Credit Card Hopping: Smart Money Move or Risky Business?

What Is Credit Card Hopping?

Over my years of experience with finance and credit repair, I have seen people employing all kinds of strategies to gain financial freedom. One tactic that’s gaining popularity is “credit card hopping."

If you’re not familiar, with credit card hopping is essentially getting pre-approved for a zero percent credit card and utilizing that for the term of the introductory rate. Which typically lasts for one to two years, then closing the account and opening up another one. This means you are frequently applying for new credit cards to take advantage of intro 0% APR offers, then closing the accounts before interest charges kick in.

The Upside: Free Money and Travel

I’m not going to lie; the rewards can be sweet. Some of my clients have earned hundreds of thousands of travel miles hopping from card to card. If you play your cards right (no pun intended), you can finance major purchases interest-free and take some amazing vacations.

The Downside: Trashed Credit Scores

However, credit card hopping does come with risks. If you don’t have a strong credit profile with a mix of credit types (installment loans, mortgages, etc.), closing accounts frequently can severely damage your credit. I’ve seen scores drop 50-100 points from this strategy.

My Advice: Proceed With Caution

So, should you start hopping on the credit card train? Here’s my advice: Only if you have excellent credit discipline and a well-established credit history. Make sure you pay balances in full each month. Don’t close old accounts; just stop using them. And give yourself at least 6-12 months between new applications.

If you’re just starting out or have made credit missteps in the past, focus on building a strong foundation first before attempting riskier strategies. There are lots of other good ways to earn rewards and save money that won’t trash your scores. Your credit is too valuable an asset to gamble with, so take it slow and think long-term. The rewards will come in time.

The Potential Benefits of Credit Card Hopping

What exactly are the benefits of credit card hopping? Essentially, it's getting pre-approved for a zero percent intro APR credit card, using it during the intro period, then closing it and opening another.

Avoiding Interest

The main advantage is that you can avoid interest charges for a long time. Some cards offer 0% APR for up to 21 months! I've had clients who were able to pay off large expenses like medical bills or home improvements over time without a single penny of interest. One client paid off $8,000 in medical debt over 18 months and saved almost $1,500 in interest charges. Not too shabby!

Building Your Credit Profile

For those with little or no credit history, credit card hopping can be an easy way to build your credit profile. As long as you keep other accounts open and use each new card responsibly by keeping low balances, your score should steadily improve. I always advise starting with just one or two cards at first, then adding more over time as your score goes up.

Maximizing Rewards and Perks

Credit card hopping allows savvy consumers to take advantage of various rewards programs and perks offered by different credit card issuers. By strategically rotating through different cards with enticing sign-up bonuses, cash-back offers, or travel rewards, individuals can maximize their benefits and get the most value out of their spending.

Enhancing Financial Flexibility

Utilizing zero percent intro APR credit cards through credit card hopping can provide financial flexibility for managing unexpected expenses or achieving specific financial goals. With no interest charges during the introductory period, cardholders have the opportunity to spread out payments over time without incurring additional costs, easing financial burdens and improving cash flow management.

Avoiding Long-Term Debt Accumulation

By regularly switching to new zero percent intro APR credit cards, individuals can avoid the trap of accumulating long-term debt with high-interest rates. Instead, they can use the introductory period to pay down existing debt or make planned purchases without worrying about interest charges, helping them maintain better control over their finances and avoid unnecessary debt.

Opportunity for Strategic Debt Consolidation

For those with multiple high-interest debts spread across different accounts, credit card hopping can offer an opportunity for strategic debt consolidation. By transferring balances to zero percent intro APR cards, individuals can consolidate their debts into a single manageable payment and save on interest expenses, making it easier to pay off debt faster and improve overall financial health.

The Risks You Need to Consider

However, there are some risks to be aware of. If you close accounts too frequently or don't have other credit accounts to support your score, hopping cards can hurt your credit utilization ratio and actually lower your score. You'll need to find the right balance of opening and closing accounts that works for your unique credit situation.

As with any financial strategy, do your research and make sure credit card hopping aligns with your goals before diving in. When done responsibly, hopping cards can be a valuable tool for saving money and improving your credit. But if not managed properly, it may end up causing more harm than good. The choice is yours!

The Risks of Credit Card Hopping Without Enough Supporting Credit

Did you know that many get caught in the trap of credit card hopping without establishing a strong enough credit history to support it? “If it seems too good to be true, it probably is," as the saying goes. While the lure of perpetual 0% APR and travel rewards can seem appealing, credit card hopping is risky business if you’re not prepared.

