpose CCs for their offers and only spend the minimum on them.

Sign up for any worthwhile ones (and a $25 signup bonus is not really worth the time of day in my opinion) and as often as you can, as per the terms of the offer. Do not worry about the impact on your credit score, it's just an arbitrary number. Focus on keeping your credit record clean by paying your bills on time and enjoy all the free perks of the offers. Just pay careful attention to the offers to make sure you are eligible for them (like if they exclude everyone who has had the CC before or something).
[OP]
Sr. Member
Feb 11, 2013
600 posts
45 upvotes
BC
So how often can you safety register for credit cards?

For example, I was pre-approved for one in November and applied for one in December. If I apply now wouldn't my credit score crash versus applying in a few months?
Deal Expert
Aug 2, 2001
16070 posts
6237 upvotes
Pursuit2013 wrote:
Feb 1st, 2015 9:26 am
So how often can you safety register for credit cards?

For example, I was pre-approved for one in November and applied for one in December. If I apply now wouldn't my credit score crash versus applying in a few months?
Crash? Hardly.

Apply for the offers now because if the sooner you apply, the sooner you can cancel and the sooner you may re-qualify for more rewards (some people churned the Amex every 6 months I think in the Hot Deals forum).

If you are that concerned, why not do a "test"? If you made an eligible purchase at Home Depot you can easily get Equifax for free for a year. Use this to see the actual hit to your credit score when you get another. This will answer your question for you. Then you can decide whether to keep going. Again, I personally think most people overthink this sort of thing.

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