Advice Needed: What To Do With Old Credit Cards?

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polygons
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Advice Needed: What To Do With Old Credit Cards?

Postby polygons » Sun Oct 27, 2013 11:24 am

My girlfriend and I need some advice from some credit card gurus :-). Thanks in advance!

We both have good jobs and good credit, but boring vanilla 1% cash back cards. So we were thinking to upgrade.

We want to keep our credit good, make it better if possible, and get some nice rewards too.

So, we were basically looking at the Chase Sapphire Preferred (CSP), BarclayCard Arrival, and some kind of Amex card like maybe the Gold Card. But so far our research favors the CSP, and this is why:

We take Amtrak a lot to see our folks. On Amtrak, a one way ticket is 4000 miles or about $100 if you buy it outright. With the CSP we can 1:1 transfer CSP miles to Amtrak miles with the Arrival you can't. To get 4000 miles with the CSP, in the worst case, if we never spend money on dining and travel (we actually spend a lot), we would need to spend $4000. If you factor in the annual dividend, it's actually $4000/1.07 = $3740. With the Arrival, we'd need to spend about $4545 so that the %2.2 rewards come out to $100. So, for us, the CSP wins, right?

It also seems like the CSP has better customer service? We never seriously considered an Amex card, but maybe we just don't get it and we really should.

So it seems like we should each get a CSP and cancel our boring vanilla cards and just use the CSP all the time?

Or maybe we shouldn't cancel our vanilla cards, because at some point I heard that canceling cards is bad for our credit? Or is that a myth, I actually have no idea where credit scores come from. We can just keep them around and never use them too.

Or maybe we should get a bunch of cards because that builds up our credit? Or so I heard. Some day not that far away we'll buy a house together.

Or maybe we should get both the Arrival and the CSP just to collect the big signing bonuses and cancel one of them before the first year ends and we'd have to pay two annual fees?

Or mabye we should get the Amex gold card?

Egads! Please help! Thanks so much! This stuff is important. :-).


takeshi
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Postby takeshi » Sun Oct 27, 2013 8:57 pm

polygons wrote:So, for us, the CSP wins, right?

Is Amtrak the only company that you'd use to redeem travel awards? If the Arrival can't transfer to Amtrak then why is it still in the running?

polygons wrote:Or maybe we shouldn't cancel our vanilla cards, because at some point I heard that canceling cards is bad for our credit? Or is that a myth, I actually have no idea where credit scores come from.

Definitely read up on credit scoring then. Closing a card increases your utilization as you have less available credit. Utilization is just one factor in credit scoring though it does play a significant role. Average Age of Accounts (AAoA) is based on the age of your accounts so unless you're paying annual fees on your existing cards then you could stand to benefit just from letting those accounts age by keeping them open. That said, accounts in good standing will remain on your reports for 10 years.

polygons wrote:Or maybe we should get a bunch of cards because that builds up our credit?

You shouldn't get cards just to get cards. Again, AAoA plays a role in scoring. Adding new accounts drops your AAoA and every application generates a hard pull which also adversely impacts your credit. On the other hand, number of accounts and variety of credit benefit your credit scoring.

Again, read up and carefully consider your decisions. We can definitely answer specific questions but it's a bit much to expect people to educate you on every aspect of credit in this thread. You will have to take some initiative as well.

I'd recommend not only looking at the types of rewards you want to get but also look into your major spend categories to see if you can maximize rewards with a certain set of cards in your wallet. For example, I use the Blue Cash Preferred for groceries, PenFed Platinum Cash Rewards for gas and the CSP for dining, travel and everything else. The Ultimate Rewards site also has opportunities for increased rewards with certain vendors (which change over time).

The Chase Freedom is popular to pair with the CSP since it has rotating 5% categories. Freedom can't transfer points but its points can be transferred to the CSP and then transferred out to partners.

polygons wrote:Or mabye we should get the Amex gold card?

Impossible to answer this for you. Weigh the pros and cons. You've detailed how you could benefit from the CSP and/or the Arrival. Do the same for the AmEx gold.

Establishing an AmEx membership can be beneficial even if just for backdating. Any future AmEx card you open will report as opened in the month you applied for the card and the year that you originally joined AmEx. As an example, my AmEx membership originated in 1998. I applied for a Blue Cash Preferred in March of this year. It reports as opened in 3/1998. That's a 15 year tradeline instantly added to my credit reports.

You won't immediately benefit from backdating but it can help down the road if you establish membership now.

MemberSince99
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Postby MemberSince99 » Mon Oct 28, 2013 8:58 am

Takeshi gave good advice and even spared you a "garden" lecture. :)

Regular Amex gold isn't worth bothering with in terms of travel as it's not a travel card. PRG may be but you have to have a lot of spend to make it pay off for you. So I would pass on that one and instead if anything consider the RPG and see if it suits your needs.

polygons
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Postby polygons » Mon Oct 28, 2013 9:38 pm

takeshi, thanks! that was just what we needed, really appreciate it.

both of us just applied and got instantly approved for the CSP. pretty excited!

i have a 20+k credit limit on my old vanilla citi card, so i hear you, i won't cancel it. i'm sure it looks good to have access to that money and not use it. i'll just put it in a drawer.

yeah that amex blue cash card must be awesome for a lot of people, but not us. now that i think about it, the CSP is pretty perfect for us. so we're just gonna stick with that. that'll be our one card. if our lifestyle changes, that might change too.

thanks again.

polygons
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Postby polygons » Mon Oct 28, 2013 9:42 pm

MemberSince99 wrote:Regular Amex gold isn't worth bothering with in terms of travel as it's not a travel card. PRG may be but you have to have a lot of spend to make it pay off for you. So I would pass on that one and instead if anything consider the RPG and see if it suits your needs.


thank you too! i tried pretty hard to decode PRG and RPG, what are they? this forum supposedly has a search button on the very very top right of the page that says search forums, but it doesn't actually work.



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