Are you a savvy millennial looking to optimize your finances and reap the rewards of credit cards? Well, you're in the right place! Welcome to the world of credit card rewards – where opening and closing credit cards can become your secret weapon to free vacations, cashback, and more. In this Flik Eco guide, we will dive into the art of opening and closing credit cards for rewards so you can make the most of your financial journey!
Opening And Closing Credit Cards For Rewards Table of Contents
Why Open and Close Credit Cards for Rewards?
Opening and closing credit cards strategically can help you accumulate a substantial amount of rewards, such as travel points, cashback, and other perks. Many credit card companies offer generous sign-up bonuses to attract new customers. By taking advantage of these offers, you can reap the benefits without the long-term commitment of keeping the card.
Factors to Consider Before Opening and Closing Credit Cards
- Your credit score: When you apply for a new card, the issuer will do a hard inquiry on your credit report, which can temporarily lower your credit score. Therefore, make sure to space out your applications to avoid too many inquiries at once.
- Annual fees: Some credit cards have annual fees which could offset the rewards you earn. Ensure that the rewards you receive are worth the cost.
- Minimum spend requirements: Many sign-up bonuses require you to spend a certain amount within a specific timeframe. Be careful not to overspend just to meet these requirements.
How to Open and Close Credit Cards for Rewards
Research and Compare Cards
Start by researching the best credit card offers available in the market; this will require some homework. Look for cards with a lucrative sign-up bonus and compare these offers based on their rewards program, annual fees, and interest rates. Make a list of the top contenders and decide which card best suits your lifestyle.
Apply for the Right Card
Once you've chosen a card, apply and ensure that it's the right one for your needs. Pay attention to factors like minimum spend requirements, annual fees, and interest rates. Keep in mind that too many applications can negatively impact your credit score, so choose wisely.
Make the Most of Your Rewards
As soon as your account is open, start working towards meeting the minimum spend requirements to unlock the sign-up bonus. Strategize your spending by using the card for everyday expenses while staying within your budget. Don't forget to redeem your rewards before they expire! This is where your research will come in handy, as different cards offer varying redemption options.
Close the Card When Necessary
Before closing a credit card, evaluate if it's worth keeping. If the card has a high annual fee that outweighs its rewards, it's time to consider closing it. Be sure to redeem your rewards before closing the account; otherwise, you may lose them.
Monitor Your Credit Score
It's essential to keep an eye on your credit score throughout the process. If you notice any negative impacts, take a break from opening and closing credit cards or consider strategies to improve your score, such as lowering credit utilization or paying off debt.
Opening And Closing Credit Cards For Rewards Example:
Imagine that you want to go on a vacation to Hawaii next year. You researched and found a great travel rewards credit card with a sign-up bonus of 50,000 points after spending $3,000 within the first three months. The card also offers 2x points per dollar spent on travel and dining purchases and charges a reasonable annual fee of $95.
After applying and receiving the card, you start using it for everyday expenses and dining. Within three months, you hit the minimum spend and unlock the 50,000-point bonus. You also accumulate additional points from your regular spending.
Now, you have enough points to book a round trip ticket to Hawaii. After your vacation, evaluate whether the annual fee is worth keeping the card. If not, close it and move on to new rewarding opportunities!
Congratulations! You've now learned the valuable skill of opening and closing credit cards for rewards. Remember, the key to success is research and strategy. Use your newfound knowledge wisely, and you'll be on your way to enjoying fantastic rewards and experiences provided by credit cards.
We hope you found this Flik Eco guide helpful and easy to understand. Share it with your friends and fellow millennials, and don't forget to explore other useful guides on our website. Let's grow our financial knowledge together!