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Do You Stop Spending On A Credit Card After You Get The Sign-Up Bonus?

by on September 8, 2013 · 25 comments

in Credit Cards, Sunday Reader Questions, Video Blog Post

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TPG reader Benjamin had a question about credit card sign-up bonuses and spending:

“After you fulfill the bonus requirements for a card, do you continue to use the cards, or do you set them aside to work on fulfilling your other card requirements? I’ve been simply putting them in the drawer after I know they’re completed, but wanted to know is there anything negative that happens when you don’t use the card?”

I stop spending on a credit card when it just no longer makes sense. For example, the Chase Hyatt Visa comes with two free nights when you spend $1,000 within 3 months of opening the card, and as a Diamond member, those two free nights are in suites. However, the card itself doesn’t really offer great day-to-day spending power.

I’d rather put spending on my Chase Sapphire Preferred and earn 2X points on travel and dining because those Ultimate Rewards points I earn are much more flexible, and can be converted to Hyatt points if that’s what I end up deciding to use them on anyway.

However, I am going to keep my Hyatt card open in perpetuity because one of its other benefits is one free night at a Category 1-4 hotel Hyatt property each year I have the card open, which is easily much more valuable than the $75 annual fee I pay on the card.

So even though I’m not spending on the credit card and it remains on my credit report, it doesn’t negatively impact my score. In fact, it actually helps in a way because if you’ve got a lot of available credit but you’re not using a huge amount of it, your debt-to-credit ratio is low, which raises your credit score since credit utilization and paying your bills on time are the two biggest factors in determining your credit score.

Main credit score factors

Main credit score factors

There are some credit issuers that will shut down accounts if they are dormant for too long, so it’s a good idea to put a small purchase on the card every so often just to keep it active.

The other thing to keep in mind is: is your card giving you more in value by hanging onto it than the annual fee is costing you? With the Hyatt card, that’s a clear yes, but if the answer for the card or cards you’re considering is not so clear, or just a flat-out no, then maybe you should consider closing it.

Before you do, though, it’s worth calling up the bank and seeing if they will waive the annual fee or give you some other sort of perk that makes the annual fee worth it, like a points bonus.

So focus on meeting your minimum spending first to secure those great credit card bonuses since you don’t want to fall short on those, then set a strategy for your credit card spending so that every single dollar and every single credit card earns you some value.

For ideas on how to meet minimum spend, check out this post, and then here’s a great post on Maximizing Travel Credit Cards’ Calendar Year Spending Threshold Bonuses and Perks and posts on how to maximize your spend on various kinds of purchases:

Getting the Most Points Out Of Double and Triple Dipping When Booking Travel
Choosing the Best Credit Cards and Sites for Booking Airfare
Choosing the Best Credit Cards and Sites For Booking Hotel Stays
Earning the Most Miles and Points on Car Rentals
Earning the Most Miles and Points on Gas Purchases
The Best Ways to Earn Points on Dining

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • Zila

    That said, each time you hold on to a card, you miss on a potential bonus point mother load, so canceling and then renewing is good strategy too,given that your credit score is high enough. So two night anywhere on Hyatt is better than one night, and MB bonus only comes with the application or renewing an application.

  • Diotallevi

    I signed onto the Chase Marriott card for the 70K bonus, which I will turn into 25K AAdvantage miles. But I am keeping the card for the one category 1-5 free hotel night per year. It has an $85 annual fee, and I use the free night to stay at a the Fairfield Inn – Long Island City or Queensboro Bridge, which usually range between $200 to $250 a night. So it actually saves me $115 to $175 annually, because those are stays I would definitely be making regardless of whether I had the free night certificate or not.

  • thepointsguy

    The free night makes it a no-brainer as long as you use it for an $85+ stay, which isn’t that hard to do!

  • thepointsguy

    Right, but to be clear Chase won’t give you the same exact card bonus twice (usually) so you can’t just cancel and re-apply for the same bonus and get it.

  • RakSiam

    From time to time you get some offers that are worth considering too. Like the Hyatt card’s 5000 point bonus if you spend $3K in 3 months. I think those are targeted. But I collected one of those last quarter and will be getting it again this quarter. That seems like a no-brainer to me too. But if you’re juggling a lot of new cards with spend requirements I suppose you have to weigh which offers are most valuable.

    Citi keeps offering me bonus miles on certain spend categories for my AA cards but since I’ve been putting my spending toward the Hyatt bonus I haven’t taken aadvantage of those. And I’ve been sticking most other spend on the Chase Sapphire Preferred because as you note, the flexibility is great.

  • Zila

    I thought that if you wait (two years?), some time, you can get the bonus again, and given that there are so many Chase cc, one can potentially “rotate” them over 2 year cycle to pocket the bonus. I think I got the Delta bonus 3-4 times over the past 5 years, and I fly Delta 3-4 times a year a use their cc periodically…

  • WBTM

    The Delta card is issued by amex

  • kestie

    Good question. I tend to hit spend, then use the card now and again. About twice a year I look through my cards and try to get rid of one or two. The cards with companion fares have worked well for my family so I tend to keep those cards. But otherwise, I go back to my Citi Premier or Sapphire cards.

  • Zila

    Yes, these are targeted, and I waiting for the 5k bonus myself. BTW, I did not know you could repeat it..

  • RNE

    I am a grandfathered Continental Presidential Plus (PP) cardholder. For those who don’t know about that card or who have forgotten, Continental and Chase created a club card that earns 1000 flexible elite qualifying miles for every $5000 in spend at an annual fee of $375 (subsequently $395). It has other benefits (and limits), but I won’t bore you with the details. The card is not available to new applicants.

