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I have never owned a credit card and am largely undecided about them in general. They have their pros and cons which could be easily found with a simple Google search; my question is more about the effects of doing what I want do do:

What would happen to my credit score if I applied for the card, got it along with a $30 promotion for applying for the card, and then cancelled it almost immediately, retaining $30 in Amazon credit? Is that even possible?

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the credit is a statement credit. –  littleadv Dec 7 '12 at 2:19
    
Do you know what your score is now? If you've never had a credit card, you have made a decision. For many, the thought of having to use check/cash/debit for every purchase isn't pleasant. –  JoeTaxpayer Dec 7 '12 at 3:15
    
Welcome to Money.Stackexchange.com RedMastif. –  C. Ross Dec 7 '12 at 16:51
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1 Answer

up vote 4 down vote accepted

It might work, assuming you can instantly qualify for the credit card. I'd bet that isn't likely to happen if you have never had a credit card before though. (I extrapolate that to assume you don't have much of a credit report. I could be wrong.)

However, it is a gift card, not cash. You would at best get $30 worth of stuff and shipping from Amazon.

  • Your credit would take a hit from the credit inquiry.
  • Then get a small bump from the new credit limit increase and lower utilization.
  • Then you would cancel it and your limit goes down because your utilization goes up, thereby making your credit score go lower.
    • (This assume you utilize credit in some other fashion at all)

Net effect? Your score goes down because you applied for the card. This is also highly dependent on the time frame in which this all happens. Credit reports won't show any activity for a couple of months. So the up and down could cancel each other out if you do it too fast.

My advice, don't apply for credit you don't want for need. Certainly don't apply for credit just to get a reward or discount. The rewards and discounts are only smart if you were already making the purchase.

To expand on the question you didn't ask, it is a pretty solid decision to get a credit card, especially if you don't need one.

  1. You will (sadly) be judged on your credit for more things that just buying stuff. (Insurance, jobs, rental agreements, etc)
  2. Credit takes time to build, so getting started before you need it is important.
  3. If you don't need it, you can develop good habits around credit. (Always pay it off, never carry a balance, never charge more than you can afford to pay that day)

I would suggest you join a credit union and get a credit card from there. They will have programs and better deals.

Once you have the card from your credit union, and you if you find credit cards fit your lifestyle, AND if you find you can manage credit responsibly, then feel free to find a rewards card you like (such as Amazon) and apply for it.

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