I’m in the midst of my latest credit card churn. Its slightly more than pedestrian, but perhaps not as crazy as some others (re: Frequent Miler) have done in the past. But I don’t think the number of cards is as important as the methodology.
Whenever I apply for credit cards, I think to myself what the risks are and opportunity cost is.
- You always run the risk that the credit card issuer/bank denies you. This could result in a hard pull but no points (the madness!)
- Worse, the credit card issuer might think you’re no longer a good customer, it could, in fact, sour the well, so to speak.
- Even worse, if they think you’re too high risk, or if American Express conducts a Financial Review on you.
There’s also the other side of it, what are you giving up by selecting a particular credit card? With reasonable knowledge (Post via Doctor of Credit) of what cards can be churned and how many cards can be applied at one time, you can weigh the opportunity costs of your decision.
- Does the card meet your near term goals?
- Does the card have a limitation–like Citi’s Platinum card–where you are limited to one bonus in 18 months? or worse, a life time? What if the card has a better bonus in the future?
- Does the bank/credit card issuer limit how many cards you can have, a la AMEX?
- What is the “value” of the bonus to you, compared to another card?
So as I prepared my latest churn (yes, I still believe in batching my applications whenever possible). I looked at the opportunity cost of the Chase Slate card and its 0% balance transfer fee, and 0% for 15 months, versus other Chase options.
Why would I need a balance transfer card, when, as everyone will say, to play this game, you need to be as debt free as possible? Well, I still have some college loans I’m trying to pay off, and I can save a bunch of interest by transferring them to a credit card like the Slate, then using the monthly payment I would otherwise be sending to the loan company, to the credit card, and augmenting that payment as necessary. It saves me some interest, and gets more debt off the books.
You might ask (as I did): How much can I save by using the Chase Slate? If you look at the terms, you can do a balance transfer up to $15,000, assuming your approved for slightly more than that. If the balance transfer is done in the first 60 days, there’s no balance transfer fee. After 60 days, you’d be hit by a 3% balance transfer fee. So, you’re saving ~$450 in that fee alone, right? Not so fast. If you’re like me, you get promotional APR / Balance Transfer / Credit Card Checks (truth be told, I’m not sure what they’re really called), and, if you’re like me, you take note of the various offers. Well, one that I typically see multiple times a year, is from my British Airways card (also a Chase credit card), that offer is typically 12 months 0% promotional APR on Balance Transfers, with a 2% fee.
So now, the “value” of the Chase Slate is closer to $300, rather than that initial $450. UPDATE: My friend FreequentFlyer also reminded me that you can convert the Chase Slate into the Chase Freedom after enjoying the balance transfer / 0% interest, making the card even more attractive in the long term–since you can eventually turn it into a points earning card!
What I’m really getting at is this: The benefit of the game that we play with miles and points, and really leveraging credit, is that you can extend it to other aspects of your life to save money, and otherwise better your quality of life. That’s probably why Matt chose the tagline as:
Have you leveraged mile and point knowledge for bettering other parts of your life? if so, please share your story in the comments!