There are many credit cards that waive the fee for the first year. Is it illegal to open up a credit card account, hold it for a year, then cancel it and then turn around again and re open it and enjoy the 'first' year for free?

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    There are many credit card with no annual fee... – mhoran_psprep Sep 25 '14 at 20:37
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    "illegal"? As in, "against the law"? Or are you really asking about credit card company policies? – Chris W. Rea Sep 26 '14 at 4:06

It's not illegal, but the credit card issuer might not approve your application for a new card.

Also, the fine print on the contract may state that the waiver only applies to new customers. For example, this card states:

I understand that any new cardmember bonus offers for this product are not available to either current or previous cardmembers of this product who received a new cardmember bonus for this product in the last 24 months.

Even if they do issue you a new card, you'll have a new credit card number, which you'll need to distribute to anybody making regular charges to your card. And the same for online stores that save your payment information (although you might consider that a bonus depending on your position on security vs. convenience).

You're better off finding a credit card that doesn't charge an annual fee (instead of just waiving it for the first year).

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Applying for a new card each year dings your credit score a bit. Not awful, but I wouldn't do it. And part of your score is the average account age. Your plan would keep the age from getting beyond a few years. As mhoran commented, shop for card(s) with no fee.

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  • Yes but no fee cards don't give you good points/miles etc. – Victor123 Sep 26 '14 at 13:43
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    @Victor123 The point is that frequently closing and reopening revolving credit accounts negatively impacts your score and will affect your approval rates. – Matthew Sep 26 '14 at 16:24
  • Yes but what if I am not in need of a loan in the immediate future – Victor123 Sep 26 '14 at 18:17
  • My no fee card gives 2% cash back. – JTP - Apologise to Monica Sep 27 '14 at 0:44

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