Cashback question from a CC noob :)

Best option for your credit score is to keep each card.

Things that affect your credit while doing this are-

1. Applying for a new card puts a small hit on your credit score (5 points maybe?). This goes away after about a year, more or less.

2. Part of your credit score is the average age of your cards. Opening cards only for a month or a year lowers your score.

3. Part of your credit score is your total available credit, vs how much you spend (spending a smaller percentage of your available credit each month is better). Closing cards lowers your available credit.

Other considerations are that opening cards with an annual fee will hit you with the annual fee, whether you actually use it or not (unless you close it).

Leaving a card open also leaves it open to theft, but as long as you don't use your card for shady transactions (you can use a temporary number for most cards to make purchases on the internet from sites that may not look as safe), you should be ok. You can also cut up a card you're not actively using to prevent physical theft.

Also, some people have said that having a lot of credit available might prevent you from opening new cards (or new cards might have lower limits). I don't see this being a problem for most people, but it is something to keep in mind.

The best thing for your credit score is to keep all of your cards open, so as long as your ok with what goes along with that, keep the cards open (and use them every so often so the company doesn't close it).

My way is to open cards that I could actually use, and try to get the best opening bonuses on those. Chase Freedom and Discover More (or Student) have rotating categories every month/quarter that give you 5% cash back. When the categories don't account for that, you can use an Amex/Costco/Penfed card to get better cash back on gas/groceries/whatever other categories you spend on.

Hope that helps

Quote from wquine : Hey slickers, I want to try and take advantage of cashback offers by CCs such as Chase. I took one of these offers recently from the slate card (200 after 500 spend in 3 months). So my question was: Once I get the bonus do I then cancel or do I have to spend the bonus first, or is it better fro my credit just to go a whole year etc? Just wondering what you savvy pros are doing?? Appreciate any tips!

I never cancelled my card after getting the bonus. I just keep it.

Ok thanks, that's fine, I'll just keep them open.

"(you can use a temporary number for most cards to make purchases on the internet from sites that may not look as safe)"

never heard of this before, how do you do that?

Quote from DWad : Part of your credit score is the average age of your cards. Opening cards only for a month or a year lowers your score.

If the card is already open, closing it won't hurt your FICO score, at least not for the near term. FICO's AAoA is based on all accounts, open or closed. Once you open a card, if you close it, it will still remain in your report and contribute your AAoA as it ages, until it ultimately rolls off after 10 years. So once it's opened, it doesn't really matter if it stays open, or if it's closed. At least not for 10 years. Ten years down the road, if you had kept it open it wouldn't roll off of your report, so THEN there would be a difference in your AAoA (and therefore your score), compared to closing it. But if you didn't use it for those ten years, the bank probably would have closed it anyway due to inactivity.

There are sites that provide what people call "FAKO" scores, which don't follow the exact same scoring model as FICO. The credit score provided by CreditKarma, for example, counts the average age of OPEN accounts. But lending institutions don't go by CreditKarma scores, so that's not really important.

So as far as your FICO score is concerned (the one that matters the most), once you've opened an account, the damage has been done, from an aging perspective. Whether it's open or closed, it will hurt your score short term because it's dragging down your average, but as time goes on it will eventually help. The boost to your total available credit will also help your utilization, so you may as well keep it open (and use it at least occasionally so the bank doesn't close it).

Dscline - true, but if you open 11 cards and close 10 right away, and only keep 1, after 10 years your score will probably drop quite a bit. Probably not a big concern for most, but something to keep in mind.

Quote from wquine : Ok thanks, that's fine, I'll just keep them open. "(you can use a temporary number for most cards to make purchases on the internet from sites that may not look as safe)" never heard of this before, how do you do that?

Discover calls them "Secure Online Account Numbers (SOANs)" and I'm sure that other cards call them something else. Basically it's a one-time-use credit card number, so if you make a purchase online, the retailer you buy from can't steal your credit card number and use it somewhere else.

You don't really need to worry about this for well-known sites, but if the site looks particularly shady and you want to make sure you don't get screwed, it's a good idea to use one of these temporary card numbers to protect yourself.

Granted, most credit cards won't keep your money if you your card gets stolen and used, but it's also apparently quite a hassle to deal with, so the temporary number at the very least can protect you against that.

Hope that helps, let me know if you need more info.