Planning Your First Credit Card Applications

Planning your first applications

One of the most popular ways to earn free travel is by signing up for credit cards. To give you an idea of how lucrative this can be, consider two offers that are commonly available: the Chase United MileagePlus® Explorer and the Chase Sapphire Preferred℠. With the United card, it is periodically possible to get a signup bonus of as much as 55,000 miles, and with the Sapphire Preferred you can get a signup bonus of up to 55,000 Ultimate Rewards points. Ultimate Rewards points transfer freely and instantly to United Airlines miles so you could sign-up for one card now and the other in 3 months and suddenly have over 110,000 miles available after meeting each card’s minimum spend requirements.

How valuable are 110,000 miles? Consider that you can fly round trip to Europe in international business class for 115,000 miles on United flights. Business class means plush lie flat (or nearly flat) seats, much nicer meals and drinks, and more attentive service. Business class flights to Europe normally cost anywhere from $3,000 to $6,000 or more, yet you would have almost enough to fly round trip from just two cards.

How many and how often?

As you saw from my example above, you can get a lot of travel from just one or two credit card sign-ups. If that’s your comfort level, then sign-up for just one or two a year and you’ll do well. Some people, though, like to push this all out and signup for as many as 32 cards a year! I would strongly advise against going that far, but you could reasonably do 9 to 12 cards a year without much trouble.

If you want to stick to just a few cards, then there really isn’t any special science to it. Simply take a look at my Best credit card offers page, sign up for a card or two and you’re good to go. If you’re interested in doing more, follow this step by step guide:

Step by step:

Step 1: Check your credit score

If you haven’t already signed up for a credit monitoring service, this page lists options for monitoring your credit for free. Ideally your credit score would be 750 or higher, but you can still do well with a score of 700 or more. If your score is lower than that, concentrate on improving your score before signing up for any of these cards.

Step 2: Plan your applications

• Review my Best credit card offers page and pick out a card with a great signup offer.
• On the Best credit card offers page, read the App Tips section for the bank that issues the card you want. If the card issuer allows multiple applications in 1 day, consider applying for a second card from the same issuer. Often, multiple credit inquiries made from the same bank on the same day are combined into one.  In other words, if you think of the credit inquiry as your cost for applying for a card, then you can get two cards for the price of one.
• Be mindful of the minimum spend requirements for each card. Some people sign up for too many cards at once and find themselves needing to spend an outrageous amount of money to get their bonus points.

Step 3: Sign up for 1 or 2 cards

Do not sign up for more than you are comfortable with. Make sure that you can handle the minimum spend requirements before signing up.

Step 4: Record the event in a spreadsheet

It is very important to record information about each of your credit card applications.  You will need this information in the future. I recommend keeping all of the following information:

• Card issuer (bank)
• Full name of the card
• Card type (e.g. Visa, MasterCard, Discover, Amex)
• The date you applied
• The offer terms (e.g. 50,000 points after $3K spend)
• The application result (e.g. approved, pending, denied)
• The date you received the full signup bonus
• The date you canceled or product changed to a different card
• Notes

Step 5: Call the reconsideration line if you get denied

The more you get into this hobby, the higher the chance is that you’ll find some of your applications get denied. Often, though, it is very simple to call their reconsideration number to get approved. I’ve done this many times in the past. See this post from Doctor of Credit for more information.

Step 6: Meet minimum spend requirements

Use the card for all daily spend.  Where possible, use the card to make bill payments.  If necessary, use a service like Plastiq or ChargeSmart to use your credit card to pay bills that can’t normally be paid with a credit card: mortgage, rent, student loans, etc.  These services do charge fees, but signup bonuses are usually far more valuable than the costs you would incur.

Keep in mind that the card’s annual fee, if any, does not count towards the minimum spend requirements.

Step 7: 12 months after signing up, call to cancel or downgrade to no fee card

When the next year’s annual fee comes due, call the card issuer to let them know that you’re thinking of cancelling the card. If they offer you a bonus for keeping the card (a retention bonus) that you value more than the annual fee, then take it.  If not, cancel or product change to a no-fee card.

That’s all there is to it! You do not need to wait until the entire cycle above is finished before applying for another card.  Instead, apply for 1 or 2 cards at a time and then wait until you’ve met the minimum spend requirements before applying for more.

More to come

In other sections, I talk you through the best ways to meet minimum spend requirements; I’ll describe which points and miles are most valuable; I’ll show you how best to use the points you have; I’ll discuss ways to get hotel & airline elite status for free. (free upgrades!); and much more. Let me know if you have particular questions or needs and I’ll see if I can help.

Useful Links

• Sample Credit Card Plan
• Check your credit score for free
• Find the best credit card sign-up bonuses

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