Thank you!

You get 25,000 points that you can redeem for an airline ticket, but if you want to use the points for gift cards, you only get 5,000 (which is the equivalent of only $50 in gift cards).

Big difference. So Buyer Beware!!!

Great Post. Thanks.

thomas: As far as I know, there are no tax consequences.

Also, my understanding was that business cards don’t show up/effect your personal credit score.

Before we go any further, I’ll say this… While applying for business credit cards triggers a “hard pull” of your credit report, the prevailing wisdom is that business credit cards such as these don’t show up on your personal credit report. Thus, such accounts may have no effect beyond the initial credit check. But let’s just talk about rewards credit cards in general, as not everyone is applying for business cards when chasing credit card signup bonuses.

As for how credit scores are calculated, I’ve written previously talked about the components of your credit score.

As it turns out, the length of your credit history only accounts for about 15% of your credit score. A relatively minor hit to what is already a rather small component of your score won’t have a major impact. In some cases, it’ll be enough to tip the scales from a good-enough credit score to one that’s no-so-good, but if you have good credit to start with there’s probably not a lot to worry about.

As for credit utilization, higher % utilization does indeed reduce your credit score. In this case, however, there is no real effect from before you apply for the cards to after you close them. The reason for this is that you’ll still have the same credit lines with the same limits/balances (more or less) after you’re done as you did before you started. In fact, you’ll actually see a short-term benefit (at least in theory) by having more available credit without correspondingly higher balances while the additional card(s) is/are open. If you decide to cancel the cards, you’ll return to the pre-application utilization level.

As for the applications themselves, a flurry of heavy application activity can have a negative effect on your apparent credit-worthiness and is viewed as a warning flag by credit issuers. However, the prevailing wisdom is that these sorts of effects fall off quickly (i.e., within months).

The bottom line here is that a lot of people make a decent amount of money by chasing credit card bonuses. It’s not for everyone, but for those that are interested, $100-$250 in bonuses for a single card is a pretty solid deal.

This is a good topic, though. Probably worthy of an article of its own. I’ll try to pull something together shortly.

Articles:
When to close credit accounts
Closing credit card account may do more harm than good

As for the amount of the referral fees, they are (unfortuantely) substantially less than the bonuses that you’ll receive for signing up for these cards.

Also note that cardoffers is no longer offering cash signup bonuses for applying through their site.

Also, how come you do not mention sites similar to cardoffers.com that pay a bonus to the applicant if you apply for a card through their site?