‘Is it a bad idea to stack credit lines for rewards as an overseas resident?’: I want to maximize rewards, but could I be harming my credit in the process?

Hey Money Minder,

I recently decided to apply for a credit card because of a sweet rewards offer (getting 300 bucks back on the first 500). Plus, it might help me beef up my credit report since I don’t really have any credit lines at the moment.

Here’s a bit about me:
– I’m a US citizen but I live and work abroad.
– My credit score is okay, but nothing to write home about.
– I don’t have any credit lines outside the US.
– No late payments, just a student loan on an Income-Based Repayment plan.
– I have savings and investments back in the US, which I sometimes transfer back with a 1% fee to cover my expenses abroad.
– I usually only use American finances for my overseas trips and the occasional purchase from the US or Japan.

Now, onto my questions:
– Is it smart to get rewards cards and just do the bare minimum to snag the rewards, then pay it all back before any interest kicks in?
– Would it be a bad move to stack up on credit lines to nab multiple sign-up bonuses and then pay it all off right away?
– Will any of this impact my credit score in a good or bad way? Are there any other risks to consider besides having a credit card while traveling?
– What should I watch out for to keep risks at bay?

Thanks for any advice you can give me!

Take care,
Curious Explorer

Response from THE MONEY MINDER:

Hello There,

Congratulations on taking the steps to apply for a credit card to boost your credit and take advantage of rewards offers! It sounds like you have put a lot of thought into your financial situation and are looking for ways to make the most of it. Let’s address your questions one by one.

Firstly, utilizing rewards cards can be a great way to benefit from cashback offers and other perks. As long as you are disciplined about paying off the balance in full each month to avoid interest charges, it can be a smart financial move. By doing this, you can take advantage of the rewards without falling into debt.

Regarding stacking credit lines for multiple registration bonuses, it’s important to tread carefully. Opening multiple credit accounts in a short period can have a temporary negative impact on your credit score due to the hard inquiries. However, if you are responsible with managing these accounts and stay on top of payments, it can ultimately help to increase your available credit and improve your credit utilization ratio, which can positively impact your credit score over time.

In terms of the impact on your credit, managing credit responsibly by making on-time payments and keeping balances low can contribute positively to your credit history. However, there may be risks associated with carrying multiple credit cards while traveling, such as the potential for fraud or theft. To mitigate these risks, it’s important to monitor your accounts regularly, set up alerts for unusual activity, and keep your cards secure while traveling.

In summary, using rewards cards wisely, paying off balances in full, and being mindful of the impact of multiple credit lines can help you achieve your financial goals while minimizing risks. Remember to stay vigilant and proactive in managing your credit accounts to maintain a healthy credit profile.

Best of luck with your financial journey!

Farewell from THE MONEY MINDER.