I think the credit card and travel hacking game can be dangerous for a variety of reasons. One of the most dangerous can also be one the most subtle. For lack of a better term, I’ll call it “internet peer pressure.” Even if you don’t overspend to meet credit card sign up bonuses and pay off your balances monthly, there exists an inherent pressure from the blogosphere to be signing up for every single credit card sign up bonus that comes around. When I started this game, I always felt I HAD to have the newest, best credit card sign up bonuses out there. It starts off simply, but like I said, it’s very subtle. I think a lot of travel credit card enthusiasts go through phases along these lines:

Four Phases of Travel Credit Card Enthusiasts

Phase 1: Hmm, should I dip my toe into this credit card rewards thing?

In Phase 1, you’re still not convinced that applying for credit cards regularly won’t hurt your credit. You dip your toe into the pool by getting a card, probably a Chase Sapphire Preferred because you’ve heard about it ad nauseum. For some people, you’ll take one trip with those points, but for others…

Phase 2: Establishing a credit card application rhythm

If you continue on, you start getting a good handle on how often you can apply for credit cards, and fall into a predictable rhythm of adding one, two, or more new cards every couple months. Maybe you double or triple the number of trips you take in a year, and you really get into the swing of earning miles and points regularly through sign up bonuses. Now lots of people stop at Phase 1, but I think for most people in Phase 2 you end up at…

Phase 3: You really want to sign up for more credit cards but there are no good signup bonuses left so you just chase that next bonus

I think I hit Phase 3 about 2-3 years into the game. I had exhausted most of the “great” sign up bonuses but I felt like I had to still sign up for new cards every three months so I started applying for good, not great sign up bonuses. I’d convince myself mentally that I “needed” these cards even though I had no uses for the miles or they belonged to obscure programs. Hopefully for those who enter Phase 3, like myself, they enter Phase 4:

Phase 4: You realize that you should only be earning the miles that you plan to spend, and that almost everyone in this space is trying to sell you credit cards

Have a plan for your miles and points. Earn the miles you plan to spend. Once I finally burned that into my brain, I stopped chasing sign up bonuses. I then coupled this with my realization of the fact that all the “buzz” about every single new and “amazing” credit card sign up bonus out there results at least in some part from people who are trying to sell you said credit card.

Understanding the internet’s role in making you want to sign up for new credit cards

I’m not trying to be critical here, though I’m not trying to defend anyone either. But I’ll just speak for myself, even my blog and social media, which receives no compensations from banks for credit card conversions, contributes to the “buzz” behind cards. That’s because when my friend tells me they just bought a $1500 dollar snowblower my automatic reaction is “you should have signed up for a new credit card.” 

Of course, this just perpetuates the notion that all spend should be going towards meeting credit card sign up bonus minimums. And if you’re in Phase 2, that’s almost definitely correct!

BUT. You get to a point where all of a sudden you are chasing points in programs that you don’t have a plan for. So, you may be earning more points, but if you don’t use them, maybe you should have just used them for regular spend on one of the cards you already have.

Factor in the fact that the minority of the community, at least on the blogs, warns you to consider how “lifecycle effects” (copyright Free-quent Flyer) has changed your travel habits. My wife and I flew internationally 5 times a year before our first child, now our goal is 2 international trips a year.

Whenever a new credit card comes out, everyone gets excited, and rightfully so! I really wanted the Hilton Aspire card and I really want the new Iberia card. But the reality is I haven’t redeemed a single Hilton point or Avios (Avio?) for over two years). So as much as I want shiny new cards, it’s tough to say I can actually use those miles and points. 

Whenever a new card comes out, 90% of blogs will write about it, travel hacking Twitter will blow up, and if it’s big enough, even your mom will ask you about it. It’s tough not to buckle under that kind of pressure, especially when the bonus is legitimately good. But I do my best to remember to ask myself: Am I thinking about my actual spending (of miles) habits when I fall for the buzz for new credit cards?

Orphaned Points – My Hall of Shame

I reached Phase 3 right around lifecycle effects dictated a restriction on my travel. So, I have a personal hall of shame, orphaned points I need to get rid of. I thought it’d be fun to share my sources of shame and how I plan to get rid of them.

Radisson Rewards (~140,000 points)

Earned via: Club Carlson credit card sign ups back in the day

Reason for shame: Still haven’t used a single point. Had a stay booked right before the extra free night expired but we ended up canceling. 

Plan for use: Since I plan on starting to book two rooms in the foreseeable future, we should use this on our next domestic vacation.

Alaska Airlines (~150,000 miles)

Earned via: a couple of BofA Alaska Airlines cards plus some old Virgin America Points

Reason for shame: Alaska Airlines felt like a great idea. We love Seattle, we love flying Cathay to Hong Kong, and hey maybe we could even fly Emirates. But it turns out when we had kids we actually realized we don’t like traveling without them! (Except for once or twice). I also didn’t book using AS for our last trip to Hong Kong because I wanted the flexibility to change dates and times from AA. 

Plan for use: No active plans. 🙁 May just burn them on domestic AA flights.

Merrill Edge Points (~50,000 points)

Earned via: Merril Edge+ BofA card sign up bonus

Reason for shame: I guess I’m not ashamed of this, but I am reminding myself I need to use these points for my next flights

Plan for use: My next domestic flights

Final Thoughts

Remember, you don’t need to sign up for every credit card sign up bonus! Be sure to evaluate your miles and points needs and make your decisions accordingly. If you travel all the time, this probably applies less to you, but if you’ve got a growing family like mine, make sure you at least consider exercising discipline in your overall strategy.

Also, I’m sure some of you have orphaned points and your own hall of shame, so I’d love to hear about them in the comments!

