I usually put a lot of thought into what credit cards I’m going to apply for. I work out a general strategy over a six-month period – what trips I’m likely to plan, where I want to focus my earning, etc. Then I adjust the plan as new offers hit the market or the field changes. Last year, for instance, I didn’t have any intention of signing up for an Ink + card from Chase, but when I read that it was going to get absorbed by the 5/24 rule, I applied right away.
This year has been a little different, since I have enough points to cover my immediate travel goals, so I’ve been a little less careful about what direction to go. I will concede up front that this is probably dumb. I’m basically taking my own advice from my Million Mile Secrets interview and earning points I don’t have an immediate need for. My basic feeling is that there’s no reason not to apply for big bonuses as long as they’re available – and with the way the anti-churning winds are blowing, who knows how much longer banks are basically going to look the other way when people apply for 10-15 cards in a year.
I also have a bunch of expenses coming up in the next 4-6 weeks, which is a good opportunity to meet minimum spend requirements. That got me looking for other cards I want to apply for, and the first one I jumped on was the Citi AAdvantage Platinum card on the last day of the 50,000 mile bonus. My application went to pending, so I called and moved some credit off of my Prestige card (which I plan to cancel in a few months anyway), and they approved me over the phone. It’s my fourth card with Citi, so I’m not surprised that I maxed out my line of credit with them. Between that card and the Aviator Red, I’ll have 93,000 AAdvantage miles banked by the time I meet the minimum spend, so even after another round of devaluations (assuming it happens before I get around to using those miles), that should still be enough to have a lot of fun.
Now to the Korean Air card. The nice thing about Korean Air miles, besides the excellent Sky Team redemption rates on business class awards to Europe, is that they partner with both Chase and SPG, so any miles I earn from the Korean Air card are basically points I don’t have to transfer away from Chase or SPG. I was going through a pile of junk mail to see what I could recycle and what I had to shred, and I realized that I had ignored a targeted offer for 45,000 miles after $3000 in minimum spending. (The bonus is actually tiered, so every thousand dollars of spending gets you 15,000 miles.) The normal bonus on this card is 15,000 miles, so this represented a pretty good opportunity.
Almost without thinking about it, I decided to apply. Again, I think this was probably dumb, especially since I didn’t consider how it might cause me to have to adjust my strategy. (To wit: I completely forgot that I intended to put $5000 on my SPG Amex in order to get the 5000 bonus that some folks were targeted for. Now there’s no way I’ll hit that and the minimum spend on this card.) Also, I really have no use for Korean Air miles right now. I’m planning a trip to Europe soon, but my priority is burning the Delta miles I earned last year, since I’m sitting on a six-figure balance, and I’m expecting those to devalue any minute now. I mean, they’ve already devalued since I earned them, but I’m referring to the hypothesized hammer-drop to make them worth $.01 across the board. So, using the Korean Air miles on that trip would cost me less miles net, but it would also prevent me from burning the Delta miles. This is the reason I plan a strategy in advance, but I’m not immune to “impulse buys” when the opportunity strikes.
Another reason I shouldn’t have applied: the annual fee isn’t waived the first year, AND there’s a minimum spend. I usually don’t apply for cards where both of those things are true – I’ll pay the fee like I did on my Aviator Red, since I was able to earn 40,000 miles for $95 and one purchase from a parking meter. And the AAdvantage Platinum has a minimum spend requirement, but no fee the first year. Korean Air hits me both places, which is generally a reason for me to pass on an offer.
It may all be moot, though, because I don’t know that I’m getting approved for the card in the first place. In more evidence that I didn’t really think this through, I didn’t realize that US Bank (who issues the card) is one of the toughest banks when it comes to new account approvals. It’s also recommended by Doctor of Credit to freeze two lesser-known credit reports that only US Bank pulls, and I didn’t do that either. (However, someone mentioned on Twitter that US Bank didn’t run their application as a result of those reports being frozen, so I don’t know if it would have helped or hurt me.) I went to pending, which is the first time that’s happened with a new bank since I started churning. I tried calling reconsideration to see if it was just a question of confirming some info, but the rep said he couldn’t help me, no one could help me, and that I was truly alone in the world. Oh, and that I’d get a response in 3-5 days. We’re still in that period, so it’s entirely possible that I’ll get approved. It hasn’t been easy, though.
What’s funny about this is that US Bank issued the second credit card I ever had – an REI Visa that I had for around 10 years before they canceled it for inactivity. Back when I got this card, I was making minimum wage in Los Angeles, and my rent payment was 70% of my income. I had terrible credit – just one card open, and I had requested credit line increases on it multiple times and always had it loaded to the hilt with debt. Still, US Bank gave me an REI card with a $10,000 limit, and they were right to do it, since they made a ton off of me in interest payments. I’m still amazed by these 23-year olds who write personal finance blogs about never having debt and retiring at 35, since back when I was 23, I could barely remember to pay my utility bill (and often paid my gas bill in person when they sent me a 24-hour shutoff notice). Carrying debt on my credit card was how I survived dropping out of school, switching careers, and literally starting at the bottom (in one of the most expensive cities in the US). Does that build character? I don’t know, probably not. I’ll probably be working for one of those 23-year olds someday.
Anyway, now that I have great credit, no debt, and a respectable job, US Bank isn’t sure about me. And while it seems ironic, they’re probably right – this time, I’m not going to pay them any interest, I’m going to take my 45,000 miles, and I’m going to cancel the card after a year. They’ll get $80 out of me plus interchange fees on $3001 in purchases – not exactly a profitable customer for them. The default risk is way lower, since I actually did once consider declaring bankruptcy, but other than that, 23-year old irresponsible me was probably a more attractive customer.
Okay, so this is a long post with not much in the way of advice, although I feel like you should expect that by now. However, there’s one nugget I want to leave you with: CREATE ACCOUNTS WITH EVERY FREQUENT FLYER PROGRAM! You hear this advice a lot, and I’m often lazy about doing this. However, when I went to the Korean Air card’s website and entered my unique invitation code, my name, address, and Korean Air frequent flyer number were pre-filled and grayed out. I’m assuming that part of the reason I was targeted for the offer is that I have a Korean Air account that has never had any activity. If I had never signed up, I doubt I would have received this offer. Another offer that floats around that I’ve always been interested in is the 50,000 bonus on the Miles & More (Lufthansa) card – and I realized that I don’t have a Miles & More account, so that offer probably isn’t going to land in the mail anytime soon. There’s your insightful takeaway: if you’ve been putting off creating accounts with all the random non-US frequent flyer programs, go register now.