Even though we covered this concept in a couple different places throughout this series, we wanted to be adamant on this point: don’t cancel your card too early, and make sure you’re meeting your minimum spend!
Problems With Cancelling Too Early
Cancelling a credit card is a viable strategy after you’ve gotten the value you wanted out of the card and no longer wish to pay its annual fee.
However, cancelling too early can affect your credit score in a bad way (refer to our credit score section).
Make sure to plan it out if you really want to cancel a card. Most cards don’t make you pay the annual fee the first year, so waiting 12 months is a good minimum timeframe.
If you don’t have extensive credit established, then you’ll need to be extra careful. Never cancel your oldest credit card, since average account age is a large portion of your score.
In fact, we highly recommend getting a non-annual fee card as your first/second card, simply so you can sit on it for years to build your credit.
That’s what many college students do; opening a card while young helps them build credit throughout their life.
Lastly, we’ll note that you’ll want to ensure that all the points you have earned on a card have been processed before cancelling. It would not be fun to realize that because you cancelled, the rest of your points didn’t go through!
Hot Tip: Instead of cancelling your card with an annual fee, why not try to downgrade it instead? Many cards offer a no-annual fee version, so call your customer service rep to see if this is an option for you!
Get Your Sign-Up Bonus Secured
Secondly, make sure to meet the minimum spends! If not, you are missing out on the biggest value of the card: the sign-up bonus.
These are often worth hundreds of dollars or more, and when you don’t meet the spend needed to attain them you are essentially throwing money away.
Again, by minimum spend we mean the amount the card agreement makes you spend in order to receive your sign-up bonus, often about $3,000 in the first 3 months.
This is why it’s important to know your spending beforehand. If you can’t actually support the required spending on the cards you’re looking at to earn a bonus, then choose different cards!
Otherwise, you may want to ask yourself if a points strategy is really appropriate for you. Recall that any fees incurred by not paying off the cards will greatly outweigh any benefits of the card.
Final Thoughts on Meeting Your Spends
As you continue with your points strategy, keep tracking all of your card information so you’re informed about the status of your credit, and are able to make the best decisions and keep getting the best deals.
Sometimes, credit card companies send targeted offers to your house, which can be even better than the deals we showcase here on the blog. If that is the case, then by all means take advantage!
The Card Match Tool may also help you find other offers available to you that you weren’t aware of.
When you keep your credit at its best, you’re more likely to receive these offers, which helps you boost your travel more and more!