The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: kamas on October 29, 2014, 10:42:17 AM
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I am looking to sign up for a credit card, after reading these articles:
1- http://www.mrmoneymustache.com/credit-cards/
2- http://www.mrmoneymustache.com/2014/10/13/credit-card-churning-for-mustachians-or-sucka-consumers/
One card says "Chase Ink Plus Business Card: This one offers a 50,000-point bonus after spending $5k in 3 months. $95 annual fee is waived for the first year. "
Would it be a wise mustachian choice to cancel this card in the first year to avoid paying the $95 annual fee? Or does the card offer mustachian benefits that would make it worthy of holding onto the card and paying the $95 annual fee?
Does canceling a credit card make your credit score go down?
What credit card do you recommend for a beginner mustachian?
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Typically after a year one will ask them to waive the fee or downgrade to a card without a fee. Otherwise yes, cancel. It can cause your credit score to temporarily go down.
The Ink Plus right now actually offers 70k points with the $95 fee not waived. However those extra 20k points are worth $200 if you just redeem them for statement credits, so you still come out $105 ahead by paying the $95 fee.
For a beginner I'd start with the Chase Sapphire Preferred, but any of the Chase ones that reward UR points are good.
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I applied for and received five travel credit cards in the past year, collected the welcome bonuses and other perks, and just canceled four of them without any problem in the past week or so, before the renewal fee kicked in.
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We pay the yearly $59 fee on our business card, but more than make up for that in points. Could probably do slightly better moving around cards every year, but would be a logistical nightmare.
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Be sure to claim all rewards well before you cancel, as most are tied to the card being in good standing.
An AAdvantage card is one exception, as miles earned get transferred to the primary account holder's AA account but you do have to be careful not to let them expire due to inactivity.
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If you have a long, deep credit history, the practice will not affect your credit score much.
If you are pretty new with credit (<8 years), I would stick with one high fee, soon to be dumped rewards card at a time, with a portfolio of other cards that you maintain long term.