Every year I open a new credit card to help pay my car insurance bill. Its expensive and I pay it annually in one lump sum to save money in the long term, and I always pay it by opening a new credit card that has a $200 spend bonus and 0% APR for 12 months. It’s like getting $200 off my bill plus I can pay it back over the year and I usually get cash back too.
I’ve done this for the last 2 years and am coming up on the 3rd time. But I’m accumulating credit cards I’m not going to use. I have a main credit card I love so once I’m done paying off the insurance bill, it just sits not being used. Do I keep these other extra cards open or close them? Is opening a new CC every year a bad financial move?
Edit: sorry everyone I don’t think I phrased my post right or very clearly. I’m not super well off and am an avid budgeter and saver, but I can afford the bill on its own. I’m doing this to get perks and yeah, save $200 off because insurance rates are ridiculous in general. I set aside the full lump sum amount each year in a separate bucket in my HYSA. I just pay it off over time with 0% APR to get more savings interest. I do it as a budget/save money/perks thing. I have a healthy emergency fund, healthy savings, contribute to my retirement and have a ‘very good’ credit score. Just wondering if the multiple cards will hurt me and if doing this is generally a poor financial move. Thanks!
Is opening a new credit card every year a bad financial move?
byu/DerangedUnicorn27 inpersonalfinance
Posted by DerangedUnicorn27
15 Comments
If you’re not closing the cards and they have a zero balance, you’re not hurting yourself; if you do close them, you’re going to reduce your overall credit age. Why not look into alternative methods so you’re not out there with multiple lines of credit you don’t need? That’s potentially just opening yourself up to having your card numbers stolen, especially if you don’t monitor them. Call the insurance company and haggle, look for bank accounts with similar benefits, etc..
Inherently, no. But it’s concerning that you’re doing it to help pay for something that you ostensibly wouldn’t be able to afford otherwise.
It’s called churning – opening new credit cards just for new card holder rewards. There’s a whole sub about it, r/churning, and if done responsibly no issues whatsoever.
>Do I keep these other extra cards open or close them?
Close it if you want. I closed cards regularly that serve no purpose/value. Collecting CC SUBs is a niche hobby- r/churning
>Is opening a new CC every year a bad financial move?
Are you paying interests? Are you getting a mortgage in the next 18 months? Are you aware that signing up for new cards gets you hit with a hard inquiry (excluding existing Amex clients), and the lowering of your AAoA (excluding most business cards)?
Edit: typo
You’re using those 0% intro APRs to barely scrape by for routine expenses.
Just because you’re not paying interest doesn’t mean you’re not in bad shape.
I can understand using a 0% offer to cover emergencies or maybe to earn some free interest (by keeping money in a HYSA), but for your specific situation, you’re living paycheck to paycheck and you’re masking it.
Credit agency’s literally score 10% of your score for how often you open a line of credit or inquire.
So long as you don’t have an annual fee for the sock drawer cards, go ahead and keep them. But I’d suggest using them once in a while, if you want to keep them. Sooner or later, they will be closed for being idle. Maybe use one each month to buy a week’s worth of groceries, them pay it off on or before the due date, and move onto the next card.
Only problem I’d point out is that many CC companies will close your CC due to inactivity after a few years.
This hurts your average age of credit because that line of credit stops aging. Therefore, it’s one of the factors in your credit score that will be more difficult to bring up, but it’s not a very important factor (average age of credit)
Otherwise, I see no issue, collect those rewards 🙂
You are playing with fire, and it’s a game you might not win. The temptation to spend is real, and it’s easy to get buried in debt. Just because you have a good score now doesn’t mean it’s going to stay that way.
No.
As long as you’re smart about it.
Keep at least 1-2 credit cards FOREVER. Pick ones with low/zero fees, and simple benefits you’ll always use (cash back, grocery rewards, etc). Use this to build your credit score – longevity of accounts held (on average), payment history, and utilization all benefit.
Churn ONE credit cards each year. Pick the intro off you like, max out the benefit, use the rewards (if they aren’t airline miles, connected to FF account), close it, repeat.
Always set everything to autopay in full.
You’ll always have 1 “new” card that dings your credit score a bit, but over time it will have a smaller and smaller impact.
If you pay them off on time, no. I started churning a couple years ago, and my credit score has never been higher. Free money, as long as you’re not tempted to spend more than you have (which is a big if). You also need to be careful you’re not generating spend you wouldn’t otherwise be doing to hit the bonuses.
One credit card a year is childs play lol.
If its a no annual fee card, you’re fine just letting it sit unactive. Put a lock on the card if you truly aren’t using it and don’t have subscriptions tied to it. Eventually the bank will either give you a use-it-or-lose-it notice or will auto cancel.
Closed credit cards continue aging in your credit history for about 10 years.
At one point I was opening a new card like every month.
Its fine. Just pay your statement balances and also never pay annual fees unless you actually can use it to justify the fee.
No, it’s great.
Just take care to cancel any cards with an annual fee. The annual fee cards are where the real sweet intro bonuses are.
I have about 37 credit cards.
I am not anywhere near 55 years old. Still in my 20s.
I opened close to a dozen a year at one point. I also…. owed AMEX 130K points at one point. I’m so glad they didn’t blacklist me. Didn’t think they would claw it back.
Essentially I opened credit cards and paid myself through PayPal. I lose 3% and get back a bunch of points in return. Gaining thousands of dollars worth of miles and points over the years.
This is called manufactured spending and AMEX decided to crackdown and closed back the points they gave me.