The Evolution Of My Credit Card Strategy

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Signing up for credit cards is one of the best ways to build up your points and miles balances. But this isn’t the Wild West anymore. You just can’t sign up for credit cards indiscriminately. The banks are on to us. They know what we’re doing. Lucky for us that they’re willing to let us continue in our credit card ways as long as they can balance the money we cost them against the money they make from everyone else.

In order to do that, banks have placed restrictions on signing up for credit cards. Name a bank and I bet they have some sort of term associated with their specific rule. 5/24, Once a lifetime + 4 max , 2/3/4, 1/6 + 6/24. All of these are unwritten rules the banks have put in place to keep you and me from signing up for every card under the sun.

To make things worse, American Express is now denying cards to people they feel are gaming the system to their advantage. What do they consider gaming?

 We may also consider the number of American Express Cards you have opened and closed as well as other factors in making a decision on your welcome offer eligibility. 

So now when you sign up for a card with American Express, they actually expect you to keep it open. For how long? Who knows? But don’t open it and then close it before that first annual fee hits.

Collecting miles and points has always been like a game of cat and mouse. The banks are constantly changing the rules and we find new ways to play under those rules. Until the rules change again. Back and forth and back and forth.

So in the current environment, how has my approach to signups changed? I think the styles of signing up for cards can be divided into two camps:

The Jenga Approach

This is the approach that many people, myself included, used to follow. You started by signing up for the cards you wanted, with no real direction. As time went on, you canceled cards you only got for the signup bonus and signed up for new ones, in essence removing bricks from the bottom and placing them on top.

There was no risk in this approach at the time because banks were handing out cards with sign up bonuses left and right. If you wanted 5 Alaska Airlines cards, Bank of America will be glad to oblige. You got a card for the signup bonus with no annual fee for the first year and then canceled it after 9 months. No worry, just sign up again after 2 years and you could get the bonus again. It was that easy. Wash, rinse, repeat.

But banks got smart. As we were canceling and applying for more cards, they were changing the rules and making it harder to sign up for new ones. Now if you sign up for the Chase Sapphire Reserve, you can’t get a bonus on the Sapphire Preferred for 48 months and you’ll have to close the Reserve before applying. Doubling the waiting period is just one of the methods the banks have implemented to slow down card churning.

Putting pieces on top of the tower with new sign up bonuses has become harder and harder and the reckless Jenga players are sitting there wondering where they can put the next piece without the tower falling apart (in the form of application denials and account shutdowns). Don’t get me wrong, you can play the game for a long time if you know what you’re doing. Some people have a drawer full of cards to prove it and a list of ones to cancel or sign up for in the upcoming year.

I’d be struggling to make sense of all of those cards and some people are building a tower like this:

I’m moved on from playing Jenga. It’s part of my strategy of choosing to be the tortoise instead of the hare. I’m now playing the long game.

Here’s how I’d best describe my new approach to card applications:

The Tetris Approach

I’m happy with the cards I have right now. They give me a good mix of the benefits I want for when we travel and the ability to earn a decent number of points for our everyday spending. I might not have the perfect card for everything, but that’s OK.

But as my bosses like to say, there’s always room for improvement.

The new cards I apply for now have to fulfill a need, or hole, in my current portfolio. Here are some examples:

I was missing a card that gave me a decent return on everyday spending. I had the American Express Everyday Preferred but you need to use the card 30 times in a month to unlock the 50% bonus the card provides. Some months we didn’t hit the 30 transactions so I wanted a card with a good return and no restrictions.

I can earn 2% back with many other cards with no annual fee so any card I get has to beat that.

Another card I signed up for is the Chase Southwest Priority Card. Several years ago I applied for both the Plus and Premier versions of this card and leveraged that to get the Southwest Companion Pass. However, I found that there wasn’t much value in keeping the cards long-term. Every year I’d receive some points when paying the annual fee but that’s just buying points and I’m not a fan of that. Since Southwest doesn’t charge for checked bags and has no set early boarding zones, there’s not much else they could offer.

The Priority card can fill a place in my card portfolio with Southwest. For the $149 annual fee, you get reimbursed for $75 in Southwest Purchases, get four upgraded boardings when available and 7,500 points. The upgraded boardings will save us from having to purchase early bird seating, which is a $120 value.

While I canceled the previous Southwest cards, I feel that this is one I’m going to keep year after year.

Every year or so, I go through my cards and mark off which ones I want to cancel at renewal. This is only when I feel that I’m not getting value or I now have a card that has better benefits. That’s how I clear off the bottom levels.

Final Thoughts

I sign up for a card every 2-3 months on average. Instead of chasing the best offer, I try to pick a card that I can hold on to for a while. That way I can keep the banks happy by not canceling every card I sign up for in the first year. I also get to pick my spots for which cards to get. It keeps me focused on my goals. Why spend time and effort to get a card which I’m never going to have a use for the signup bonus? I’m past that time. But, as always, Your Mileage May Vary.

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