Credit Cards: Why Being Loyal Can Pay
Why You Shouldn't Keep Switching Credit Cards
Everyone loves the introductory offers that credit cards offer. After all, who doesn't want interest-free financing, double rewards or cash incentives? The problem is, hoping from one credit card to the next can actually hurt your credit. Here's some things you need to know.
The Credit Score Factor
If you want to qualify for the best credit cards, you need a good credit score. However, if you jump from one credit card to the next your credit score may take a dive. This is because your credit score isn't only determined by whether or not you make your payments on time. How long you maintain relationships with your creditors and how many credit cards you have open also contribute to your credit rating.
If you keep hopping from one credit card to the next, you're going to need to close some of your credit card accounts when more are opened. This means shorter creditor relationships, which can lower your credit rating.
The Risk Factor
Now, let's say you're hopping from one credit card to the next assuming that you'll just transfer your balance when the introductory period is over. That 25 percent interest rate won't affect you at all, so you max out the card. What happens if your credit takes a dive and you don't qualify for a low-interest balance transfer? You'll find yourself in a heap of trouble.
When it comes to credit cards, remember intro rates are a gamble. They don't last forever and you can't assume you can transfer to a better situation later on. Make sure you only apply for credit cards that have terms you'll be happy with in the long run. Anything else and you're asking for trouble.