Sunday Reader Question: Help Me Plan My App-o-rama

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. For an explanation of our Advertising Policy, visit this page.

TPG reader Russell writes with several questions about creating a credit card application strategy of his own:

“I am super new to using credit cards to rack up points.  I spent the last year trying to build up a solid credit score by just having a student Discover card.  After I felt confident in my score I applied for the Chase Southwest card and got accepted (sweet!).  Now I wish I had applied for more cards that day but was such a novice I got psyched on the idea of 50,000 miles so I forgot. 

Now I’m trying to figure out my next move.  I want to do an app-o-rama like you do, but don’t know if I can yet or how many to do at once.  Here are some of my questions…also some of my main goals are to get to Europe for free this summer and rack up a bunch of points for domestic travel.”

Before I answer his questions, I want to stress that it’s important to understand your credit score before you start applying for a ton of cards. Many of the bloggers who write about “app-o-ramas” take meticulous care of their credit and pay off balances in full. You should too if you want to come out ahead in the credit card game. If you run high balances, you are most likely better off getting low-APR cards or those with balance transfer offers. You can get your official FICO score from myfico.com ($19.95) or get a free estimate from sites like Credit Sesame. There is no universal score that will guarantee credit card approvals because there are many factors that go into a credit decision, but I’d recommend having at least a 700 before getting into credit card applications (the higher the better). Each credit inquiry will take 2-5 points off your credit score, so take that into account before going haywire. You should also make sure you can handle the minimum spend requirements on cards before applying for multiple cards. You don’t want to bite off more than you can chew.

Now that I’m done lecturing, here are my answers to your questions:

Q: I applied for the Chase Southwest card on Nov 26th 2011, when can I apply for another Chase card?

A: There is no official rule. Generally it’s at least 30 days between applications, though you may still get automatically denied even if you wait a couple months. The great thing about Chase is that they have real humans staffing their reconsideration line. If you get denied, call up and explain to them why you need the card. Worst case scenario, offer to take some of your Southwest card’s credit line to move to whatever new card you want. Several TPG readers have reported getting two Chase cards in a day, but that’s only after calling the reconsideration line. Citi will often approve two applications in the same day, but Amex and Chase will generally auto-reject the second thinking its a duplicate or mistake.

 Q: I want to get the Chase Sapphire Preferred card because everyone makes it out to be the best spend card, but I also was looking into getting the Southwest companion pass.  Can I apply for the Sapphire and the Southwest business card on the same day or how close together?

A: If you apply on the same day, there’s a good chance you  approved for both, but it is possible when going for a personal and business card. Once again, you may have to call the reconsideration line and make your case. For business credit cards, you need to speak to the business lending department between 8am and 8pm EST.  Business credit cards are still guaranteed by your personal credit so they will generate an inquiry, but they sit on a different credit report once approved.

As for the Companion Pass, the qualification period is January 1- December 31. So if you applied for the 50,000 point personal card in November 2011 and those points posted in 2011, your Companion Pass qualifying miles will have reset to 0 on January 1, 2012. However, if you you waited to use the card and your points posted in 2012, then I’d urge you to go for the Companion Pass, because it is an amazing benefit and I’m not sure how much longer they will count credit card sign-up bonuses towards qualification. Here is the link to the 50,000 point business card.

You can then apply for Sapphire and try to get approved- if not, you can apply a month later. I’ve been told the 50,000 point bonus is going away at some point this quarter (before March 31) and that the sign-up bonus will be decreasing. I don’t work for Chase, so I can’t guarantee when that’s going to happen, but I’d try to schedule an application before the end of March if you want that sign-up bonus.

Q: What other cards would help me accumulate points and get me to Europe this summer?
The thing about banking a ton of Southwest points is that they aren’t good for European travel.

If you get both 50,000 miles AA Citi cards (which you can in one application), that will give you 100,000 points, which is enough for a roundtrip business class award to Europe (or more than enough for two roundtrips if you travel off-peak October 15- April 15, which are only 40,000 miles each).

If you do get the Sapphire Preferred and spend the $3,000, you’ll end up with 53,000 points (more if you spend money on travel and dining which earn 2 points per dollar and shopping via their portal, which can get you up to 20 points per dollar or more), which is almost enough for a transatlantic coach award on United (60,000 miles). You can transfer your Chase points to United, so if you have an existing account with miles, you can top up with enough Chase Ultimate Rewards points to get your award.

The Chase United card is offering 60,000 miles to most people, though that has a high spend requirement to get the full 60,000 ($25,000).

There is currently a 50,000 point offer for the Mercedes-Benz Platinum Amex ($475 annual fee). However, the annual fees on those cards can negate the value of the trans-Atlantic you are looking to redeem. There is also a 50,000 point Amex Platinum offer if you are referred by an existing cardmember. Email me at info at thepointsguy.com if you want an invite.

If you are looking at getting a coach ticket, the Citi Thank You Premier gives 50,000 points (update: the bonus has been decreased to 30,000 points), which can be used to purchase $665 in flights. Depending on the route, that may be enough to get your ticket – plus you earn miles and elite miles on tickets booked with ThankYou points. That way, you can use your Chase Ultimate Rewards for hotels since they transfer to Hyatt, Marriott and Priority Club at 1:1 ratios. Hyatt has the best free night awards, though Marriott and Priority Club both have reduced price awards, which can be valuable.

4. How many should I apply for at once?

Since you don’t have a long credit history, I’d strongly urge you to accrue new credit slowly and steadily. While some people with long credit histories can apply for 8+ in a day, I wouldn’t recommend that for you. I think it’s important you build a relationship with each issuer, so I’d go for applying for one from Amex, Citi and Bank of America. If you apply on the same day, none of them will see the inquiries from the other banks so your chances of approval will increase. However, you still get inquiries from each, so your score will take a hit. I’d focus on paying off your bills in full and on time and your score should improve quickly, especially as your accounts continue to age. Check out these posts on learning more about credit if you haven’t done so already:

Understanding How Your Credit Score Works
8 Tips to Improve Your Credit
Yahoo Finance: Interview With Fico President Mark Greene

Maximize your rewards, points and cash back. Get a Personalized Recommendation Now