Applying for Credit Cards

What is the one thing that keeps us from traveling the most? And we all say “money money monaaay”. Time is also a factor, but if money wasn’t, don’t you think you could find the time to travel to destinations like Singapore, New York, Hawaii, or Italy? I sure can get creative when money ain’t a thing.

take me there!

When traveling long distances, what is the most costly expense? Without a doubt it’s plane tickets! The easiest way to cut expenses for traveling is to find a way to fly at a discounted rate or FREE……holla! And how do you fly free or for cheap? Quite simply you marry someone who works at an airline. If that is not possible or you aren’t marriage material, then you should start accumulating reward miles and travel hacking. The fastest and best way to do this is by signing up for credit cards that have big sign up bonuses. Its EASY, oh so easy. In 2011, there were several credit card bonuses for 100k miles. Thats enough for 4 domestic round trips or 2 international trips depending on cabin and destination. All for signing up for a credit card! While there are no 100k offers right now, there are plenty of sexy offers available.

what kind, which one, how many?

So now we come to the fear of signing up credit cards and the misconception that it will hurt your credit. First of all, your credit score is one of your most important assets and you must protect it (like that little hobbit creature and his ringy thing). If you aren’t monitoring your credit or don’t have an idea of what your credit is, I would find out before signing up for any cards. Also, you must be careful not to apply for too many cards if you are trying to re-finance your house, get a mortgage, or a car loan.

After reading above, you should be dying to sign up for credit cards. Wait a sec and read a bit more before you do….easy, tiger.

dude. what about my credit?

When you apply for credit cards, the bank backing the card will do an inquiry on your credit. This inquiry will initially ding your credit 2-5 points. This is why you must map out a good strategy when applying for cards. You want every application to count. Generally I want every application of mine to at the very least generate $500 worth of rewards.

Most credit cards have a minimum spend that you must meet in a certain time period to receive the bonus. This is very important, as you must only apply for cards where you can meet the spend. There are several tricks and techniques to help meet spends, but that’s a different story for a different day.

Once you get approved, your overall credit limit has risen, which is a good thing. Especially since just because you have a new credit card, that doesn’t mean you are going to spend more, right? Right. You are going to be a good noob, keep to your shoe string budgets, not run up our credit cards, and keep paying them off every month. Doing this will improve your credit utilization– meaning that your debt to credit limit ratio will improve. This is a factor that will indeed increase your credit score. I almost sounded smart there.

Another important aspect to applying for credit cards is your credit account history. If you don’t have credit, then I would suggest signing up for a secure credit card to help build credit history. Creditors love seeing a long account history so building a long credit history is very important.

don’t those cost money?

Most rewards credit cards have an annual fee, but almost all of them waive this fee for the first year (they are just wanting us to see the world on their dime). I would highly highly suggest that you don’t cancel your card before the first anniversary of your account. This is where good bookkeeping comes in handy. When it has been about a year, call and cancel your card so you won’t be charged the yearly fee. Often times, the credit cards companies will waive the fee or give you some kind of bonus to keep the card! This is what we are looking for, two little words I love — a retention bonus. Just last month I called to cancel a card and was offered a $89 credit or 10k miles! I took the miles as I valued them more than $89. Keeping the credit card active also keeps the account history growing which is cooler than cool……ice cold.

proof!

During my last churn, I signed up for 4 credit cards, netting me over 250k in miles (all while keeping my credit above 750). My wife has signed up for two credit cards, netting her 125k in rewards while keeping her score above 780! Anything over 740 is considered excellent and will guarantee you the best interest rate when taking out a loan. This was all done while getting two different car loans and a mortgage re-finance loan.

American, United, Continental, Chase, CitiBank and many more corporations are just begging for us to travel and see the world on their dime!

It sounds too good to be true, but if you are self-disciplined, then you too can apply for rewards cards, travel the world, and still maintain you credit score. There is absolutely nothing special about me, so there is no reason why you shouldn’t let the “man” pay your way to travel.

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