I signed up for an American Express preferred Blue card and got approved for a limit of $25,000. I have a 830 credit score. I realized that the places I shop don’t accept that card and you have to pay for it yearly so I canceled it.
Then I decided I was going to get a Costco Visa. Once I signed up the credit limit was only $5,000. So I canceled that one. So I stupidly signed up for a Wells Fargo Visa and that was $4,000.
Don’t leave yet and please don’t make fun of me but I’m not done being stupid. I decided I wanted a different American Express card and when I signed up for it the credit limit was $2,000 so I canceled that one.
Again I know I’m fucking stupid but how bad did I just fuck up my credit?
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Was it dumb? Yes
Is it easily corrected with some on time payments over the course of 6 months? Yes
They cacel each other out. You good
oh that’s right we don’t have a credit card or travel Lemmy yet. Okay, take down a few notes.
First you haven’t done anything terrible. Probably you’ve knocked your credit score down about 10 or 15 points. Not because of the opening and closing, but because multiple hard inquiries of your credit can cause the score to drop. That will repair itself over the next six months.
Something good to know is that American Express cards will only give you their sign-up bonus once per lifetime per person per card. I know that Chase will let you reapply two years after you drop a card and will give you the bonus, and I believe that’s the standard for other Visa cards or MasterCard.
I strongly recommend that you look at cards based on the rewards plan that they’ll provide you and the amount of spending required for you to be able to get the reward. I own several businesses so a $4000 or a $6000 spend is not a big deal for me over three months, But when I didn’t have that, I would need to figure out if I could make that spend over the required time period and go one card at a time. so back in my early days I was getting one card every three or four months, and then canceling cards about a year or two in, and then reapplying for them two years later.
I know that sounds complicated, but when you wanna fly to Australia, free and business class, and you don’t have a lot of money, that’s how you work the system.
Something good to know is there are essentially three tiers of credit cards. There are basic cards that will give you a lower reward, have a low spending requirement, and are generally with no annual fee. Then there is a second tier of cards, which will usually have a $95 per year fee, which is waived for the first year, and they have more rewards and perks. Then there is a third tier of cards that will have much higher spends (sometimes $6000-$10,000 in 3 to 6 months), but they will have much larger rewards along with about a $500 fee. I recommend staying away from the higher to your cards unless you can play that game and it’s not an issue.
OK, that is our Lemmy primer for everyone interested in credit card points.
Edit: I also strongly recommend you get one of the lower tier cards now, and keep that one with no anual fee from now on. Part of credit history is card longevity; I am a charter cardmember of a card from years ago for that reason.
Iirc, closing an account impacts your credit not because you cancelled your account, but because it impacts your debt/credit ratio.
You have 2 credit cards. Card A has a 10k credit and 2k balance. Card B has 10k credit and 0 balance.
So your ratio is 2k/20k or 10%.
If you cancel card B, your credit line is now 2k/10k, which is 20%. This increases your credit utilization, which impacts your score.
Opening and closing a bunch of cards without any balance shouldn’t have a significant impact on your score, maybe a few points.
Hard inquiries can be bad but most credit cards use soft inquiries nowadays anyway
Forget the credit card, tell me you’re on anxiety meds.
You’re financially ruined.
Give up all hope and mail me your credit cards, OP. I’ll “dispose” of them “properly” for you.
I don’t know what I’m reading.
Here people mostly use debit cards, and we don’t worry about things like credit scores or whatever. Also these cards tend to be free. At the end, they just give you a convenient way of paying with money you actually own.
Why would anyone buy normal stuff using credit? I get it for big purchases as a house or a car. But why go into debt for groceries or a new laptop?
Credit cards offer protection over debit cards. After all, it’s the banks money if something fraudulent happens on a transaction, not yours. I always use my credit card over my debit card mainly for this reason.
Some credit cards offer cash back or rewards which build up when you spend.
I have a direct debit set up to pay off the balance at the end of the month so it just automatically pays itself off.
Credit cards have good protections against fraudulent webshops and often provide free insurance against damage and theft. This makes it worthwhile for buying a new laptop.
My card is automatically fully paid off at the end of the month, so mhe debt is very temporary
But you still pay interest for basically nothing.
