Travel Reference
In-Depth Information
if you call up the card issuer and let them know you are thinking of canceling, many times you can get the
fee waived for a second year or get your account switched to a no-fee card.
It's true that “churning and burning”—that is, opening and closing a lot of credit cards at once—can hurt
your credit score. But opening a few accounts over a longer period of time won't kill your credit score. I've
been opening and closing accounts for years, and I still have a credit score close to 800 and have never been
denied a card.
As Brian Kelly from thepointsguy.com, a website that teaches people how to use credit cards to gain loy-
alty points, told me, “While in its own words, FICO says 'opening several credit accounts in a short period
of time represents greater credit risk,' that's because you're applying for multiple lines of new credit rather
than submitting several inquiries for a single new line, such as a mortgage. In general, however, the impact
on your score from multiple inquiries is small—and remember that new credit counts only 10 percent to-
ward determining your overall FICO score. So as long as you are strong in the other areas that determine
your score, like payment history and amounts owed, you should be fine to apply for new cards.”
Brian is constantly opening credit accounts and has had the same experience as I have. He recommends
that “ideally you should space your applications several months apart.” That's the key. Your credit score will
slightly dip every time there is an inquiry into it, whether that is a credit card or home loan or car loan. It's
how the system is set up. But so long as you space out your applications and maintain good credit, you won't
do any long-term damage to your credit. Your credit rating rises over time as long as you maintain it; you
aren't going to have a bank officer tell you years from now, “Sorry, because you canceled three credit cards
in 2012, your loan is denied.” I once canceled four credit cards in one day, and the impact on my score?
Nothing.
What Makes a Good Credit Card
So now that that is out of the way, let's talk about why these cards are important for travelers and how to
find the right one for you. Travel-related credit cards are good for two reasons:
First, most travel credit cards offer bonuses of at least twenty thousand points just for signing up. Don't
sign up for a card that doesn't offer this, because without it, it will take a long time to exchange reward
points for hotels, cash, or airfare. Starting at twenty thousand points is a lot better than starting at zero. Most
of the time, the points are worth at least a free domestic airline ticket, as most U.S. carriers begin award tick-
ets at twenty thousand points for a flight in the continental United States. The American AAdvantage card
offers around twenty-five thousand miles just for joining (that's a free round-trip domestic ticket). United
Airlines gives you around forty thousand miles for signing up. Delta Airlines offers the same. Starwood Ho-
tels often has specials that give you thirty thousand points for signing up with their card. Even general-use
cards, like Chase Sapphire, offer a sign-up bonus of forty thousand points. In short, by not getting a credit
card, you are leaving free flights and hotel rooms on the table that could be used to lower your travel costs.
Free is the best word in the English language after all!
Since offers and bonuses vary from time to time, it's important to keep track of the latest deals. The best
websites for that are the following:
Flyertalk: flyertalk.com. A forum site where people post the latest flight bonuses and miles
specials.
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