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So today IRL I had a friend ask me, “How long should I wait before applying for a new credit card?” This friend, who I’ll call Nicole, had been poking around my blog but couldn’t find if I had written about it anywhere. While I discussed the different ways applying for new credit cards affects your credit score way back when this blog began, I never explicitly discussed how long to wait between credit card applications. I thought it’d be helpful to address this really quickly.

Of course, the answer, as always, is it depends. And I’m generally hesitant to hand out concrete advice these days, on the blog at least. We all have our unique situations. Still, I’ve had a few reader questions lately that I’d like to address, and I’ll start with this one. 

For these reader questions, my aim is to provide a framework for people to make their decisions. While I know my friend’s particular situation and what I’d advise her, that doesn’t mean it’s the same thing I’d advise another reader. But I think the framework we approach questions generally remains consistent. 

So, what should you consider when deciding how long to wait between credit card applications? TL;DR at the bottom of the post if you’re lazy, but if you’re a beginner make sure you understand what you’re getting yourself into.

Can you handle paying your credit cards in full?

Since this post suits beginners more, let me start with the biggest reminder. Credit cards and the benefits you can earn are wonderful, but you must have both the means and the discipline to pay your cards off in full. Otherwise, the banks are making money off of you and you are putting yourself in a negative financial situation.

There are, of course, exceptions for advanced players – but that’s 400-level stuff. Be responsible, pay your credit card bills on time and in full, or perhaps consider another strategy.

Factors that affect your credit score

So I mostly covered it in that old post, but let’s quickly look at what affects your credit score. It’s important to understand what a credit score is and how it’s used. 

Simply put, the banks are trying to figure out whether you will pay them back their money. Obviously, if they extend you credit and you never pay it back, they lose money. Your credit score places a numerical value on how “trustworthy” you can be. With that in mind, a quick recap of what affects your credit score.

Payment History

Obviously, if you pay your bills on time, you will look more credit-worthy to the banks. And like I said above, pay your credit card bills on time and in full.

Credit Utilization

This is mostly a fancy word for the amount owed. Basically, if you use a lot of the credit offered to you, then banks find you less credit-worthy. “Why does she need all that extra money?”, they ask. So if you have a lot of credit available to you but you don’t use a lot of it, you seem more credit-worthy to the bank.

Average Age of Accounts

If banks have been extending you credit for a long time, you look more credit-worthy.

New Credit Inquiries

If you keep asking the banks for more credit, that naturally hurts your credit score.

What causes banks to refuse to extend credit to someone

So I said I’d give you a framework for making your decision. Taking into account the factors that affect your credit score above, you can sort of figure out why banks would reject you for a credit card.

If you use up a lot of the credit extended to you, apply for cards all the time, and miss payments, obviously you’ll look bad to banks and they won’t want to give you credit cards. 

However, if you’re responsible and pay your cards on time and don’t use up all your credit, you will look different to a bank even if you apply for cards a lot. Does applying for a lot of cards look great? Probably not, but overall you look like a net gain for the banks and they will be more likely to approve you for a credit card.

Your credit inquiries (each time you apply for credit) hurt your score the most in the first three months, and then the negative effect decreases.

So a general rule of thumb, which led to the old app-o-rama strategy, is don’t apply for credit cards more frequently than every three months. But overall, it’s okay to apply for cards every three months because every card you approve for makes your credit utilization look better, assuming you don’t increase your spending. You get more credit extended to you, spend the same amount of money, so your amount of credit used goes down.

And, of course, there are lovely banks like Chase with rules prohibiting you from (generally) getting approved for new cards if you’ve opened too many in the past. Google Chase 5/24 if you don’t know what I’m talking about.

Overall, make sure you have a good understanding of where you stand before you apply for new credit cards. Sites like Credit Sesame and Credit Karma will give you an estimation of your credit score, too.

How often do you apply for credit cards overall?

This, ultimately, is what I asked my friend and the most relevant to her situation. If you consider yourself a travel hacker and apply for cards all the time, you should follow the general rule of thumb and wait 90 days for new cards. 

But if you’re just starting out, or have a lot of expenses coming up, it’s not the worst thing in the world to apply for, say, two cards within a month of each other. It will definitely hurt your score in the short term but on time payments and your credit utilization should balance that out in the long term. 

Which is why I say everything depends. Personally, I don’t adhere to a strict 90 days anymore, though I try to keep everything spaced out like that as a general guideline. 

Some questions to ask yourself 

As promised, here’s the TL;DR version. A framework, if you will, of what to ask yourself/think about if you are trying to figure out how often you should be applying for new cards.

1. Are you paying your credit cards off in full every month?
2. Assess your payment history, credit utilization, average age of accounts, and recent credit inquiries.
3. How many lines of credit have you applied for in the last 90 days?
4. Do you have any large credit needs (e.g., mortgage), coming up in the next 90 days?

While the general answer to how often to apply for new lines of credit is 90 days, a good understanding of yourself and your habits in relation to the above questions should help you determine situations when you might not want to wait the full 90.

Final Thoughts

Again, I can’t reiterate this enough. You have to figure out what works for your current financial situation. But I’d definitely advise against messing around if you’re not paying your credit cards off in full. Personally, I don’t apply for cards every 90 days anymore. I just wait until I see sign up bonuses I like and then pull the trigger. That means sometimes I’ll go six months with no new cards. Other times, I apply for 3 cards in the span of 12 days. 

If you’re a beginner, start out slow and find out what works for you. Hopefully this gives you a general idea of what to consider in terms of time between new cards. Remember, sign up for cards with your travel goals in mind. Happy travels!

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