Opinions on credit cards with annual fees?

3 years ago by sweca to c/personalfinancecanada

I saw this card (https://www.scotiabank.com/...) offered by Scotiabank that offers 10% cash back on purchases within the first 3 mo up to $2k, and 4% regularly on groceries and recurring payments. From first glance, it looks really good, but at the same time, there's a $120 annual fee. Although, the first year has no fee.

I wonder if I could use it for the first year and then close or downgrade it afterward. Would my credit score take a substantial hit?

What's your general opinion on cards with annual fees? What benefits would it need for you to consider one?

Shadow 7 points 3 years ago

My friend, you need to google "churning".

https://princeoftravel.com/newbie-guide/

I have 7 credit cards right now and cycle them regularly. Check /r/churningcanada for their credit card recommendation sticky thread.

To answer your question, no you wouldn't take a hit beyond the initial credit inquiry when you get the card. Just keep an eye on your rating with something like credit karma.

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sweca 3 points 3 years ago

I've heard of churning but I was told that it can ruin your credit score. How has 7 cards affected your acceptance rate?

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Shadow 5 points 3 years ago

https://hardbacon.ca/...

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Shadow 3 points 3 years ago

It doesn't. You take a tiny hit if someone does a hard inquiry, but it won't do anything major AS LONG AS YOU PAY YOUR SHIT OFF.

If you can pay your balance every month, go for it!

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mindcruzer 3 points 3 years ago

My card has a $150 annual fee but I get like $800 in cash back per year. Pretty easy one to say yes to

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mxwarp 1 point 3 years ago

Your spending must be quite substantial! I'm genuinely curious to learn which credit card provides such impressive cash back rewards. Are there no annual maximum limits on the rewards?

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PuffyPanda 1 point 3 years ago

What’s your general opinion on cards with annual fees? What benefits would it need for you to consider one?

Personally, my spending is still too haywire for me to like annual fee cards. I don't want to be forced (consciously or subconsciously) to spend more money just so I can break even on the annual fees. Not spending money will always be better than any % of cashback.

If you have consistently high spending (e.g. if you have kids), then maybe. But I still don't like the idea of paying more money to get more money, since it invariably means you're making money off of people who can't pay high fees, or people in credit card debt.

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matchbox009 1 point 3 years ago

I used to have more cards, using specific ones for different things, but I just get no joy from tracking that stuff. I currently just stick with a simple, no fee, cash back card. If you spend a lot (small business) I think there are better opportunities for credit cards. If you like spreadsheets and tracking, churning could be an option, but I think this is less profitable in Canada vs USA.

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