When I first started in the credit card game, I got a little carried away and signed up for nine credit cards in a four-month span.
That’s right. NINE.
Ok that’s probably more than a little carried away. I thought every offer no matter how good or bad was worth getting because it offered some value.
But the game has changed since then.
The Chase 5/24 Rule
After my credit card sign-up spree, Chase bank implemented it’s 5/24 rule, which basically states if you have opened 5 or more credit cards in the last 24 months, you will be denied. Originally, it was only for their Ultimate Rewards earning cards such as the Chase Sapphire Preferred and Chase Freedom cards, but then it was expanded to most of their Chase co-branded and business cards as well.
In my opinion, Chase offers the best rewards credit cards in its portfolio as well as the best rewards program — Chase Ultimate Rewards. The 5/24 rule was implemented to deter people (such as myself) from credit card churning. It’s as if the banks actually care about their bottom line.
Which is perfectly understandable considering JPMorgan’s CEO James Dimon said the huge 100k sign-up bonus for the Chase Sapphire Reserve last year cut their 2016 Q4 profit by up to $300 million. The stakes are high for your business.
Needless to say, I was forced to sit on my hands for quite a while to let my applications roll off.
But I’m finally free again!
If you want to be able to get Chase credit cards (which you should), you can realistically only open TWO new credit cards per year. That way you’ll still be eligible for their cards.
Why So Selective
With only two cards per year, you have to be VERY selective in deciding which credit cards to apply for. A HUGE opportunity cost is involved.
Think about it — applying for a store credit card where you save $50 on a purchase could mean missing out on a bonus that provides over $1,000 of value.
So the question to ask is:
Given a limited number of applications, how can you maximize the value of each application?
Best Time To Apply For Credit Cards
The key thing to remember about credit card sign-up offers is that they are promotions. Like all promotions, they change over time. Which means sometimes the sign-up offer will be higher than other times.
This is the best time to apply — when the sign-up bonus is HIGHER than usual.
Typically credit cards will have a 1-3 month period each year with an increased sign-up bonus. That means you don’t know when it’s coming and have to be ready to jump on it when it does come around.
Right now I will only sign up for a new credit card when the sign-up bonus is higher than usual.
But there is a caveat.
You also have to be getting a certain minimum amount of value. Just because the $50 bonus is now $100 doesn’t mean it’s worth getting.
I’m looking to get at least $600 of net value from a sign-up bonus.
Ideally closer to $1,000.
I balk at all offers less than that. With so many available options and such a limited number of applications, there’s no reason to waste them on lower value bonuses.
Let the offers come to you. It’s very similar to stock trading — waiting until the good setups develop. Sometimes doing nothing is the hardest thing to do. But you’re not exactly doing nothing. You still have to keep an eye out so you don’t miss out when the opportunities do come around.
How To Know a Sign-Up Bonus is Higher
When you check out a credit card sign-up offer, how do you know whether that offer is good or bad?
Well, if you’re brand new to the game, it’ll be a little tougher because you don’t have any frame of reference.
Here are some examples to help fix that:
Chase United MileagePlus Explorer – normal offer used to be 30k. I got it in 2013 when it jumped up to 50k and my wife got it at 50k in 2015. Now the standard looks like it could be 40k.
Chase Southwest Cards – normal offer used to be 25k, then it became 30k, and now it could also be 40k as Chase appears to have upped its standard offers. I got 2 Southwest cards the very first week of 2016 at 50k each in order to earn the Southwest Companion Pass. Last month all the cards were at an increased 60k sign-up bonus and my wife took advantage of that offer and got one.
Citi Aadvantage Platinum Select WorldElite Mastercard – normal offer is 30k. I got it at 50k in 2015 and my wife got it at 60k in 2016. That’s double the normal value! That’s the difference between a one-way award ticket to Europe and a roundtrip!
Starwood Preferred Guest – normal offer is 25k. I got it at 30k in 2015 and my wife got it at 35k in 2016. This may be the only card I recommend getting where the gross points are less than 50k. That’s because Starwood points are valued higher than any other rewards program.
Remember — all points are not created equal.
That’s why a credit card such as the Hilton Honors Card is a bad deal even though it offers a sign-up bonus of 50k. In terms of actual value, that’s more like $300. That’s less than half the value 50k points would provide in any of the Chase Ultimate Rewards or partner programs.
This at least gives you a starting point if you’re completely new to the credit card game. Either way, you still have to monitor the available offers.
Once a month is enough.
It’s very easy. Simply Google the cards you’re interested in as well as the best credit cards sign-up bonuses for the month. This way you won’t miss out on the cards you really want or a bonus that’s too good to pass up.
When To Avoid This Strategy
Like there are exceptions to any rule, there are also times when certain strategies are not optimal. It’s worth pointing out when it may NOT be worthwhile to wait for a bonus to go up:
1. The credit card will be a staple in your wallet.
Credit cards such as the Chase Sapphire Preferred or Reserve are so valuable for their everyday earning potential that WAITING on them is a big opportunity cost. I wouldn’t hold it against anyone for grabbing either at their standard offer of 50k points (used to be 40k a couple years ago). Likewise, a bonus lower than $600 is perfectly acceptable if there is significant earning potential such as with the Chase Freedom cards.
2. You need points for a specific purpose.
Let’s say you just decided to plan a big international trip five months from now and want free flights. You probably don’t have time to wait around for a bonus to increase. You still have to get the card, hit the minimum spending requirement, actually receive the bonus, and then book the award flight at least 2-3 months in advance.
3. You are using a referral.
This works when you’re married or have a partner to play the credit card game with. If one already has a certain card, that person can refer the other person. In this way, you can essentially get an increased bonus together. By referring your partner for the Chase Sapphire Preferred, you could earn a combined 60k points. No need to wait!
Note that the referral offer for the new person will be the standard offer even if there is a current increased promotion.
No double dipping. I tried.
Ideally, once you have the staple cards in your wallet, you’re just looking to take advantage of sign-up bonuses when they’re too good to pass up. Right now my wife and I have been sitting on over 160k American points for over a year after taking advantage of the increased offers.
Instead of being forced to get a card at a lower offer for something needed right away, it’s better to take advantage of the higher offer when it’s not needed — knowing one day it will be. We plan on using those points for a big trip in 2018.
With the rules tightening on credit card applications, we have to be much more selective about which cards to apply for as well as when. Almost every sign-up bonus will have an increased offer at some point in the year. It’s best to wait for these times to apply in order to maximize the value out of each application.
If you’re married or have a partner, you have the additional benefit of TWO people playing this game, which allows you to get FOUR new credit cards each year. Spacing out the applications is also beneficial if possible so hitting the minimum spending for the bonuses isn’t an issue. As always, when getting new credit cards it’s also important to follow the rules of the credit card game.
As you can see, my wife and I have gotten a lot of the same credit cards. We have our favorite rewards programs and prefer to target those.
Plus that also makes it easy to travel together 🙂