Here in TPG, we are always looking for and working towards a Welcome Bonus. Welcome bonds are the best way to win a large part of the points or miles. I usually follow a simple process: once I have won a welcome bonus, I start working to win the next bonus. I follow this motto: always wins.
However, once you have won that coveted welcome bonus on a card, you can ask whether you must continue using it, if you can throw it into the sock drawer or if you should even consider closing the account.
Let’s examine whether, or should, stop using a credit card After winning the welcome bonus.
Can I stop using my card after winning the welcome bonus?
This is a two -pointed response. The simple answer is yes, but should you? No.
While he can be tempted to think: “I earned the welcome bonus, so there is no need to use this card”, that thought can negatively affect its Credit score.
If you stop using your card, your account can be inactive, which can lead to Banks closing your account. From the bank’s perspective, if you don’t use it, you may not need it. Unused accounts also do not earn money.
If you do not use your card, the bank will have nothing to inform the credit offices. That means you will have less evidence to prove that you can pay your cards in a responsible way when your statements are due. This could make the emitters nervous for issuing a new card.
In addition, if you use your credit card just to get a welcome bonus and then ignore later, run the risk of bothering the bank that issued the card, which could make the approval of future cards difficult.
It is also imperative to mention that if you choose to close your account after winning a welcome bonus, the sender can collect the points or miles. He also runs the risk of the issuer blocking him from receiving future bonds.
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A perfect example is American Express Bonus Elictability Tool ‘. It establishes that the bank can evaluate not only its credit score, but also its past banking activity with Amex to decide whether to obtain a welcome bonus of future credit card requests. If AMEX determines that it is an undesirable client, it may be difficult to change your mind.
If you decide not to use your card, you must still monitor your account. As you will not have an invoice to pay, it is less likely to notice fraudulent charges on your card.
Related: Credit card fraud: how to detect and inform it
Reasons to keep your accounts active
The first and most important reason to keep your cards is that it helps maintain a Good credit scoreGeneral use of age and credit. A good credit score can help you get the approval of more cards, which means you can get more welcome bonds.
If the bank closes its card for inactivity, it risks:
- A poorest credit use: His Credit use It represents 30% of your credit score. It is a relationship that shows how much of its total credit limit is using. Close a card account will reduce its total credit limit available. Ideally you want to maintain your credit use ratio less than 30%.
- Reduce your credit history: Its credit length represents 15% of its credit score and will be reduced if a credit card account is closed.
Both factors play an important role in determining their general credit score.
Along with not informing activity to your Credit ReportThere are other problems that must be taken into account, such as The impacts on your credit report if your account is closed.
Not only will your account stop aging (which means that it will not improve its duration of the credit history), but if it appears as “closed by the issuer”, it could also leave a negative brand in its credit report that could damage it when you request credit in the future.
Given all this, it is worth keeping your credit card accounts active for Improve your credit score And increase your chances of obtaining more welcome bonds. It is also worth keeping your accounts open to enjoy the benefits of your cards.
Many cards that offer welcome bonds come with advantages such as Access to the living room, elite status, Company certificates and declaration credits. These benefits can provide hundreds and even thousands of value when used correctly, so they are incentives to keep their accounts open. If your account is not active and the bank decides to close it, it loses all these valuable benefits.
In addition, many credit cards’ travel and Purchase protection Just apply when you use that card for a purchase, so you may want to book your next trip or make your next purchase on one of your cards to ensure that these protections are activated.
Have a Credit card with travel protections It is only useful if you use that card to pay your trip, and you cannot do it if your account is closed by inactivity.
Also, to win and exchange points and milesYour account must be open and in good position. If your account is closed due to inactivity, it could potentially lose any reward attached to that credit card.
How to keep your accounts active
If you want to keep your active accounts, simply use your credit cards.
But what about working on those new account welcome bonds? Purchase on other cards will not reduce your progress towards the bonus? The easy solution is to use your card from time to time to make a small purchase.
For example, in letters that I do not use regularly in my daily life, I established a calendar reminder To notify me that I will buy a coffee, a gum pack or recharge my Chick-Fil-A application to ensure that the card remains active.
You don’t have to make big purchases; Small purchases will be enough. You just want to show the bank you are using your card. And while making a charge once or twice a month does not guarantee that the bank does not reduce its credit limit or close its account, largely reduces the risk.
There is no standard framework for when emitters close inactivity accounts, since each one has their own rules set.
Some could close after just a few months, and others after a year. The simple way to avoid this is to make small periodic positions on all your credit cards.
Related: How to avoid red flags with credit card issuers
End
Once you receive the welcome bonus on a credit card, you may want to move immediately to a new card so you can win another welcome bonus. While you can use that first credit card less frequently, it is imperative to maintain your active account.
Fortunately, you don’t need to use your card frequently or for large purchases. It can drastically reduce how much a credit card uses, but you should not stop using it completely.
