How to take advantage of credit card promotions while preserving credit?

[KnickNut3]

Some of the hot deal sites call attention to many good credit card deals (free $250 for one purchase, etc.) I obviously want to take part in them. However, I don't want to pay for it down the line by getting denied because they see me having too many CCs as being unreliable.

Now, I've never had a late payment (knock on wood) and never intend to carry a balance on a CC--I use them solely for convenience, cash back, and deals like these. I know canceling a card can damage your score (you're better off locking them in the safe and forgetting about them). However, are there tips to ensure one can take advantage of a number of these deals without adverse effects? Something like calling to lower credit limits on cards we won't use, limiting to X/year, limiting to X cards overall, what?

Thanks for the tips, as I'd really love to keep taking advantage of these deals and not having to worry about it being misinterpreted in the future as someone who's too credit-happy or the like.

 

[bctbct]

Go read the FW Finance thread, those guys know all the tricks.

 

[wiredspider]

Yea, go over to fatwallet, basically get the card, use it, get the rewards and sock drawer it. You can combine lines later, so you don't have to many cards...

 

[kranky]

There's no way to answer your question simply. Take bctbct's advice, and start by reading the stickied threads in FW Finance. In order to make this work and not screw yourself, you MUST do your homework. The people who do their homework succeed, the people who jump in too quickly get burned. Personally, I read FW Finance for six months before I jumped in, but I'm going to make about $3,000 in free money this year from what I learned there. I can't emphasize enough to read, read, read before you do anything.

 

[bctbct]

OP should do an Appo-ramma!

 

[KnickNut3]

Thanks, will do.

 

[KnickNut3]

Originally posted by: kranky
There's no way to answer your question simply. Take bctbct's advice, and start by reading the stickied threads in FW Finance. In order to make this work and not screw yourself, you MUST do your homework. The people who do their homework succeed, the people who jump in too quickly get burned. Personally, I read FW Finance for six months before I jumped in, but I'm going to make about $3,000 in free money this year from what I learned there. I can't emphasize enough to read, read, read before you do anything.

$3,000 in free money?

Most of the information I'm seeing about these app-o-ramas seem to be to acquire a lot of 0% APR credit, which I don't need. Were you able to acquire a lot of free money offers at once?

 

[shocksyde]

If having too many credit cards is bad, I'm screwed. I think I'm up to 22 now.

Too many cards doesn't hurt. In very specific situations a creditor may not like it, but I don't use any more than 10% of my available credit, so they'll get over it.

 

[kranky]

Originally posted by: KnickNut3

Originally posted by: kranky
There's no way to answer your question simply. Take bctbct's advice, and start by reading the stickied threads in FW Finance. In order to make this work and not screw yourself, you MUST do your homework. The people who do their homework succeed, the people who jump in too quickly get burned. Personally, I read FW Finance for six months before I jumped in, but I'm going to make about $3,000 in free money this year from what I learned there. I can't emphasize enough to read, read, read before you do anything.

$3,000 in free money?

Most of the information I'm seeing about these app-o-ramas seem to be to acquire a lot of 0% APR credit, which I don't need. Were you able to acquire a lot of free money offers at once?

I'm using the 0% money, putting it in the bank and collecting interest until it has to be repaid.

 

[KnickNut3]

Yeah, figured as much after I wrote that reply.

Not making payments on the 0% period doesn't affect your credit rating at all?

I looked at my credit report and I have 0's for the missed payments for every single month on every one of my cards. I'd like to preserve that--will floating the money like that affect the reports?

 

[Viper GTS]

Originally posted by: KnickNut3
Yeah, figured as much after I wrote that reply.

Not making payments on the 0% period doesn't affect your credit rating at all?

I looked at my credit report and I have 0's for the missed payments for every single month on every one of my cards. I'd like to preserve that--will floating the money like that affect the reports?

He never said anything about not making payments.

BT to your bank account, pay nothing but the minimums, & then PIF right before the 0% ends.

To minimize impact to your credit score you need lots of available credit, but worst case as soon as its reporting that you paid the card off your credit score will bounce back.

Viper GTS

 

[kami333]

Originally posted by: KnickNut3
Yeah, figured as much after I wrote that reply.

Not making payments on the 0% period doesn't affect your credit rating at all?

I looked at my credit report and I have 0's for the missed payments for every single month on every one of my cards. I'd like to preserve that--will floating the money like that affect the reports?

Usually you have to make the minimum payment or they will jack up your rates. I think he was talking about putting all the money in a savings account, and only paying the minimum balance until the promo period ends.

A lot of it depends on how good your credit is right now. Personally I try to limit hard pulls to about one every other month, 1 pull = ~-10 points, little effect after 3 months, almost no effect after 6months. And new credit accounts to about one every 3-4months, effect depends on your credit, I saw mine go up once due to lower total utilization, but usually I've seen another 10-20 decrease, for around a year if you have moderately old credit history.

If you do play the BT game, your score will take a hit, a large one especially if you get close to the limit on the card and if you don't have large credit lines on your other cards due to the higher utilization. 30ish%, 50%, and 70% seem to be major levels of utilization, and never go above 90% on a single card, from what I've seen. Good news is once you are done paying it off though, you are likely to have better credit since you have larger credit lines.

 

[kranky]

Yes, you MUST make at least the minimum payment during the 0% period, and then you pay the remaining balance in full when the 0% rate expires. I took a 70 point hit when I jumped on the 0% offers (because I took 100% of the available credit lines) but that's only temporary until the balances are paid back. It's now been 6 months and I've recovered 25 points because my utilization has dropped below the 90% level. And if I had a need for credit during the 0% period, I'd pay it all back first before applying for new credit.

