Should You Stop Using Your Credit Card After Earning the Sign-up Bonus?

You can cancel it, but your credit score may change.

Rewards credit cards allow consumers to earn rewards by using their credit cards. Plus, many card issuers have generous sign-up bonus offers to attract new customers. These bonus offers can make for a quick way to earn many points or miles if you meet the minimum spend requirements. But should you continue to use your card after you earn the sign-up bonus?

A sign-up bonus can be a win for your wallet

Some of the best credit cards have attractive sign-up bonus offers. Eligible new cardholders who meet the minimum spending requirements can earn the bonus. It's not uncommon for credit card reward enthusiasts to open a new credit card because of a sign-up bonus offer.

Earning a sign-up bonus can put you much closer to your redemption goals. Whether you're looking to book a free flight for an upcoming vacation or hope to get cash back as a statement credit to lower your credit card bill, earning a bonus offer can be a big win for your wallet.

Consider the value of the card benefits

What should you do after you earn a sign-up bonus? Should you keep the card in your wallet but stop using it, or should you get rid of it for good? If you're unsure if you should continue using a particular credit card, it's a good idea to consider the value you're getting from it.

Does the annual fee fit your budget? Are you using most of the benefits offered? Are you able to earn rewards with your usual spending habits? Does the card make your life better? Asking yourself these questions can help determine if you should continue to use the card. Not every credit card is a good fit for everyone, and that's okay. There are plenty of other card options.

Don't rush to cancel your credit card

Yes, you can stop using a credit card if it's no longer meeting your needs, but closing a newly opened credit card account can have consequences. The length of your credit history is one of several factors that makes up your FICO® Score. A lengthy credit history shows you know how to manage credit and may help you increase your credit score.

Before you rush to cancel a credit card, consider how that choice could impact your credit score. If your credit card no longer provides you value but doesn't charge an annual fee, you may want to keep it in your wallet for a year or two and remember to use it occasionally, so the account remains active. Doing this can help you improve your credit score.

What if the card has an annual fee that is too costly? If your current card has an annual fee, you can ask the credit card issuer to downgrade your card to a no annual fee credit card. Doing this can save you money by eliminating the yearly fee and allowing you to keep your existing account open -- which looks good on your credit report.

Do pay attention to your credit score

Your credit score matters and can impact your future, so don't forget to consider how your everyday financial choices will affect your score. Want to make wise credit card moves? Paying your entire credit card balance (not just the minimum amount due), paying your bills on time every month, and maintaining a lengthy credit history are some actions you can take to improve your credit score and set yourself up for financial success.