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Our strategy for opening and closing credit cards

To the point

Here is our strategy for opening and closing credit cards according to your objectives.

Our strategy for opening and closing credit cards

Several questions frequently recur in exchanges on the Facebook group regarding requests for cards credit:

  1. How to open and close credit cards, or when to ask for them… how does it work?
  2. How often can we apply for credit cards?
  3. How long should they be kept. or when should they be closed?
  4. What is the strategy to adopt?

Before all this, we must of course define what our needs are and have an earning strategy (philosophy of “Earn & Burn & Repeat” or “earn & Use & Repeat”).

For more details on this, read this article trying to answer the famous question: Which credit card should I apply for?

The optimal request sequence for credit cards

Once the choice of credit cards is made, you need to build a strategy, a sequence of requests, because it may not be possible to apply for all the cards at the same time. Credit card applications will have to be spread out 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).

Look at the cards that come closest to this goal.

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 fee!

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 certain categories of spending.

Have renovations to do? Consider buying gift cards at your convenience store or grocery store with your American Express Cobalt™ Card and you’ll get 5 points for every dollar (a minimum of 5%)!

Which credit card offers the biggest bonus of all the credit cards in the world?

If you have ONE big expense (municipal taxes, high maintenance costs on your car, dentist, etc.) that is planned /or predictable, opt for a credit card like the American Express® Business Gold Rewards Card or the BMO® AIR MILES® Business Mastercard®* that will give you a great welcome bonus after you’ve spent $5,000 in 3 months!

What is the value of the points you earn with the credit card ?

Do not hesitate to do calculate the value of your points.

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 also optimal to maximize return on investment: it is profitable to absorb some costs.

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:

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 in a timely manner?
  • Should I synchronize with a particular time of the year because it is more conducive to big expenses on my part (payment of taxes, large planned purchases, etc.)?

There are of course services that can help you such as Plastiq, PayTM or Rakuten. But when it comes to spending $10,000 – $15,000 in 3 months, it gets complicated!

You should never tell yourself “I’m just going to spend more”: no, no and no! Include your average (or expected) spending in your strategy.

In order to maximize the chances of reaching all the purchase thresholds that give access to the application bonuses, it is preferable to keep one or two months between spouses, i.e. not to apply to cards during the same months, and alternate.

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.

It is important to know that multiple applications in the same day are often considered as a single application in terms of the 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 focus your credit card applications on the same day. However, it also happens that each of these requests may result in an alert. And every time you open a credit card account, it will show up on your credit report, which can have a downward or upward impact on your credit score .

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.

If you wish to request an additional card for your spouse, there will be no impact on your or his credit history.

The most important question then remains: Will we be able to meet each trigger purchase threshold for application bonuses on time?

Knowing that a number of expenses are somewhat common (taxes, daycare, groceries, Hydro-Québec, etc.), the couple may well put the expense on both spouses’ cards.

The frequency of asking for cards credit

Assuming you have a good credit rating, it is possible to apply for credit cards every 3 months.

If an average of 3 credit cards are requested every 3 months (to reduce the impact on the credit bureau as mentioned above), up to 12 cards can easily be requested per year.

But if you are starting out, we advise you to do it every 6 months with 2-3 cards each time (so 4-6 credit cards in the first year).

How long should they be kept, or when should they be closed?

Of course 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

These cards will be kept for a short time (until the application bonus has been received and/or used).

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 .

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.). It is impossible to make an insurance claim if we are no longer in possession of 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® World Elite®* Mastercard®*, and that in the meantime you have closed your account and you have subscribed again 6 months later to get a new bonus, the insurance will not apply: because although it is the same card, it’s not the same account.

Conclusion

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 free…!) and not to get into debt. Everyone must therefore plan according to their needs and abilities.

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