You can cancel it, but your credit score may change.
- Many consumers open new credit cards to get attractive prizes and signup bonus offers.
- Signup bonuses can be an easy way to earn more rewards as long as you meet the minimum spending requirements.
- If you’re thinking about canceling your credit card immediately after receiving a bonus offer, you should consider how closing your account might affect your credit score — it might make sense to put your new card on hold for a while.
Rewards credit cards allow consumers to earn rewards using their credit card. Plus, many card issuers have generous sign-up bonus offers to attract new customers. These bonus offers can be a quick way to earn lots of points or miles if you meet minimum spend requirements. But should you continue to use your card after getting the sign-up bonus?
Signup bonuses can be a win for your wallet
Some of the best credit cards have attractive sign-up bonus offers. New cardholders who meet the requirements and meet the minimum spending requirements can get a bonus. It’s not uncommon for credit card reward enthusiasts to open a new credit card because of a registration bonus offer.
Getting a sign-up bonus can get you closer to your redemption goal. Whether you’re looking to book a free flight for an upcoming vacation or hoping to get cash back as a credit statement to lower your credit card bill, getting bonus offers can be a big win for your wallet.
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Consider the value of the card benefits
What should you do after getting the sign up bonus? Should you keep the card in your wallet but stop using it, or should you throw it away for good? If you’re not sure whether you should continue to use a particular credit card, it’s best to consider the value you get on that card.
Is the annual fee within your budget? Are you using most of the benefits on offer? Are you able to earn rewards with your usual shopping habits? Do cards make your life better? Asking yourself these questions can help determine whether you should continue using the card. Not all credit cards are right for everyone, and that’s okay. There are many other card choices.
Don’t rush to cancel your credit card
Yes, you can stop using a credit card if it no longer meets your needs, but closing a recently opened credit card account can have consequences. The length of your credit history is one of several factors that make up your FICO® Score. A long credit history shows that you know how to manage credit and can help improve your credit score.
Before you rush to cancel your credit card, consider how that choice might affect your credit score. If your credit card no longer gives you value but doesn’t charge an annual fee, you may want to keep it in your wallet for a year or two and remember to use it occasionally, so the account stays active. Doing this can help you improve your credit score.
What if the card has an overpriced annual fee? If your current card has an annual fee, you can ask the credit card issuer to downgrade your card to a credit card with no annual fee. Doing this can save you money by eliminating annual fees and allow you to keep open existing accounts — ones that look good on your credit report.
Watch your credit score
Your credit score is important and can affect your future, so don’t forget to consider how your daily financial choices will affect your score. Want to make a wise credit card move? Paying your entire credit card balance (not just the minimum amount due), paying your bills on time each month, and maintaining a long credit history are some actions you can take to improve your credit score and set yourself up for financial success.
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