    Nowadays, Continental is history but the card still exists and applies to United’s MileagePlus frequent flyer program. I put the lion’s share of my spend on my PP card because of the flexible Premier Qualifying miles are useful to me in bumping up my typical 25,000 miles of annual flying up to 50,000 (and thus Gold status). However, I will still apply for new cards (recent example: the Chase Sapphire Preferred (CSP), thanks to you, Points Guy) and will divert spending from my PP card to meet their minimum spend. I will keep the CSP card because of the 2-point per dollar benefit and the flexibility of their use.) However (bear with me; I’m getting to my point), I have a few very old cards (open for 35+ years) that I want to keep on my credit report because longevity of credit counts, but these cards don’t do much for me otherwise, and thankfully they have no annual fees.

    My point: Even if a credit card is not of great use, as long as it’s not costing you anything to have, it may make sense to keep it in the fold.

  • jjflysalot

    Another option to not only avoid the renewal fee, but also not take the cancellation credit “hit” is to convert/downgrade to a no-fee card. Yes, I realize that you probably won’t get the benefits under the terms of the annual fee card, but it does provide an option to cancelling out right.

  • bufito

    How about a no-fee CC? I have an old Amazon visa I was thinking of closing since I don’t use it at all. It had a $30 rebate when I first got it. Worth keeping in a drawer or cancel?

  • danny

    once i hit the MSR, usually there tends to be leftover points to redeem. i allocate further expenses until i hit the next increment. for example, a CC may have a 50,000 point sign-up bonus requiring $2,000 MSR. when all the points settle, it’ll be approx 52,000 points, but it would only be worth it to cash out in 2,500 point increments, so I would spend another $500 to hit that increment. then i stop using the card for x months, call in for a retention offer (with the expectation of cancellation), and see whether it is worth it to me to keep it.

  • Shane

    Is there an upper limit to the number of cards you recommend keeping open? I’m sure it’s different for everybody depending on credit situations, but can you provide some general guidance?

  • Danny

    If you have enough points, the travel packages let you transfer marriott points at 1:1 with nearly any airline.

  • sam

    I say keep it. If you apply for another Chase card and are denied you can call and ask them to reallocate the credit available on that card to open the new card. And they can close the Amazon card then. Even if you don’t have to use it for that keeping it open helps your average age of accounts and your debt to credit ratio on your credit report.

  • Sarah

    Is that the Chase policy for all cards, meaning the only way for more big sign on bonuses would be waiting for them to come out with a new card? I got the sign on bonus for the Sapphire Visa and then the Sapphire MC but haven’t tried re-applying for anything else (I already have the Ink Bold, Ink Plus, Freedom and others). Is there an article out there anywhere of which cards you can get every year or two?

  • bufito

    Great advice. Thanks!

  • Diamond Vargas

    Google “issuing banks rules for applications” and “a churn for every
    season” for two articles that address this for each bank, although not down to the level of individual cards within the banks. Both articles are somewhat out of date,
    especially the indication in the second one that you need to wait two
    years with Amex — they started adding language subsequent to that post
    which clarified you can get bonuses again if the card has been closed
    for 12 months.

  • http://donnielaw.com/ Donnie Law

    This has always been confusing for me and there seems to be a lot of conflicting information with how soon you can get a large bonus again for the same card.

  • Jonatas Silva

    I initially signed signed up for the Amex premier rewards card, which is a great day to day card, 2X on gas and supermarkets and 3X air travel. I then proceeded to get a Amex Open Gold card for a 50K sign up bonus, which did not have 2X gas and supermarkets. I called Amex to cancel the premier rewards because of the $185 annual fee, and they made me a deal that if I spent an additional amount on it (i forgot the exact number, like $500) they would give me a $150 credit, essentially knocking the Premier rewards annual fee to $35, well worth it!

    And to Brian’s point, my credit score has jumped up 56 points since I started playing the points/miles sign up bonus “game”, I went from 1 credit card to 10, and my credit is better than ever, just keep those balances down, and never ever miss a payment!

  • JTP

    Depends on when you opened that card… if that is your oldest card for example, by all means leave it open; having a no-fee card as your oldest is probably the best case scenario when you play this game.

  • http://mreverydaydollar.com/ Mr. Everyday Dollar

    Like TPG stated, sometimes it makes sense to keep the card open for the yearly perks. I don’t use my Hyatt card anymore day-to-day but the yearly category 1-4 credit is worth the $75 annual fee. I just used it for a night at the San Francisco Fisherman’s Wharf property where the rack rate is $429 (plus taxes and fees!).

  • Jim

    I keep my Chase Mileage Explorer Card going. I typically churn about $5000 – $10000 per month in Cost of Goods for business. Pay with card, pay the charges off. I got the 10,000 mile bonus in March, and I got it again in July. I don’t know if they made a mistake or what, but so far I got 20,000 bonus miles for spend.

    One more bonus, and that’s another free ticket, plus the boat load of miles I’m racking up. Now, to move to Delta and AA….

  • Fanfoot

    So putting the card in a drawer doesn’t hurt your credit score, but doesn’t it hurt you with that particular bank? Are there any banks that will look at your past history with them, detect that you tend to spend just enough to get the bonus and then stop spending (especially for those stupid BofA cards that give you the bonus on approval), and then decide not to approve you for new cards in the future.

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