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Why I’ve soured on a sweet credit card offer

John Egan

An appealing credit card offer recently showed up in my mailbox, but I’m taking a pass. Why?

The offer, from the company that provides my auto and renter’s insurance (come to find out, the insurer owns a card-issuing bank) invites me to sign up for a card with an introductory APR of 0 percent on purchases and balances for 12 billing cycles. Oh, and for the first 90 days after opening an account, there’d be no balance transfer fees.

Even more tantalizing? A variable APR of 13.24 percent for purchases and balance transfers after the introductory rates end. Considering that the average APR for new credit card offers now sits at a record-high 16.06 percent, this offer from my insurance company’s bank seems pretty sweet.

The company’s invitation seeks to sweeten the deal by illustrating how I could save $860.77 in interest if I transferred a $5,000 balance from an existing card with a 15.99 percent APR to the insurance company’s card, with an introductory APR of 0 percent.

Well, thanks, but no thanks. I’m not going to take advantage of this generous offer. Why wouldn’t I? Let me explain.

For one thing, I’ve already got enough credit cards as it is – really, way too many. The other day, I was chatting with a friend about credit cards and realized during our conversation that I’ve got at least four store-branded credit cards. And I’ve got even more general credit cards. (Don’t ask me how many.)

Suffice it to say that I’ve got more plastic than comedian Joan Rivers famously had.

Another reason for not accepting my insurer’s credit card offer? I’ve got a condo under contract and don’t want a credit inquiry to show up on my credit reports before I begin the mortgage process.

Fortunately, the prescreened offer from my insurer doesn’t affect my credit score, since the offer stemmed from what’s known as a “soft” credit inquiry. But if I were to go ahead and submit an application for the insurer’s card and the application were approved, this would trigger a “hard” credit inquiry. While the effect of a hard inquiry on your credit score is minimal, it can last for up to a year.

OK, so the impact on my credit score would be slight and would not be drawn out.

However, I don’t want my credit score decreasing by even just a few points in advance of applying for a mortgage. To me, it’s just not worth the risk.

As explained by credit score provider FICO, applying for a new credit card before applying for a mortgage “seems fairly harmless,” but it could prevent you from securing the best interest rate for the home loan.

The amount of money to be saved from having a mortgage with a good interest rate far outweighs the amount of money to be saved from having a credit card with a good APR. It’ll take years, if not decades, to pay off the mortgage principal and interest. Meanwhile, it shouldn’t take decades and hopefully shouldn’t take too many years to pay off the credit card debt.

Translation: A lower interest rate on a mortgage typically is more valuable in the long run than a lower interest rate on a credit card.

Therefore, as much as I hate to pass up a great deal, I’m going to opt for “home sweet home” instead of the sweet credit card offer.

See related: I have a bad case of travel rewards card remorse, How to avoid 4 trap of balance transfer cards4 easy ways to stack your card rewards

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