Frequent Lifehacker readers will recognise our staff’s love of boring finances. It’s especially the case when it comes to credit cards. Using the same credit cards for many years improves your credit score by lengthening your history of credit use.
But we get it. Credit cards offer appealing bonuses to new customers, and even our own staff members want the fancy new cards that offer the coolest rewards.
If you apply for a new card that has a signup bonus, however, make sure you plan to keep the card for at least a year. The Points Guy noted this recently, highlighting language from American Express that if you close or downgrade a Delta SkyMiles card in the first year you have it, your signup bonus could get taken away.
Here’s the language American Express uses in its cardholder agreement, with key points bolded by The Points Guy:
“If we in our sole discretion determine that you have engaged in abuse, misuse, or gaming in connection with the welcome offer in any way or that you intend to do so (for example, if you applied for one or more cards to obtain a welcome offer(s) that we did not intend for you; if you cancel or downgrade your account within 12 months after acquiring it; or if you cancel or return purchases you made to meet the Threshold Amount), we may not credit the welcome offer to, we may freeze the welcome offer credited to, or we may take away the welcome offer from your account. We may also cancel this Card account and other Card accounts you may have with us.”
We’ve mentioned this before: You need to be on your best behaviour for the privilege of earning and keeping a signup bonus. Credit card issuers know that welcome bonuses are the best way to earn points and miles fast, and if they suspect you’re taking advantage of your earning power by churning through cards, you could be accused of rewards abuse.
The solution? Sign up for new credit cards for the long haul, not just for the benefit you can snag right away. Weigh the benefits a rewards card offers—and that you’ll actually use—against the annual fee it charges.
And if you’re truly disappointed in the card once you’ve used it for a few months, call customer service to talk through your options. For instance, if you sign up for a rewards card just a few months before you learn the annual fee is going to go up, that may be a legitimate beef you can raise with the issuer.
They likely won’t waive your annual fee, but they may be willing to downgrade you to a lower-tier card without penalising you for requesting the change so soon after you opened the card.