This is part 1 of a two article series about my latest credit card App O Rama and how I netted 240,000 points and $200. Part 2 on Friday will talk about which cards I applied for, how many points I ended up with (it’s a lot!) and how I met $20k in spending in only 2 months.
When most people think of getting married, they think of moving in together, having kids and spending the rest of their lives together. That all sounds great to me but I’m also excited to get married because of the financial reasons. Since my fiancee is in school, once we get married our taxes are going to go down, I can add her to my company’s health care plan for free and we’ll get to combine our finances.
These might not seem like the most exciting things ever but for me it opens up a whole new world of possibilities. Since I love to rack up credit card points, getting married means I now have twice the opportunity to do so. Right now the limiting factor to my credit card applications is my credit score. Even with over 20 cards, in order to keep my credit score in the high 700’s (my current FICO score is 796), I have to make sure that I don’t apply for too many lines of credit.
My fiancee isn’t really into personal finance but she does like reaping the benefits of all my credit card sign-up bonuses. I think she is actually starting to get a little too accustomed to luxurious rooms and flights because without all of these awesome credit card offers there’s no way I’d pay for ocean front suites in Hawaii or business class flights to Europe. Now that we’re getting married though, I can take over her credit score and double up on all the great offers available out there.
Most serious credit card churners like to stagger their applications every 3 months. But the only problem with that strategy is that you can end up with a lot of inquiries on your credit report. I think it’s best to do a round of applications every 4-6 months. In the past, this is exactly what I have done but if a really great offer pops up I might pull the trigger a little earlier.
Now that I have my fiancee on board, I can apply for a new round of cards every few months but it will be on separate accounts. So this strategy enables me to get nearly double the benefits and sign-up bonuses but with the same number of credit inquiries. At this level, we should be able to maintain both of our scores in the mid to high 700’s and still rack up around $5,000-$10,000 in tax free rewards each year for the both of us.
Credit Score 101
My fiancee only has a few cards so this was her first real App O Rama. She already has a few no fee cards that I signed her up for a while back so she would have a solid credit history to build off of. Applying for a new card actually affects three parts of your score: the average age of your accounts, the number of inquires and the total credit limit. When you open a new card, the total credit limit portion of your score will getsa boost since you’re increasing your total limit (thus decreasing your credit utilization rate). But a new inquiry will generally ding your score by a few points and since the card has zero age, it will also negatively impact the average age of your accounts.
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You can mitigate the latter effect though by having several very old cards. If you have three cards with an average age of 10 years, introducing a 0 year card will only reduce your average age to 7.5. An average age of a few years or more is good for your score so you can see why it’s a good idea to never close out your oldest cards (as long as there are no annual fees).
Planning Out a Strategy
I stay abreast of all the latest and greatest offers by reading The Points Guy and following the forums on Flyer Talk. I’ve only been playing this game for a few years but I can’t imagine that there were ever more great offers floating around than there are right now. You can get everything from frequent flier miles, hotel stays, elite status, lounge passes, cash back and more just by signing up for a credit card and spending money that you would normally spend anyways.
Most of the best sign up offer cards have annual fees but the first year is often waived and a lot of the cards will waive the fee or let you downgrade if you call in once your annual fee hits. For this App O Rama in particular, I wanted to pad up a few of our balances since our European Honeymoon in the peak of summer put a big dent in our mileage total. Here were my goals:
- US Airways Mastercard: I wrote about this card a few weeks ago since it will be going away at the end of the year once AA and US Airways finish up their merger. This was a great time to apply for this card since I wanted to get the bonus before it goes away. And if we don’t use the points on US Airways, they will eventually be merged into AA points so there’s no risk of losing them.
- Starwood Preferred Gold Points: Starwood is by far my favorite hotel branded points systems since their points are just so valuable. I was able to get $1,750 in value out of just 35,000 points for our honeymoon stays in Rome and Athens this summer. That being said, the points are kind of hard to come by so our balance was at 0 before this card.
