Can I switch credit cards to ones that have a $0 first year fee to avoid getting stung with an extra years fee?

New to point hacking, but my understanding is that after the first year you should switch cards to avoid paying the annual fee. But you shouldn’t cancel the card because that will damage credit score. Most banks have a ‘low fee’ card that’s usually $30-$99.

Question is - instead of switching to one of those, can I switch to a card that has a $0 fee first year? or is that usually only for new customers/ does it count as a promotion that is excluded if you’ve held a rewards account in the past 12 or 18months?

Also… how bad is the credit hit for cancelling? is it better to pay $50 for an unused account for a year until the promotional period resets or just cancel?

Hi @cold-steel-blade

Welcome to point hacking!

To reply to your second question first: I have read that in the USA, for reasons that I can’t say I understand, cancelling a credit card does indeed damage your credit score. But this is not the case in Australia. Cancelling a credit card will not harm your credit score in Australia – quite the opposite. I would recommend that you spend some time reading the articles on the Get Credit Score website. The best and most effective point hackers have a good knowledge of what harms their credit score, and what improves it, and they use that information to their advantage. The infographic below is a good place to start.

To answer your first question: it’s a perfectly legitimate strategy to take out an $0 annual fee card. Some cards will only charge you $0 under certain conditions (eg. you have a home loan with the same bank or credit provider), but others will charge you $0 as a general offer, available to anyone. Check the card’s Terms and Conditions and, if the card is right for you, go for it!

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