New to Miles and Points: Which Travel Credit Cards to Apply For?

• Chase Freedom
• Discover
• Blue from American Express

 

• Southwest Premier 
• Starwood from American Express

 

I am thinking of applying for the Chase Sapphire Preferred and Barclaycard World Arrival cards with the 40,000 miles bonuses.  My credit score is in the high 700s and my credit utilization of all my cards is about 6% so I think I am in good standing.  For the next year or so, I only plan to travel domestically.  So, my questions are:

• Do you feel these two cards are good choices and complement my existing cards?
• If I close my Southwest card to avoid the 2nd annual fee coming up, will this impact Chase's decision to approve me for the Sapphire Preferred? Also, you should know that I was denied the Chase Sapphire Preferred in 2012 because of my low income, but I have since found a new job so I don't know how this will affect my application this time around.
• Should I apply for the two cards on the same day?
• Also, how many cards can I actually apply for at one time or a short period of time without it impacting my credit score?
• Are there any other offers you recommend that I should apply for?
• Is there a hit to your credit score when you cancel cards?”

Chase Sapphire Preferred

 

It could, so I would NOT close a credit card right before applying for another card from that issuer; instead, apply for the new card first, and then, after getting approved, close the other card. The other reason for doing this is that you don't want to lose the credit line you've been given by that issuer–it may help you get approved for the new card(s) you're applying for.

 

 

Yes, I definitely recommend applying for two or more credit cards on the same day, then waiting several months before applying for any more credit cards. If you're applying for two personal cards from the same issuer, the credit score pulls may be combined, resulting in fewer points off your credit score. Even if the cards are from different issuers, the advantage of doing your applications on the same day, as close in time as possible, is that then the issuers don't see the other credit applications you've made, so you're less likely to be denied for “too many recent credit inquiries.”

 

 

 

There will be some impact on your credit score–when you apply for a new credit card, a credit inquiry can take 1-5 points off your credit score, and the number of points can be higher for those who have shorter credit histories or only a few accounts. So there's really no way to apply for new credit cards without impacting your credit score.

 

The good news is that, as I mentioned above, by applying on the same day for a couple similar type of cards (e.g. both personal, or both business) from the same issuer, credit inquiries can be merged, reducing the impact to your score. And over the long term, by gradually building up your credit lines and credit history while keeping low credit utilization and always paying in full and on time, individual inquiries can have less of an impact, and a long credit history and low utilization can help mitigate the temporary effect of the new credit inquiries. Typically the effect of the credit inquiries only lasts for about a year.

 

In general, I would advise that this is a marathon, not a sprint. If you're new to miles and points, I *don't* advise going out and applying for 5 or more new cards every 3 months–I would instead make a list of 3-6 cards that make the most sense for you, given your travel preferences and goals, and applying for those 3-6 cards over the course of the next year, say in 2 application days spread 6 months apart. This may be conservative, but it also lets you gradually ramp up with much less risk of getting declined, plus gives you time to meet minimum spend and manage the new cards without feeling overwhelmed.

 

 

I recommend that you diversify your miles and points portfolio to hedge against devaluation, give you flexibility when booking awards, access more airline partners, etc. and the top miles and points I recommend collecting are AAdvantage miles, Ultimate Rewards points/United miles, AMEX Membership Rewards points and SPG points.

 

This reader is already collecting SPG points and, if approved for the Chase Sapphire Preferred, will also be collecting Ultimate Rewards points/United miles via that card and the Chase Freedom, so the other cards I'd recommend applying for would earn AAdvantage miles and AMEX Membership Rewards points.

 

Currently there's are 50,000 AA mile offers for the the Citi Platinum Select AAdvantage Visa and for the Citi Platinum Select AAdvantage World MasterCard (see Best Travel Rewards Credit Cards) so I'd recommend applying for one of those. Unfortunately, it's no longer possible to get the bonus for both. See Citi AAdvantage: Official 50K AA Miles Offer But No More Churning?

 

For AMEX Membership Rewards points, unless the reader has been targeted for a higher offer for the AMEX Premier Rewards Gold card (public bonus is only 25,000 Membership Rewards points) I would recommend the Mercedes-Benz Platinum Card from AMEX, with 50,000 points as a signup bonus. Now, the annual fee for this card is high, at $475, and not waived, but by applying towards the end of this year, the reader can get a $200 airline fee credit this year and another $200 airline fee credit next year. It's still possible to get these fee credits for United gift cards–see Maximizing the AMEX Platinum Fee Credit which would mean $200 each off of two United flights. The $100 fee for Global Entry is also reimbursed (see American Express Platinum Card Global Entry Tips). Even though the reader doesn't have any international travel plans in the next year or so, Global Entry is valid for 5 years, so this is still worthwhile to get while having the AMEX Platinum.

 

Another aspect to consider is what most of your spend is on, because, when not meeting minimum spend for new credit cards, you want to be able to leverage this spend with category bonuses. For example, much of my family's spend is via Amazon, which makes the Ink Bold an important card to us, thanks to being able to buy Amazon gift cards at office supply stores to earn an effective 5X points on all Amazon spend. Of course, this reader can also do this up to $1500 with her Chase Freedom for October-December 2013 (see Amazon 5X Points: Activate Chase Freedom Q4 5X Bonus and Tips).

 

 

 

There's not a direct hit to your credit score when cancelling cards in terms of a few points being deducted simply because you cancelled, but it can lower your score if, as a result of cancelling, your credit card utilization increases due to having lower credit lines, even if your spend remains the same. That's why I nearly always recommend moving your credit line to another credit card of that issuer that you still hold, *before* cancelling or closing a card. And don't forget to try for a retention bonus before deciding whether to close a card or not–if you earn enough points from the retention bonus or receive an annual fee waiver, it's often worth keeping the card open for another year, which in turn helps your average age of accounts and credit score. 

 

Do you have additional credit card and credit score tips for this reader?

 

 

 

 

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