- Chase Ultimate Rewards (UR): At the time, Chase was offering a 60k point bonus for signing up for the Ink Bold or Ink Plus Business cards so this was a great opportunity to boost our UR account. Chase is one of my favorite credit card point options because their points are so flexible and easy to redeem. They have tons of great transfer partners like United, Hyatt, Southwest and more. You can also redeem the points for a 25% bonus and book travel on your own or you can redeem at a 1 cent to 1 point ratio for cash back or gift cards.
- American Airlines Miles: AA is pretty much our go to airline living on the West Coast since they have good availability and reasonable redemption rates. We’ve used them to fly to Kauai and Maui over the past couple years and this summer we’ll be flying from LAX to Rome through JFK (economy comfort on the new A321!). I already had close to 200,000 miles on AA saved up but I figured it couldn’t hurt to get some more since we’ll use them up eventually.
My strategy for this churn was pretty simple: build up my Starwood and Chase point balances since I was pretty low and rack up some easy AA miles. Even though I already have 200,000 AA miles in my bank, an offer for 100k was just too tempting to pass up. I’ve actually never seen an offer above 100k so any time you see one, it’s a good idea to jump on it.
My fiancee’s credit was pretty solid so I was pretty confident she would get approved for all four cards. In part two of this series, I’ll go into detail about which cards I applied for, what my thinking was, what the results were and I’ll tell you how I was able to spend $20,000 in less than 2 months.
Readers, what are the things you think about before applying for a great credit card offer? Do you have any rhyme or reason to your applications or do you just apply whenever you see a great offer?
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-Harry @ PF Pro
Wow 200,000 points is amazing! I need to learn from your amazing ways 🙂
Harry Campbell says
Haha I’ve been thinking about doing a monthly points report like you do for your income reports. You are the $$ master, I’m the points master 🙂
Kevin H @ Credit Bureau Insider says
It seems like you a doing a good job of keeping your credit score at a reasonable level. It would be interesting to see how all your open to buy impacts the interest rate you are asked to pay when the time comes to apply for a mortgage.
Many lenders will shy away from borrowers with instant access to large amounts of revolving credit. You get lots of great travel perks today, but may be making larger mortgage payments for years to come.
Harry Campbell says
Yea we’ll see. I can’t say for sure because I haven’t applied in a couple years but I don’t see why it would affect me getting a mortgage. The higher your limits are, the lower your utilization will be which helps your score so why would lenders see that as a negative?
Kevin H @ Credit Bureau Insider says
The larger your open to buy the more quickly you can take on more debt. Your aggregate credit limit could be viewed as a negative. Most lenders work with custom scorecards that consider different factors than what a generic FICO score might.
Harry Campbell says
Thanks for the info Kevin, I guess I could see why they would think that. Either way, I can always close a few accounts and by the time they run my credit score for the second time hopefully those limits would have dropped off by then.
Tevis Verrett says
I respectfully disagree with Kevin. I am a private equity fund and hard money financier. I also have intimate knowledge and collaborations from operators of the commercial divisions of the major banking institutions.
All credit is not looked upon equally.
Mortgages: Don’t pay your bills and the bank forecloses to protect it’s investment. . .
Auto Loans: Same here, default and they repossess.. . .
The riskiest credit is UNSECURED CREDIT CARDS DEBT. Default and they got bupkis. . . short of ruining your stellar credit rating.
So credit card limits are the gold standard of credit risk. If you are a good custodian and keep your utilization rate below 20% the banks will fall out of their chairs throwing money at you.
I have colleagues with a half-million in credit lines and corporate credit cards. . . they are able to borrow millions.
Now take the antithesis, a college coed that late pays on her $500 Discover Card. . . is always living on the edge of 90% utilization.
She has hosed herself with the banks. She will blacklist herself as an unacceptable credit risk.
So it ISNT how much credit you have, it is HOW you manage it!
That is my .02!
Blessings Neighbors and thanks HC for a great blog!
Harry Campbell says
Never thought about it like that Tevis, but that is a great point. I’m with you!
Kevin @ Credit Bureau Insider says
I agree with most of what you said. However I sold credit information to mortgage lenders for years, and implemented automated decision systems for them. It is common practice to require certain segments of mortgage applicants to close their credit cards in order to get a loan approval.
So we are both right!