Simplifying My Credit Card Strategy | brokeGIRLrich
There’s something to be said for simplicity.
This past year, when I was knee deep in trying to buy a house, I knew I couldn’t mess with my credit score and so I just left every credit card I had alone.
I have been a fairly hardcore rewards card churner for the last seven years. And I don’t regret it one bit.
It knocked some serious cash off:
With minimal effort on my part. I think the Hawaii trip was really my crowning achievement of churning because I did it in such a short time frame and still managed to save over $1,000 on that trip.
Also, a cool thing I’ve noticed since I’ve been doing this for so many years is that with many cards, if you wait a few years between reopening them, you can do the reward churn a second time.
But with credit card churning comes spreadsheets and a lot of organization. And a lot of credit cards. And a lot of careful tracking to make sure you don’t get hit with annual fees (which has definitely happened to me a few times).
I’ve noticed in tracking my credit score while I do this, that the hit I get for the inquiry is entirely negligible but I do see a few point drop when I close the cards.
This leads me to believe that credit utilization (what percentage of credit I’m using) is a far larger factor than inquiries.
So when I close a card, I might drop from having $60,000 of credit available to only $55,000 or $50k. And so I usually see about a 3-5 point drop.
Clearly, I wanted to avoid this while mortgage hunting (I don’t personally recommend churning cards in the year you prepare for a big purchase that will involve borrowing money from a bank). So I let the cards I had ride and got hit with about $300 in annual fees for cards that weren’t exactly providing me anything useful during a global pandemic.
As I’ve now stepped back from the home buying idea, I thought, now is the time to simplify.
This allows me to “reset” on any cards that might allow me to churn them again in the future (like if I do buy a house in 5 years and then have to furnish the dang thing, you can bet your bottom I’ll be churning cards like crazy).
I’ve left my oldest card alone.
Pro Tip: Always leave your oldest credit card alone. And make sure you put the occasional purchase on it so the credit card company doesn’t just up and close it on you.
I always thought it was an old wives tale that credit card companies will just close your credit card, and I’m still not sure it happens that often, but I did have CapitalOne just cancel one of mine during the pandemic for lack of usage with no warning, so that was cool.
I’m also keeping a Barclay’s cash forward that has rewards but no annual fee as my primary card.
I also caved a tiny bit and opened the new Venmo card to check it out so I can write a review for all of you, but every other card I have is either cancelled or on the docket.
As part of this process, I realized that a lot of cards had some rewards sitting on them that I hadn’t noticed and some cards had lower redemption thresholds than I had previously realized. So if you’re also doing some credit card spring cleaning, double check your points first and use what you can.
