Well, our new rewards card is hard at work, getting us closer to the new-user bonus. Once we hit $3,000 in three months (which is unfortunately all too easy, given our expenses), we’ll get about $500 in travel credit.
Still, I love our Sapphire card. Well, more correctly, I don’t love the idea of closing a credit card after just one year. And it is awfully nice to always be connected immediately to a customer service rep. No automated system, no hold time.
So I called that immediate-access customer service to see if they’d waive the fee for a second year. Alas, the answer was no… Sorta.
The guy said he couldn’t waive the fee, so I told him to go ahead and close the card. At which point he jumped in with an offer for a $60 statement credit. In other words, we’d basically be paying $35 to keep it open another year.
Now, I’m loath to go back to paying annual fees. We kept the United MileagePlus card far, far too long. We used points to avoid paying the actual fee for a few years, but it came with no bonuses other than getting miles. I get very frustrated when I think how much money my inertia cost us.
So understandably, part of me bristles at the idea of paying even $35 for the privilege of a card. Especially when we spent at least $40,000 last year thanks to with Tim’s dental implants and charging everything to the card. We made them at least $1,200 in transaction fees. How is it good business to let us quit over $95?!
Plus, there are many, many rewards cards that wouldn’t charge us for the privilege of being a cardowner.
All logical protests, I think. On the other hand…
Too much “new” credit can hurt your FICO score. New credit is defined as cards or loans opened within the past year. Which means that if I do close the Sapphire card by the 364th day, it doesn’t look great. Especially since we closed the 10-year-old mileage card only a few months ago.
Also, debt-to-credit ratios matter, and closing the Sapphire means losing $20,000 in credit.*
On the face of it, debt-to-credit ratios aren’t a thing for people who pay their balances in full each month. Except that, when you charge every little expense (to maximize rewards), you can have a substantial amount of money on the card — at least, depending on where you are in the billing cycle.
So while we may pay the card off each month, a random check by a would-be creditor might show as much as $3,000 on the card. Usually more like $1,000 or $2,000. But ya never know.
And $3,000 out of $18,000 isn’t nearly as impressive as $3,000 out of $38,000.
Of course, the argument could also be made that $18,000 of credit looks a lot better than $38,000 when I go to apply for 2018’s main rewards card.
The new company might decide that I already have more than enough and not want to provide more. Or perhaps just give us a much smaller limit.
You can see why I’m undecided.
What would you do here?
*Yes, Chase Sapphire gave us way, way too high a limit.