Does Using Credit Cards for the Perks Hurt Your Credit?

Written By Mary Beth Eastman
Last updated December 8, 2020

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January 15, 2019

Simple. Thrifty. Living.


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We all love the idea of earning rewards and incentives. Companies encourage those feelings by offering enticing and exciting credit card perks. Not to mention sign-up bonuses, cash back offers, easy ways for earning points, and other reward offers! While these credit cards sound like an excellent way of saving money, are they wreaking havoc on a consumer’s credit score, or helping to boost it up?

Each time you sign up for a new credit card, this doesn’t have much effect on your FICO score. It’s the payment history that FICO is paying attention to. In addition, the length of credit history and the number of accounts owned matter as well. So, if someone has three or four rewards cards that are currently in use, their score shouldn’t drop. If someone fails to make payments on time on those cards, that’ll hurt their credit.

If you have a habit of churning through dozens of rewards cards, otherwise known as credit card churning, you may have issues with your credit. For example, you may feel the temptation to close cards you no longer receive rewards from. You may also struggle with those that have a percentage rate that’s too high after the introductory period is done. Each time you close an account, this hits the amount of credit you have available to you, as well as the lifetime average of your credit history.

Therefore, if you don’t have several other credit accounts with long-standing histories, you’ll experience a drop in your score. Companies like Lexington Law credit repair specialize in helping you repair your credit, but you can be proactive by taking steps to keep your credit score high in the first place.

Many consumers like using credit cards to earn travel miles or free gas. However, there are many other incentives too, including sign-up bonuses and cash back on payments or purchases. Some of the top credit cards will offer gift cards, as well as introductory rates on balance transfers and purchases.

Usage of these programs in a responsible manner will help maintain or elevate the your credit score. The main reason is that you’re using the cards regularly and making the payments on time. In doing so, you’re establishing a credit history with these reward cards. It’s safe to use a few cards and keep them open and active without causing any damage to credit scores.

About the Author

Mary Beth Eastman

Mary Beth Eastman serves as the content manager for Simple. Thrifty. Living, where she is dedicated to helping readers use money and credit wisely. Mary Beth believes that access to the right financial information paired with a growth mindset are essential tools for getting out of debt and building wealth. Mary Beth has a degree in Journalism from Bowling Green State University and has focused her 20-year journalism career on putting readers front and center, carefully considering their concerns and presenting information that will help them in their everyday lives. She has won numerous statewide journalism awards. Her writing on personal finance as been featured on numerous websites in addition to Simple. Thrifty. Living, including Huffington Post and Lexington Law blog. Mary Beth resides in Pittsburgh, Pa., with her family and two rescue dogs.

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