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Like everyone, I’m frequently asked at the checkout of drugstores and retail outlets if I have a credit card linked to the store and, if not, why don’t I quickly apply then and there to get a discount or cash bonus when my application is approved? I was recently tempted by $50 offered at the local chain drugstore, but then I thought about the time and energy to unfreeze my credit score and declined the $50 offer (but I continued to think about it for a short while 😊). However, when I got a notice last week that my backup credit card, currently with a $0 balance, is increasing its annual fee from $99 to $249, I decided it was worth my time and energy to apply for a $0 or low fee card. After all, this is just for my convenience and peace of mind if the one I use all the time needs to be replaced. Quick research found a no-fee card with the same bank. Though I haven’t yet followed through with the application process or the unfreezing, I have learned that everything can be done either online or on the phone and takes well under 10 minutes per scoring company. I think it will be worth my time to follow through later, but I’m interested in your opinions before doing so. Thanks.
Things to consider when applying for a new credit line (or when unfreezing credit records is worth considering)
The Good: access to retailers (Costco store & gas); welcome offers (for me, nothing under $200 USD is attractive – check Nerdwallet dot com), loyalty perks (airline points, Amazon / Wholefoods discounts), cash back rewards.
The Bad: reduced FICO score with each new card, store credit card has very low limit (5K) compared to bank card (30K); interest rate on store card (APR) is much higher than bank card (if balance not paid in full for each billing cycle); managing more credit cards is a pain point; future application is limited by banks (the major issuers, have limits per year for all cards); spam soliciting mailings, emails from retailers
The Ugly: more credit cards open = more exposure risk to scam / personal ID theft (retailers got hacked quite often); closing credit card takes work and FICO hit but it might not erase personal file on the retailers’ files.
I stopped worrying about my FICO score some time back. It’s comfortably in the 800s, but since I have no expectation of needing a loan, or additional credit cards (I have several), the only possible hit might be for insurance, and I don’t plan to switch carriers.
$150 saving for 30 or 40 minutes of your time. Seems like an easy decision, and that doesn’t take into account making a stand against your card company taking advantage. It’s not going to move the needle on your credit score to any great extent, and if you’re like me, the score is only useful for low-impact things like insurance quotes and phone contracts, etc.
This is what I think. Chris