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

Sep 8, 2013

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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 Credit Card comes with two free nights when you spend $2,000 within 3 months of opening the card. 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

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points

TPG'S BONUS VALUATION*: $1,650

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

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More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
  • Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
  • With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
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Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

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