I have never signed up for cards with signup bonuses with the expectation of canceling, but I am getting curious about it.
The signup bonuses range from $250-500, more if you redeem for travel sometimes. Some of them have annual fees, but often these are waived for the first year. The only requirement seems to be that you spend $3-4k in the first 3 months.
It seems rather incredible. If you just repeatedly sign up, use the card exclusively for 3 months, then redeem and cancel in the 4th month, you could gain $1,500 a year (probably tax free, and even if not you'd pocket $1k).
I don't even think it would hurt your credit too much. You'd take a minor ding from the application inquiry, but you'd also have a minor boost from adding more cards to your record (which would last longer than the ding from the application). The impact is probably negative overall but negligible if you'd otherwise have good credit.
So here are my questions:
Would companies eventually notice from your credit report (or otherwise) that you usually cancel after 4 months and stop approving you?
Any other bad side effects? For example maybe this would look bad to a human reviewer of a mortgage application?
If the annual fee isn't waived in the first year then you'd have to pay it even if you canceled after 4 months, correct?
Overall, what am I missing?