I have a confession to make. I’m shameless in my pursuit of credit card rewards. I know what you’re thinking. I’m selfish. I’m careless. I’m out for myself.
If you happen to be thinking any of those things, I want you to know that you’re totally correct. It’s true.
I have zero love for the big banks who dole out ridiculous sign-up offers and incentives. After all, would Chase or Citibank piss on me if I was on fire? Would Bank of America help me out if I were in trouble? Would American Express show mercy on me if I was having trouble paying my bills? Doubtful. Also, I think it’s important to keep in mind that they don’t offer rewards out of the kindness of their hearts. They’re actually trying to trick us. They want to lure us in, get us to spend more than we planned, and pay interest to them for the rest of eternity.
Therefore, I don’t feel bad at all when I take advantage of their generous offers without paying annual fees or a cent of interest. Not one bit.
Does Pursuing Credit Cards Hurt Your Credit?
Just the other night, I made a nifty spreadsheet detailing all of the credit cards we’re currently working on. And well, it was a little shocking. Between the two of us, we have over 20 open credit card accounts. Some have been used already and we’re currently working on others. With that many cards open, people often ask me if we’ve done irreparable damage to our credit rating. They ask if we had trouble getting our most recent mortgage or if we had to pay a higher interest rate. Basically, they freak. So, let’s look at the facts:
- Between the two of us, we’ve opened 8 different credit card accounts each within the past twelve months.
- We currently have over $145,000 in available credit on credit cards. Yes, I’m serious.
- We pay all of our credit card balances in full several times a month.
- When we applied for the mortgage on our new home, Greg’s credit score was 758 and mine was 745.
So, in a way, pursuing credit card rewards has affected our credit score in a negative way. When we bought our first home in 2006, our mortgage broker was uber-impressed that my credit score was 830. But, the last time I checked, there were no rewards handed out for having a credit score in the 800’s. The high 700’s are nice too, but the fact is, you don’t get any special perks for having a credit score over 720. The only thing I worry about is keeping our scores over 720 so that we can qualify for all of the best offers out there. Other than that, I couldn’t care less about my credit score. In fact, we closed on our new house Thursday and I went straight home and signed both Greg and I up for a Southwest Rapid Rewards Visa card. And I’m glad I waited since they recently brought back their 50,000 point sign-up bonus!
Guidelines for Pursuing Credit Card Rewards
When it comes to pursuing credit card rewards, you have to protect yourself. Here are some basic guidelines that I follow when churning cards:
- I pay off my credit card every few weeks. Technically, you only have to pay the balance in full each month to avoid paying interest. However, I use a zero-sum budget and I like my account to be empty at the end of the month. It’s just how I roll.
- I only pursue offers that I can easily attain. If the spending requirement on a particular card is too high, I don’t sign up. Sometimes it makes me sad but I don’t like to stretch myself. Fortunately, since we had a ton of home renovations coming up, I was able to sign up for a few choice cards ahead of time and take advantage of the situation.
- I keep track of everything. If you’re like me, you mostly pursue cards for sign-up bonuses instead of long-term rewards. If that’s your strategy, you need to keep a detailed record of when you opened and closed your accounts as well as when you hit the spending requirement. Forgetting to cancel a card before the annual fee kicks in could result in you having to pay it. Who wants to do that?
- I don’t manufacture spending. There are a ton of ways to manufacture spending towards earning rewards. Some of those include opening several Amazon accounts and sending money to yourself, or buying thousands of dollars in gift cards. While I’m not against those things, I don’t do them. Having as many cards as I do is complicated enough. I prefer to focus on earning rewards for my actual spending and not trying to game the system too much.
What about you? Do you pursue card rewards? If so, are you worried that it will impact your credit?