Living on a Budget, Saving Money/Another credit card for tires
Wife's and my credit scores are decent (low 800s) and no debt other than the house and her van. We pay our credit cards off each month.
My vehicle needs new tires before winter. In price comparisons, some of the tire dealers offer from $40.00 up to $140.00 rebates on tires but you need to apply and pay for the tires using their credit card. If I went this route we would pay for the tires as soon as the bill came in the mail as we have the money but we are in decent shape financially because we are somewhat "cheap" and saving $140.00 looks like a good deal. My question is would my credit score take such a big hit for applying/getting another credit card (that we would probably never use again) that it wouldn't be such a good deal in the long run?
Good Evening Jim,
Thank you for your question.
First, congratulations on your credit limits and $0 credit card balances at the end of each month. That is excellent!
As far as applying for a new credit card, you are correct in that your score will lower a bit based on the application. However, the overall impact will depend on how much credit you will receive and how much will be charged against the new/available credit.
In general, when your debt to available credit ratio decreases, your score increases (ex: if all else stays equal, and then you add $1,000 to your credit and only charge $100, your ratio will decrease; the debt percentage to overall credit will drop, and this is great).
And, because it sounds like you are "disciplined" with your spending, having more available yet unused credit should be a positive effect on your credit score specifically. And, when you pay it off, you have satisfied the account, therefore further increasing your score.
If you anticipate your credit report/score needing to be a "tool" for you in the next few months, I think getting the rebate is worth what will in the long run probably be a slightly increased score. It may take a couple of months, but it will even out.
And, if you should choose to close the card, I would just suggest that you: a) make sure the account does not have to be open for a certain amount of time in order for the rebate to be "yours", and b) ask the credit company to put a note saying that it is "closed at the account holder's request". This way, it is noted that you closed the account, not them.
I hope this helps.