You Need a Credit Cushion

Before closing one card to open another, make sure you have other credit accounts in good standing to keep your scores from taking a hit. As I tell my clients, you need a “credit cushion" of at least 3-5 open revolving accounts, like credit cards or lines of credit, with a solid payment history. Without this cushion, closing an account can lower your credit utilization ratio and shorten your credit history, dropping your scores.

Your Credit Scores Will Fluctuate

Even with a credit cushion, your scores are likely to fluctuate when opening and closing accounts in quick succession. While the drops are often temporary, they can be frustrating and even damage your approval odds for new credit or loans if they occur at the wrong time. As one client found out, a 50-point score drop from card hopping cost him a mortgage approval and delayed his home purchase by several months.

You Risk Missing Payments

With multiple new accounts to keep track of, it’s easy to miss payments and incur late fees, penalty APRs, and score damage. A client of mine missed two payments in a row hopping from one new card to the next. His scores plunged over 100 points, and he ended up stuck with a 29.99% APR for the next year.

If done responsibly by those with excellent credit, credit card hopping can have its benefits. But for most, the risks far outweigh the rewards. My advice: only open new credit accounts when truly needed, pay on time and in full each month and let your credit history strengthen over time through responsible use. There are no shortcuts to good credit. Slow, steady, and strategic wins the race.

Maintaining Good Credit While Credit Card Hopping

You know, credit card hopping is not all negative; I’ve seen many clients successfully utilize credit card hopping to their advantage. However, it does come with risks if not done properly.

From my experience, the pros of credit card hopping are significant. You can have an endless supply of 0% interest credit to leverage for large purchases, investments, or even daily spending. Some of my clients have earned hundreds of thousands of points and miles to travel the world for next to nothing. The key is making sure you pay the balance in full before interest charges kick in. As I always say, “Interest is for suckers!"

On the other hand, the cons can hurt you if you’re not careful. As one client learned the hard way, if you cancel too many cards too quickly without other credit accounts to support your scores, your credit can take a major hit. His scores dropped over 100 points in just a few months from aggressively closing accounts. You need to have a mix of credit, like installment loans, mortgages, or student loans reporting along with your credit cards to maintain good scores.

My advice is to start slow if you’re new to credit card hopping. Only open a new 0% card when you have a large purchase to make, and keep your older cards open if possible. Pay balances in full and on time. Check your scores regularly to ensure they remain in a good range before opening another new card. If done responsibly by maintaining a good mix of credit and low balances reported each month, credit card hopping can be a smart money move. But if you’re not diligent, it can quickly become a risky business.

In the end, credit card hopping, like many financial strategies, needs to be done in moderation and with your long-term financial well-being in mind. When used properly, the rewards and interest savings can be well worth it. If abused, it can damage your credit and cost you money in the long run. The choice is yours!

Is Credit Card Hopping Right for You? Key Considerations

As the owner of a credit repair company, I’ve seen many clients find success with credit card hopping, but it does come with risks. Here are some things to consider before jumping on the 0% APR bandwagon:

Your credit history

You need to have a solid credit history to pull this off without damage. As one client learned, if you close accounts too quickly, it can hurt your credit utilization ratio and drop your scores. You want to make sure you have enough other revolving credit to balance out the closed accounts.

Your credit profile

Do you have a long, established credit history with a mix of accounts in good standing? If so, hopping a few cards probably won’t hurt much. But if you’re just starting out or rebuilding credit, it’s riskier. Check your scores and reports first to see if you can afford a temporary drop.

Your budget and spending habits

Will you pay the balances in full before interest charges hit? 0% APR offers mean nothing if you end up paying interest. You have to be highly disciplined to maximize the benefits. If you tend to overspend or carry balances, credit card hopping may end up costing you more.

Your time and organizational skills

Churning through multiple credit cards requires time and effort. You have to research offers, apply, meet minimum spend requirements, track statements, cancel cards at the right time, and more. If you’re not on top of the details, fees and charges can pile up quickly.

For the right person with the right skills and habits, credit card hopping can be an easy way to earn rewards or even profit. But go in with your eyes open to the potential downsides, especially if you’re still building credit. By managing risk and maintaining your scores, you can hop without wiping out your progress! But as always, spend within your means—0% APR or not.

Conclusion

Look, I get it. The idea of constantly opening up new credit cards with 0% interest rates seems incredibly tempting. You get to avoid paying interest and rack up rewards points. But unless you have a rock-solid credit profile, credit card hopping can be a risky move.

Canceling cards and opening new ones too frequently can definitely hurt your credit, especially if you don't have a long history of managing credit responsibly. My advice? Only hop cards if you're certain you can pay off balances in full each month. Otherwise, stick to a couple of go-to cards with reasonable rates. Maintaining strong credit is way more valuable than chasing intro offers or airline miles. Trust me, I've seen countless clients mess up their credit through card hopping without proper planning. Don't let that be you!