ANY late payment will result in revoking the 0% rate so you have to make sure you don't screw up, even if the late payment doesn't go on your credit report. For example, if you pay one day late, you will get the 0% cancelled, but it won't go on your credit report. Usually you have to be at least 30 days late for that to happen. You must be disciplined to make it work.

 

[KnickNut3]

Ah, didn't know the minimum payment (on time) would not have that negative effect. Thought it would show some negative effect if you didn't always pay in full.

I'll have to decide whether floating like that is worth it for me. I don't have that many non-cash purchases to use up a ton of 0% credit (rent takes up a good portion of my take-home), so I'll have to decide accordingly. Will jump on the $$$ offers, though.

Thanks. Keep the advice coming if desired.

 

[daggerr]

If you want to better understand how all of these credit card games (e.g. App-O-Rama) affect your FICO score, there's a good description of an approximate FICO score formula in the June 30th blog posting at uThunk: Money-Saving Decisions Made Easy.

 

[Special K]

I have a couple of basic questions -

1. How exactly does a BT work? The CC company just sends you a check for the max amount you can charge on the card? I thought a BT was used for transferring the balance on a high-APR card to the 0% card? How can you just get money from the 0% card if you don't already have a balance on another card? Isn't that called a cash advance?

2. Do you cancel all the cards once the 0% APR period ends and you pay back the balances on all of them?

3. How often can you do an AOR? Is it a one-shot only thing?

 

[kranky]

Originally posted by: Special K
I have a couple of basic questions -

1. How exactly does a BT work? The CC company just sends you a check for the max amount you can charge on the card? I thought a BT was used for transferring the balance on a high-APR card to the 0% card? How can you just get money from the 0% card if you don't already have a balance on another card? Isn't that called a cash advance?

2. Do you cancel all the cards once the 0% APR period ends and you pay back the balances on all of them?

3. How often can you do an AOR? Is it a one-shot only thing?

Disclaimer: These are NOT comprehensive answers so no one ought to think this is all there is to know.
1. Yes, BT offers are intended to move a balance from one credit card to another. For people who want to use BT offers for profit, the challenge is to find a way to get the BT funds into your own hands so you can put the money in the bank and collect the interest (there are ways). However, some (but not many) issuers will let you deposit BT money into your checking account which makes it much easier.

2. There's no reason to cancel the cards.

3. Simple answer: you can do it as often as you want. That does not mean it's a good idea to do it as often as you want. You could apply for new cards every day if you wanted, but of course you'd quickly end up with a bunch of declined applications and a messed-up credit score. Knowing when you can safely do it again requires research and study and a very good understanding of how credit scoring works.

Just read a story about a guy whose credit is completely demolished because he did an AOR, took a bunch of BT money, then ended up in jail, couldn't make bail, and was unable to get the payments made. He's probably wishing he had never heard of the term AOR. It will take years to undo the damage.

Another story I read was someone who thought she knew enough about AORs and got declined for every card she applied for. Turned out she didn't know it mattered what cards and what issuers to apply with. Didn't do enough homework. Now she has to work at getting the inquiries off her record, meaning investing a lot of time just to get back to where she started.

AORs and BT games sound so simple and easy but there are plenty of pitfalls. People don't want to do enough homework ahead of time and get burned by something they didn't know about. Some people think it's a way to live beyond their means. Some have no self-control and just rack up even more debt. Some don't have the self-discipline to never, ever miss a payment. Like I said above, I spent six months doing research before I tried it.

 

[fleabag]

Originally posted by: kranky

...
Another story I read was someone who thought she knew enough about AORs and got declined for every card she applied for. Turned out she didn't know it mattered what cards and what issuers to apply with. Didn't do enough homework. Now she has to work at getting the inquiries off her record, meaning investing a lot of time just to get back to where she started.

AORs and BT games sound so simple and easy but there are plenty of pitfalls. People don't want to do enough homework ahead of time and get burned by something they didn't know about. Some people think it's a way to live beyond their means. Some have no self-control and just rack up even more debt. Some don't have the self-discipline to never, ever miss a payment. Like I said above, I spent six months doing research before I tried it.

Huh? What do you mean she has to work at getting the inquires off her record? They'll become nearly useless (negatively) at 6 months and leave entirely at 2 years. The only time work would be done is if you lie and call the credit bureau and say those inquires were false (not an unusual thing for a CB/FWer to do).

 

[kranky]

Originally posted by: fleabag

Originally posted by: kranky

...
Another story I read was someone who thought she knew enough about AORs and got declined for every card she applied for. Turned out she didn't know it mattered what cards and what issuers to apply with. Didn't do enough homework. Now she has to work at getting the inquiries off her record, meaning investing a lot of time just to get back to where she started.

AORs and BT games sound so simple and easy but there are plenty of pitfalls. People don't want to do enough homework ahead of time and get burned by something they didn't know about. Some people think it's a way to live beyond their means. Some have no self-control and just rack up even more debt. Some don't have the self-discipline to never, ever miss a payment. Like I said above, I spent six months doing research before I tried it.

Huh? What do you mean she has to work at getting the inquires off her record? They'll become nearly useless (negatively) at 6 months and leave entirely at 2 years. The only time work would be done is if you lie and call the credit bureau and say those inquires were false (not an unusual thing for a CB/FWer to do).

True, the impact fades after 6 months. IIRC, she planned to dispute the inquiries in order to get them off her report so she could do the AOR successfully the second time. Of course, disputing them can have negative consequences as well. Some lenders will blacklist you if you dispute an legit inquiry, and sometimes lenders will remove positive tradelines that were helping someone's score.