I've heard from a number of different consumers that they don't like to stick with a credit card for long once they receive the initial sign-up bonus offered by their card. Be it cash back or miles, a lot of consumers don't recognize the perks in hanging on to a card once the bonus has been met.
I'm here to tell you that's flawed thinking, and that you're best off choosing a card you can stick with over the long-haul as opposed to a brief (and albeit fruitful) fling.
First and foremost, the length of time your existing credit cards have been open is an important factor that lenders and creditors consider when deciding whether or not to approve you for a loan or credit card. The longer your account has been in good standing, the better. Plus, eliminating a credit card account eliminates your ability to make payments back on that card each month. And since your payment history is the most important factor determining your score, it could end up being detrimental to the growth of your score when you cut out the opportunity to make payments on a card each month.
Essentially, your credit score won't grow if you aren't making payments each month. Active credit users are the ones most appealing to creditors, which is why keeping all available credit card accounts open is crucial to a successful score.
And even if you are closing one card and replacing it with another, that's not a sustainable way to maintain a good score since every card you apply for takes a hard pull of your profile. A hard pull - which is done by both creditors or lenders when you apply for a loan - has a small but noticeable negative effect on your score. Hard pulls will stay on your report for up to two years, which means accumulating several over that time can have a prolonged impact on your report and ultimately your score. You want to keep the hard pulls as limited as possible, and applying for multiple cards throughout the year isn't the way to do so.
We know credit card signup bonuses are tempting and that a card can to some degree lose its appeal over time, but there's rarely ever a case for closing a card. Even if the annual fee you're stuck paying is exorbitant, odds are the card is paying for itself by maintaining and improving your score and thus saving you on interest fees down the road.
When choosing a card, consider the long-term impact of the card as well as the bonus. If you're unsure you'll be using your card as often once you reach your bonus, it's probably worth applying for a credit card with no annual fee to ensure that your new plastic will always be "free to carry". Make closing a credit card account your last resort rather than your first.