Interest is only charged on the outstanding amount going into the next month’s cycle. Paying it off every month means all purchases are interest free.
Fair enough then, never used this kind of service.
Ppl downvoting you is wild. Let’s not bring in toxic reddit traits. Not everyone is from BurgerCredit land. Perfectly valid question. SO to Stelor for explaining in a reply.
In the US and Canada, a person’s credit score is used to figure out how safe it is to lend them money. Big ticket items such as cars and houses are often bought on credit with a payment plan that includes interest - so the entity lending the money makes money off the loan. Good credit score = Less risk to the lender = Lower interest rate for the borrower = Less money spent in the long run.
Credit cards are an easy way to build a good credit score. I use mine for almost every purchase I make: groceries, gas, bills, subscriptions, donations. The things is, I pay it off in full each month (so I don’t pay interest fees to the credit card company) AND my card gives me 2% money back on my purchases. So if I use it for $20,000 worth of purchases, I automatically get $400 back. Free money!
Also, my bank limits the amount of transactions I can make in a month to 12. They charge a small fee from the 13th transaction onward. If I had to pay for everything directly by debit, I’d probably end up paying tens of dollars just in fees, each month!
Edited to add: By using my credit card and paying it in full, I demonstrate I’m trustworthy when it comes to credit, because I pay it back. That’s what a lender wants! This makes my credit score go up, which in turn helps me when I want to buy a car or get a mortgage on a house. I got my first credit card when I was 18, following the advice of my parents, and that has served me extremely well 15 years later! Who would you rather lend $20,000 to: someone who makes $50,000 and reliably pays back their credit card in full each month for 10 years and has zero debt, or someone who makes $500,000 but carries a $100,000 debt on their credit card?
So people who are savvy about credit do not buy everything “on credit” just because they pay for it with a credit card. It is legitimately a good way to save (or even make) money, at least in the US and Canada.
How is this kind of discrimination even legal there?
Could keep all of them that don’t have annual fees, and spread out your purchasing. I have three cards, one that’s 2% off everything, and one that’s more off food, and another that’s more off online purchases. My aggregate credit limit is pretty high even if each one were a bit modest (they aren’t as modest as they used to be though)
You can always pay off your balance more often than monthly. When I first opened my first card, I paid it off every Friday, to make sure the small limits were available if I needed them (I had a credit limit of $1,000 back then). Now I pay them off every payday, still multiple times a month. If you need to carry a large balance across payment cycles, you’ll get stuck on a high interest rate treadmill you don’t want to be on anyway.
The credit limits increase with time. The $1,000 card I started with now has a $10,000 limit. Mostly the limits came automatically, but I did request an increase to be able to pay for a home repair in a single transaction. Now between the three cards I have a lot of limit.
A fair number of places where you might want to spend a lot of money in a single transaction won’t accept credit cards anyway over a threshold. Last time I bought a car after establishing the price I asked about just charging it to a credit card. They were willing to do it only for $2,000, so I had to cut a check for most of the car anyway.
As somebody who lives in country where credit cards are mostly used when going abroad for a vacation, this whole comment section is wild.
Ok?
cancel
Ok.
find one that has no fees. pay it off every month. it doesn’t matter what your credit limit is
Hard inquiries stay on your report for 2 years but stop impacting your credit after a year
It’s not a huge deal unless you’re planning to buy a car or a house or something relatively soon
You can dispute them but they were all legitimate so you might as well just wait, it’s not that long. Your score was excellent so unless you incur a ton of debt It shouldnt go down all that much. And again, unless you’re planning to do something that is contingent on your credit within the next year or two it doesnt really matter
That’s reassuring. Thank you
You did more damage by canceling the cards than getting them and keeping them. In the end, had you kept the cards, it would have improved your score (even if you never put any charges on them because having the space counts positively toward your debt-to-credit ratio in FICO).
Yeah and average age of credit is a positive factor too. Basically reset that with every one they cancelled.
Oof didn’t even think about that but yeah. I have a very old retail credit card I got when I was 19 that I keep open just to keep my average high. Put some on it once a year just to keep it open
Using old cards is important - if you don’t use them the issuer might close them. I had that happen with my very first credit card. My next oldest account was something like 5 years newer, which at the time was a pretty big gap because I hadn’t yet reached quasi-old-far status.
