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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.
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 big 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.
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®.
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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