I knew that applying for too many credit cards could adversely effect on my credit score. However, the concept wasn’t picture perfect until I read Rocket Finance’s story where he said, “we traded our credit score of 748 at it’s highest point in exchange for favor from credit card companies.”
How Did I Sell My Credit Score?
I am not above this pitfall either; however, not all of them were bad trades. Here is some of what I have done:
- 10% Off — Guilty! I have signed up for many store cards at Macy*s, Target, Saks Fifth Avenue, etc. The only worthwhile one was Home Depot card where I got 10% off a $3,000 purchase with no interest and no payment for 12 months
- Mileage for Air Travel — My wife and I got Citibank Premiere Card for our trip to Thailand. In hindsight, we should have used our existing Discover Card or Citi Dividend Card.
- No-Fee for International Transactions — Did you know that most credit card companies charge 3% fee for international transactions? Well, my wife and I found one from Commerce Bank (now TD Bank) that offers no-fee for international transactions. Another good trade in my opinion.
Other Ways To Sell Your Credit Score
I believe that’s all I have done as far as selling my credit score. But there are other ways:
- Free t-shirt, pen, mug, etc.
- Cash bonus
- 0% Introductory rate
- 0%, no fee transfer
I am sure there are other creative ones.
Is It Bad To Sell Your Credit Score?
I guess the answer is depends. In case of Rocket Finance, I think it isn’t so bad. After all, he got $5,000 through sign up bonuses and credit card arbitrage — enough to balance his budget. However, it could be bad if you are planning to do something that depends on your credit score — i.e., take out a home mortgage. In general, there are two types of trade that I think are worthwhile:
1. Leverage 0% Introductory Rate to Reduce Interest Expenses
I mentioned this strategy in 7 Steps Debt Reduction Illustrated, where I said it make sense if you could transfer balances from high interest credit cards to credit cards that offer no-fee 0% APR transfer to save you money.
2. Leverage Cash Back Rewards
I am also a big fan of getting money back by using reward card, as mentioned in 40+ Alternative Income Ideas and Resources. There is nothing wrong with using credit cards if you pay off the balances in full each month.
When it comes to credit cards, I believe the key is to pay them off in full each month so that you don’t have to pay any fee. If you can manage this, then credit cards are great for collecting cash back rewards and other bonuses. They are also safer than cash and debit cards when you travel. And lastly, they could act as your emergency cash reserve if needed.
Pinyo is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.