For what in the hell does anyone use a credit card, like ever?
To build credit 🙃
I have A+ credit and have never possessed a credit card.
What is A+ credit?
It’s what the guy at the bank told me each time I bought a car or a house.
And building credit is useful to set yourself up for future purchases - a condo/house, car, whatever. The whatever here is bigger than it semese, as having a decent credit score can let you finance all kinds of things at a pretty low rate, if not 0% even today. If you’re saving any extra money in an investment/retirement account, and can pay off your 0% financing offers in full by the time you would start to owe interest, financing at 0% is a great deal even if you have the cash on hand to pay outright.
Yeah, I don’t necessarily agree with the game, but since we’re in it, I play it. All of my purchases go on credit cards. But I never spend money I don’t have, and I pay the statement balance in full every month so I’m never charged interest. The only time I don’t pay the full statement balance is when I buy a new phone since I have the store card with 0% financing. But anything else, never ever ever carry a balance.
It sucks because it’s basically a benefit for people who have good executive functioning and financial literacy, paid for by those who don’t. It’s a benefit I only get because big banks prey on poor people.
Literally every purchase. Use it like a debit card and build a good credit report before you’re even 30. Shit my credit score was over 800 before I turned 21. My credit wasn’t very thick. But what I had was solid.
Plus every card I have gives me cash back so it’s like getting 1-5% off every single purchase. Plus since I buy things for work and get reimbursed for it I’m effectively making money off of it.
I’m 44yo with A+ credit and have never used a credit card in my life.
Define “A+”
Credit is about length and girth in addition to their scores. By 40 you’d better have an “A+” score. If you’ve had a mortgage for 20 years, paid your bills on time, and had a couple car loans then anything under 800 would be hard to get.
Sounds like you agree with me that a credit card is not remotely necessary for building good credit.
Compared to a debit card, it adds an additional layer between my money and the rest of the world. If my card is wrongly charged, by malice or honest accident, I then have some weeks to sort that out before the money is actually going to be pulled from my bank account. That’s why I prefer to pay by credit card instead of by debit card.
As long as you pay it off every month it should be the way you pay for everything. It builds your credit score and is more secure. With a credit card you’re spending their money, so if your card gets stolen you won’t be on the hook for everything. Vs a debit card you’re spending your money, it is much harder to do fraud from the consumer side with a debit card. Plus perks .
I understand if you’re bad with credit, but if you’re not, why wouldn’t you use one?
Debit cards have all the same functionality as far as I can tell, and you don’t need to worry about building up debt at predatory interest rates.
Cash back rewards cards work well, I end up with at least 2% - 5% cash back on all my shopping.
The key is to treat credit cards like cash e.g. pay your bill in full every month, never ever carry a balance. It doesn’t work for everyone and that’s okay, some people just can’t help themselves and get too spendy and end up in debt.
Other nice thing is that fraud is handled better with credit cards, if my card is lost/stolen no one has a direct line to my bank account and can’t try to drain my bank balance with debit purchases. Sure your bank may/may not void those transactions but in the time it takes for them to “investigate” you’re going to be out real money in your bank account. With a credit card you just dispute those fraud charges and never actually pay for them.
The amount this matters in relation to your 830 score is likely going to be negligible. Are you making a large purchase via a line of credit anytime soon that would rely on a stellar credit report? If that answer is no, fuck it, go make some more mistakes you earned it
Lol thanks. House is paid off. Didn’t need any cars any time soon. I’m ok
Amex makes sense if you (a) live in the US, and (b) can pay off your balance every month. Yes, there’s a yearly fee, but there are many benefits as well. I don’t know what Blue gets you, but you get things like Uber rebates, points that can be used in Amazon like money, airline benefits, and so on.
You do not want you carry a balance over and pay the interest. Amex is not competitive on their interest rates.
I use Amex almost exclusively, and only very rarely encounter a place that won’t accept it.
- How much are you spending on your cards every month???
- Why not have more than one card for different things, rather than cancelling cards?
- You generally want to very rarely cancel a credit card, I recommend finding one with no annual fees and sticking with it. You can always have more cards after all.
- A spending limit doesn’t really mean anything if you payoff your credit early, you can always hound your CC company to release your credit early once you pay it off early.
