In Which Order Should You Apply For Credit Cards?

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Reader Jared asked the following question in the “Ask Lucky” forum:

I have a big purchase to make soon, in the range of $8,000-10,000. I’m looking for advice on what cards I should use this purchase for to cover spend requirements on a few new cards I’ve been thinking about signing up for.

I am thinking of going one of two routes. Either apply for the Citi Executive AAdvantage Card (normally I wouldn’t be able to make this spend) or apply for a few branded hotel cards because I’m going to Europe for a month this fall and could use the free hotel nights. I already have Citi Hilton HHonors Reserve Card and the Hyatt Credit Card and the IHG® Rewards Club Card. I would be going for the Club Carlson Card and the Marriott Rewards® Premier Credit Card.

So to sum up my question, would you suggest going Citi Executive AAdvantage Card because it would be the only time I could make that high of a spend or get a few hotel cards and use the points for a few free nights in Europe (more then I already have with the cards I already use)?

Jared poses an interesting question, which I think is worth tackling “big picture.” What’s the correct order in which to apply for credit cards? Admittedly there’s not a single right or wrong answer, perhaps other than “whatever makes you happy.” But I do think there’s a general thought process to go through when you decide which cards to apply for.

Here’s the general order in which I’d recommend applying for cards:

1. Cards with spend requirements you couldn’t otherwise meet

This is pretty straightforward. Jared explains he wouldn’t otherwise be able to reach the minimum spend on the Citi® / AAdvantage® Executive World Elite™ Mastercard®. The card has huge sign-up bonus. That’s more than enough miles for a one-way ticket in Cathay Pacific first class between the US and Asia.

Cathay-Pacific-First-Class-777-01

So in general my top priority would be picking up a card with a lucrative sign-up bonus and high minimum spend, since he otherwise wouldn’t be able to complete that minimum spend.

2. Cards with promotional sign-up bonuses

If you’ve been following the credit card industry for a while, you’re probably familiar with the “normal” offers on credit cards. So when a card offers an increased sign-up bonus, you know how much better it is than usual.

For example, there’s an increased sign-up bonus on the Starwood Preferred Guest® Credit Card from American Express and Starwood Preferred Guest® Business Credit Card from American Express. The sign-up bonuses on these cards are usually 25,000 Starpoints upon completing minimum spend, while at the moment they’re 30,000 Starpoints after completing minimum spend.

Ultimately that’s 5,000 Starpoints more than normal, which I wouldn’t leaving on the table. That being said, if the option were between one of those cards and the Citi® / AAdvantage® Executive World Elite™ Mastercard®, I’d probably go with the latter. I’d rather earn a 75,000 mile sign-up bonus and forgo the extra 5,000 Starpoints on the SPG cards.

3. Cards with anniversary perks every year

As I’ve explained before, there are credit cards which have perks that more than justify the annual fee. For example, getting an annual free night certificate on the IHG® Rewards Club Select Credit Card is a huge perk. The card has a $49 annual fee, which is even waived the first year.

IHG-Anniversary-Night-3

Every year you wait to apply for the card, you’re basically giving up a night at any IHG property in the world for just $49. Exact details of the sign-up bonus aside, I tend to think the cards which have perks which more than justify the annual fee are worth getting sooner rather than later.

4. Cards which have rewards you value short term

Once you’ve thought about cards with high minimum spend requirements, increased sign-up bonuses, and perks you value long term, I’d think about cards with rewards you value short term.

I never view earning points as a long term “investment.” Instead I’m all for earning and burning, since points devalue over time. Having a bunch of points in an account is like having cash in a bank account not accruing any interest… except points typically devalue even more quickly.

With that in mind, my tiebreaker would be getting a card with perks you value short term. In other words, if you have a trip coming up soon and a specific points currency would be most useful, then I’d probably get a card with that bonus. But with a sufficiently diversified strategy, hopefully you’ll already have points which would be useful in such a situation.

What I would do in Jared’s situation

Jared already has some hotel credit cards, so it doesn’t sound like really needs them for his Europe trip. If I were in Jared’s shoes I’d probably hop on the increased sign-up bonus on the Citi® / AAdvantage® Executive World Elite™ Mastercard®. 75,000 AAdvantage miles is a huge sign-up bonus.

That being said, assuming Jared has a good credit score, I see no reason he couldn’t be approved for the Club Carlson Premier Rewards Visa Signature® Card and Marriott Rewards® Premier Credit Card as well. It sounds like he would be able to meet the minimum spend on at least two of the three cards, and the three cards are issued by three banks — Citi, US Bank, and Chase.

So while I would prioritize the American Card, the Club Carlson and Marriott Cards should be attainable as well.

What’s your general approach in deciding the order in which to apply for credit cards?


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Comments

  1. @Lucky Do you know if City would prorate the $450 Annual Fee? Meaning that if used and cancel after 6 months I would only pay half of the AF? Thanks

  2. @ Frank — I could be mistaken, but I don’t believe they would. Someone correct me if I’m wrong.

  3. I’d add ‘0. Cards with no Annual Fee’. That way, your oldest accounts are the ones you can keep forever for no cost.

  4. Assuming a credit score is good, this would make a good app-o-rama — three cards from different banks.

  5. I’d throw in another factor: first cards from issuers that have cracked down on those of us who churn through cards — i.e., if you put your Chase cards off until after you churned through a bunch of Citi / Amex / Discover / BofA / Capital One / USBank cards, by the time you apply for a Chase card, they may turn you down after looking at how many accounts you’ve opened over the last 2 years.

  6. Thank you for the post Lucky.

    I am curious, if banks tend to look at consumer credit line and business credit line as 2 separate lines, with 2 separate considerations, even though the holder of the cards is the same person. In other words, if I apply 2 consumer cards and 2 business cards from the same bank, will the bank see my credit line as 1 big bucket, or will they consider extending a consumer credit line and a business credit line?

    With Chase, I am guessing that they view it differently. I have CSP, IHG and Hyatt card on the consumer side, and I have Ink Plus on the business side. The consumer side tends to have more generous credit line vs the business side. That’s my personal experience however, so I don’t know if that applies to other people.

    Any thoughts here? I am considering applying for the SPG card and Business Gold cards. I already have a regular Hilton and Gold cards and a business Delta with Amex.

    Note: I am surprised that you have not posted 75K MR sign up bonus on Amex Gold business card.

  7. Gosh, the most Points Guy esque drivel yet.

    First of all, by spending $7,500 on a new card, he’s giving up $150 in cashback from, say, the Citi Double Cash or even more if he has a Barclay Arrival Plus. So there’s no such thing as a free lunch. Is 75K miles worth $150? Definitely.

    At that rate, you could just PayPal someone $7300 and pay $200 in fees to meet the spend for the 75,000 miles. Does he need 75,000 miles? Then paying an “extra” $50 should be no biggie. It shouldn’t be dependent on this large purchase.

  8. Ben – what am I missing about CX redemptions?

    Best I can tell US-HKG would fall somewhere in zone D or E based on length of flight.
    First Class OW for D is 105k miles, First Class OW for E is 130k miles

    which would mean that the sign up bonus is not enough for a first class ORD-HKG CX flight.
    I’m sure this is a newb question – thanks for explaining in advance!

    https://www.asiamiles.com/am/en/redeem/charts#3

  9. The Citi 75,000 mile bonus says it is not offered to anyone who “opened or closed” one of their credit cards in the past 18 months. Does this also include an account open for more than the past 18 months and not closed? With a $450 fee, I would hate to sign up and then find out I don’t get the bonus miles.

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