There are several questions that come up in the exchanges on the Facebook group regarding credit card applications:
- How to open and close credit cards, or when to ask for them… how does it work?
- How often can we apply for credit cards?
- How long should they be kept. or when should they be closed?
- What is the strategy to adopt?
The optimal request sequence for credit cards
On milesopedia.com, we keep repeating this golden rule: once the choice of credit cards is made, you need to build a strategyIt is not possible to subscribe to all credit cards simultaneously. staggering credit card applications over time.
Therefore, which card(s) to start with? The following are questions that can help establish this strategy.
Which credit card enables me to reach my goal most quickly?
You have a well-defined goal (that plane ticket that you have to book in a few months for spring break, or that kitchen that you will have to redo soon, etc).
No need to earn Aeroplan points to save on your kitchen renovation. On the other hand, a card offering an accelerated cash back bonus for a few months will be interesting.
Or are you planning a trip around the world? You will need a credit card with no foreign currency conversion fees!
Which credit card offers the highest earning rate?
Take the example of the American Express Cobalt® Card: it is one of the credit cards that offers the best earning rate in specific spending categories.
Do you have some renovations to do? Consider buying gift cards at your local convenience store or grocery store with your American Express Cobalt® Card, and you’ll earn 5 points per dollar (a minimum of 5%)! Find out how to earn 5 points per dollar at hundreds of retailers.
Which credit card offers the biggest bonus of all the credit cards in the world?
If you have ONE big expense (municipal taxes(e.g., high car maintenance, dentist, etc.) that is expected / foreseeable: then go for a credit card like the Business Platinum Card® from American Express or the BMO® AIR MILES® Business Mastercard®* which will offer you a great welcome bonus after spending $5,000 to $7,000 in 3 months!
While American Express doesn’t usually ask for proof that you own this business (see our detailed guide to getting a business credit card), BMO does more often than not. So be prepared to show your documents (or register with REQ).
What is the value of the points you earn with the credit card?
Feel free to calculate the value of your points (see our estimate here).
We are often asked which are the best credit cards with no annual fee or which credit cards do not charge a foreign currency conversion fee.
While it is optimal to minimize costs, it is equally optimal to maximize your return on investment: it pays to absorb some costs (or to take advantage of first-year free offers).
See Jean-Maximilien’s detailed answer on this subject in the milesopedia Facebook group.
Current promotions and/or upcoming changes in the short term
Ask yourself two questions:
- Is there an exciting promotion on any of my targeted credit cards?
- Are imminent changes (promotions) expected on any of my targeted credit cards?
Answers to these two questions can influence the request sequence of your credit cards.
When there are good offers on the market, you should target them first because they can be withdrawn at any time.
It is therefore optimal to start with the best offers in force: in this respect, our monthly ranking of the best credit card offers can help you.
We repeat: when an offer is “too good”, it won’t stay forever.
Our ability to reach the purchase thresholds that allow us to obtain the application bonus
The idea of applying to multiple credit cards is mainly to trigger subscription bonuses. It is therefore important to consider the following aspects:
- Will I be able to reach the trigger threshold for each card requested promptly?
- Should I synchronize with a particular time of the year because it is more conducive to significant expenses on my part (payment of taxes, large planned purchases, etc.)?
Our credit bureau rating
Asking for several credit cards on the same day
Credit applications to the credit bureau count for 10% of the credit score.
Sometimes multiple requests in one day are considered one request in terms of impact on the credit bureau.
Credit bureaus (Equifax and Transunion) assume that you are shopping around for credit and that you will not say yes to all offers.
It is therefore recommended to concentrate these credit card applications on the same day. However, it also happens that each of these requests may result in an alert. And each credit card account opening will be reported on the credit report, which can have a downward or upward impact on your credit score. But it will be momentary.
Avoid asking for 2 cards from the same issuer
For example, you can apply on the same day for one of the American Express cards, a Scotiabank credit card and/or a BMO credit card.
However, some in the group reported that they had no problem applying for two BMO credit cards at the same time: the BMO eclipse Visa Infinite* Card and the BMO® AIR MILES® Mastercard®*.
Pay attention to the usage rate
Also remember that your credit card usage rate accounts for 30% of your credit rating.
So, when you receive your credit cards and start using them, make sure you keep the total usage rate of your credit cards below 30%.
It is often suggested that payments be made on a regular basis (without necessarily waiting for the statement to be produced) to keep the usage rate low.
An additional card, yes or no?
No. In the vast majority of cases, it is not cost-effective to request an additional card upon enrollment (except where the additional card provides benefits such as with the Infinite TD® Aeroplan® Visa Infinite* Card or the BMO eclipse Visa Infinite* Card).
It is indeed more optimal for each spouse to apply separately for the credit card . Although the couple will incur higher annual costs, the application bonuses will also be doubled.
However, if you wish to apply for an additional card for your spouse or family member, please note that there will be no impact on your credit report (or theirs).
The most important question remains for the couple: Will we be able to reach each of the purchase thresholds that trigger underwriting bonuses promptly?
Knowing that some expenses are somewhat familiar (taxes, daycare, groceries, Hydro-Québec, etc.), the couple may put the expense on both spouses’ cards.
The frequency of asking for cards credit
Assuming you have a good credit rating, applying for credit cards every three months is possible.
This being said the profile of the point hunter can be compared to that of an investor: prudent-moderate-dynamic.
The dynamic will apply for an average of 3 credit cards every three months and can quickly get up to 12 cards per year.
But if you are starting, we advise you to do it every six months with 2-3 cards each time (so 4-6 credit cards in the first year). Also, respect your profile. Some cards will fit so well you won’t want to part with them.
How long should they be kept, or when should they be closed?
The goal is not to keep all these cards forever. So there will be a cycle that will inevitably end one day with closing a card.
And the cycle time will depend largely on why the said card was requested initially.
Credit cards which you requested only to get the bonus
The general rule is to keep a credit card for one year.
Indeed, for some cards, you have to keep the account if you want to use the bonus, because the action of closing the account leads to the loss of points (if they have not been used or transferred manually/automatically to another loyalty program).
This is especially true for the American Express Membership Rewards points as well as the travel points cards usually offered by banks (BMO Rewards, Scotia Rewards, etc).
Conversely, when points are automatically paid monthly into another points program (e.g.: AIR MILES, Aeroplan, Marriott Bonvoy, etc.), the points are automatically credited to your account andclosing the card has no impact on the points, as these are in a separate program from the credit card .
However, we try to keep them for one year, which will facilitate a future application.
Credit cards which you requested to access VIP lounges
Have you applied for a credit card offering free passes to airport VIP lounges?
These cards should be kept as long as you need access to VIP lounges (upcoming trips). Cancellation of the credit card linked to a Priority Pass or LoungeKey account will result in the cancellation of that account and the available visits.
Credit cards which you requested for insurance purposes
Have you applied for a credit card to benefit from its travel or purchase insurance?
Keep these credit cards for as long as you need insurance (extended warranty on a purchase, travel insurance, etc.). However, it is impossible to make an insurance claim if we no longer possess the SAME account with which the purchase was made.
Indeed, what matters is the account and not the card . For example, if you bought a plane ticket with the BMO Ascend World Elite MastercardIf, in the meantime, the account is closed and you subscribe again 6 months later to get a new bonus, the insurance will not apply: even though it is the same card, it is not the same account.
It may seem a little complicated at first, but you end up finding your way around and giving yourself a modus operandi that works. The objective must remain to travel for free (or almost…!) like the members of the private Facebook group and not to go into debt. Everyone should go according to their needs and abilities.
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