Opening cards just for mileage bonus

[myFlightco]

Hi everyone - wondering what the general consensus here is about opening a card that has a great ~50,000 bonus miles sign-on bonus.  I estimate that this would save me about $1,100 over the next year.  The effect on my credit score, far as I can tell, would be another inquiry (had one last May) and lowering the AAoA.

I can live with the additional inquiry - won't need credit until +1 year at the earliest, and at that point I will only have one inquiry and some negative accounts roll off, so will net be higher than my current 750 score.

The AAoA - looking at my Equifax report, there are so many accounts on there that were either moved or the CC company closed and reopened for no reason that I am not sure it will marginally make a large difference.  There are 8 cc accounts on there with less than 10 years passing since they were opened, only three of which are currently open (activity before I started being careful about my credit).

So I pose the question - open another account for the miles and possibly cancel account within a year, since after one year the annual fee is $100 - or just pass on the card?

[enharu]

It's up to you. I suppose you are referring to the UA or AA card?

Some lenders don't mind as much about customers churning bonuses. Some do. It really depends on the lender.

Certain lenders may flag you in their systems if you been opening accounts solely for sign-up bonuses and therefore disqualify you for any sign-up promos in your future applications. It does take quite a bit of abuse to even get to that point though...

If it's just a couple cards, go ahead and do it if you think its worthwhile.

[espnjunkie]

Think about whether you plan on using the card beyond the first year prior to applying for it. Lenders know that many people will sign up just for the bonuses, and thus often require spending minimums to be met before the bonus gets applied. Spending limits ensure that you use the card enough to become fairly invested in the rewards system they have instead of using your other cards. 

[myFlightco]

I don't plan on using the card that much.. nor am I overly concerned about whether or not I will get approved.  Just fretting over the score impact and the general idea of opening cards for bonuses.. it feels strange to do it since it is not sustainable BUT it is a real $ savings.  How much is a temporary ding to credit worth?  Probably less than $1,000.

[indiolatino61]

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@myFlightco wrote:

Hi everyone - wondering what the general consensus here is about opening a card that has a great ~50,000 bonus miles sign-on bonus.  I estimate that this would save me about $1,100 over the next year.  The effect on my credit score, far as I can tell, would be another inquiry (had one last May) and lowering the AAoA.

I can live with the additional inquiry - won't need credit until +1 year at the earliest, and at that point I will only have one inquiry and some negative accounts roll off, so will net be higher than my current 750 score.

The AAoA - looking at my Equifax report, there are so many accounts on there that were either moved or the CC company closed and reopened for no reason that I am not sure it will marginally make a large difference.  There are 8 cc accounts on there with less than 10 years passing since they were opened, only three of which are currently open (activity before I started being careful about my credit).

So I pose the question - open another account for the miles and possibly cancel account within a year, since after one year the annual fee is $100 - or just pass on the card?

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Welcome to myFICO and the best of luck to you.

[clocktick]

I have done this many many times for points, mileage, etc.  I did it with Bank of America 3 separate times and closed all 3 cards a year later.  I did it with Amex for the Hilton Surpass and the Gold card and canceled both a year later.  I did it with the Chase Sapphire and United card, however, I kept those.  All of these have annual fees.  I did it with three separate Citi cards, all for points, however I kept those open as well.  I never had a negative reaction from any of them, and all of them I just met the minimum spend and never charged on them again (except for the CSP and United, which I kept).

They put those generous offers out there to entice you to apply for their card.  Of course, they're hoping you keep it but that's completely up to you!

[myFlightco]

Thanks, clocktick, for the thoughtful reply.

[longtimelurker]

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@myFlightco wrote:

I don't plan on using the card that much.. nor am I overly concerned about whether or not I will get approved.  Just fretting over the score impact and the general idea of opening cards for bonuses.. it feels strange to do it since it is not sustainable BUT it is a real $ savings.  How much is a temporary ding to credit worth?  Probably less than $1,000.

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Actually, with the large number of lenders it is quite sustainable, and some old hands here rely on bonuses as the way to get rewards (nearly always more valuable than the rewards available through actual card use).   Don't hit any issuer too often, and don't close straight after meeting the spend (wait till near the AF) and you will fine.

When it becomes an issue, the issuers change their rules: e.g. Chase clamping down on what constitutes a different card, and Citi cutting down churning by requiring more waiting time between apps.

So I wouldn't even worry about it, you have correctly determined that the score impacts are small.  And who knows, you may end up loving the card.  Probably not, but that is what the issuer hopes!

[sailor_mercury]

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@myFlightco wrote:

I don't plan on using the card that much.. nor am I overly concerned about whether or not I will get approved.  Just fretting over the score impact and the general idea of opening cards for bonuses.. it feels strange to do it since it is not sustainable BUT it is a real $ savings.  How much is a temporary ding to credit worth?  Probably less than $1,000.

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I apped on 1/6 for the Chase SWA Visa for this reason.  I received the card about a week later but just used it for the first time yesterday.  I can pay my rent which exceeds the $2k spending criteria with VISA for a $19.95 fee.  The inquiry has reported to the CAs the new Trade Line has not, I expect it to update sometime this week now that I have used the card.

I can reply back or Private Message you when I see it hit my report and let you know the impact.

PRE SWA Card reporting:

Current AAoA is around 3.5 years, it was over 6 years prior to an App Spree in December.

Current UTIL - 26%, it was zero back in Dec

Current Score - 691, it was 702 or 703 back before the App Spree, new Trade Lines and increased UTIL

POST SWA Card reporting:

???

[red259]

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@myFlightco wrote:

Hi everyone - wondering what the general consensus here is about opening a card that has a great ~50,000 bonus miles sign-on bonus.  I estimate that this would save me about $1,100 over the next year.  The effect on my credit score, far as I can tell, would be another inquiry (had one last May) and lowering the AAoA.

I can live with the additional inquiry - won't need credit until +1 year at the earliest, and at that point I will only have one inquiry and some negative accounts roll off, so will net be higher than my current 750 score.

The AAoA - looking at my Equifax report, there are so many accounts on there that were either moved or the CC company closed and reopened for no reason that I am not sure it will marginally make a large difference.  There are 8 cc accounts on there with less than 10 years passing since they were opened, only three of which are currently open (activity before I started being careful about my credit).

So I pose the question - open another account for the miles and possibly cancel account within a year, since after one year the annual fee is $100 - or just pass on the card?

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One of the main reasons I get credit cards is the sign up offers (other cards I will get for long term rewards/benefits). Some of the AF cards I will keep in the long run (or I will PC to a non-AF version). Others I will close if they do not serve my needs. If a card will serve your needs for the first year then get it. Who knows maybe they will give you a retention offer making the AF worthwhile.