Credit Card Strategy For 2019

Credit Card Strategy For 2019

Since I often get asked which credit cards to sign up for, I thought it would be a good idea to publish my credit card strategy for the rest of the year. So get ready for a long post!

In general, every four months I sign up for a few credit cards. I strategically time credit card applications so that I can meet minimum spending requirements by paying my taxes online. That way, I can easily earn sign up bonuses without having to worry about spending enough. My taxes are so high, it’s easy to meet the minimum spending requirements!

Other than paying taxes, I find other creative ways to earn sign up bonuses by using credit cards to pay for my everyday living expenses.

But there’s a little more to it than that.

So what’s my credit card strategy this year?

 

Chase 5/24 Status

Part of my credit card strategy revolves around my Chase 5/24 status. If you don’t know what that is, please read this post first.

The bottom line is that you will not be approved for any Chase credit cards if you have opened five or more personal credit cards in the past 24 months. The rule was implemented to prevent credit card “gamers” from signing up for multiple credit cards and “churning” them to earn a ton of points from sign up bonuses.

Every card issuer has a rule. American Express has a “once in a lifetime rule”. Citi has it’s own rules too. You just have to know these rules when you play this game. By far, the most popularly known rule is the Chase 5/24 rule.

Before signing up for any Chase credit cards, it’s important to know your 5/24 status. Otherwise, if you’re over, you will automatically be denied. You don’t want to waste a hard credit inquiry with a flat out denial. Plus nobody likes to feel rejected!

How Do You Check Your 5/24 Status?

There are several ways to check, but the easiest way is through Credit Karma. If you don’t have an account, you can easily set one up in a few minutes. It gives you free access to your TransUnion and Equifax credit reports with full details about the accounts that show up on your report.

After setting up your account, here’s the steps to follow:

1. Log in to your account
2. Click on this link to access the old interface that shows the full report of all your accounts
3. Then click on accounts
4. Sort accounts by “open date”
5. Count the number of qualified accounts (which are the ones that count toward 5/24 status) in the past 25 months***

*** 25 months gives you some leeway. According to most data points, you will not be below 5/24 until the first day of the 25th month after your fifth account was opened. For example, if your fifth-most recent account was opened on July 4, 2017, do not apply for a new card until August 1, 2019.

What is my 5/24 Status?

By following the directions above, I get the following…

These are the most recent accounts on my personal credit report. It’s important to note that most business credit cards do not show up on your personal credit report. This is why business cards usually do not count toward your 5/24 status.

It’s also important to note that other account types do not count either. For example, the “JPMCB AUTO” is an auto loan of $40,718 and does NOT count toward Chase 5/24.

As you can see, only four credit cards show up on my personal credit report in the past two years:

• AMEX open date January 12, 2019 – This is my American Express Hilton Aspire card.
• CITI open date October 16, 2018 – This is my Citi Premier card.
• JPMCB CARD open date October 2018 – This is my Chase Freedom card.
• JPMCB CARD open date April 14, 2018 – This is my Chase Sapphire Preferred card.

You can also see a BRCLYSBANKDE on the list as well. But this was opened on June 2, 2017, which is more than 24 months ago. And in case you were wondering, that was a Barclay AA Aviator card.

Since it only shows that I have only four cards open in the past 24 months, it clearly means I am under 5/24. I can apply for Chase credit cards again without being automatically denied. Woohoo!

What About Business Cards?

As I mentioned earlier, business credit cards do not show up on your personal credit card.

The following are all the business credit cards that I have opened in the past 24 months:

• American Express Business Gold (opened 5/5/2018)
• Citi Business AAdvantage Platinum Select (opened (5/52018)
• American Express Business Hilton Honors (opened 5/5/2018)
• Chase Ink Business Preferred (opened 7/18/2018)
• Chase Ink Business Unlimited (opened 8/18/2018)
• Bank of America Alaska Business card (opened 3/6/2019)

As you can see above, I had a blitz of non-Chase business cards on Cinco de Mayo last year! At that time, all of these cards had increased sign up bonuses. You have to be ready when opportunity strikes! In addition, the timing coincided so that I would receive those three cards in time for the June 2018 estimated quarterly tax payments.

It’s also noteworthy to see that I applied for two Chase business cards after July. This coincided with me getting under the Chase 5/24 that time last year. It was also perfect timing for my September 2018 tax payments.

The Bank of America Alaska Business card was the only card I opened this year. This is because it had a great sign up bonus.

 

What’s My Credit Score?

By now, most readers know that I have more than twenty credit cards.

And I often tout my excellent credit score. How do I have such a great credit score?

It’s because I pay my entire credit card balances in full and always on time. I have an impeccable payment history. No late payments and I never carry a balance.

I also have a very low credit utilization. This means that while I have around $200,000 of credit available (spread among all my credit cards), I only use a fraction of it. As frugal, conscious consumers, we almost buy nothing and barely spend any money!

Okay. You want numbers?

Here’s My FICO Score

Most credit cards will show your FICO score for free. In my case, I used my Citi Double Cash card because it has that option.

In case you didn’t know, the FICO is the most common credit score used by lenders. It consists of the following factors:

• Payment history: 35%
• Amounts owed: 30%
• Length of credit history: 15%
• New credit: 10%
• Credit mix: 10%

The other common credit score is VantageScore.

Here’s My VantageScore

You can check your VantageScore by using Credit Karma.

According to VantageScore, more than 2,200 financial institutions use its credit scores. The scores are based on the following factors:

• Payment history: extremely influential
• Age and type of credit: highly influential
• Percentage of credit limit used: highly influential
• Total balances and debt: moderately influential
• Recent credit behavior and inquiries: less influential
• Available credit: less influential

For an effective credit card strategy, you have to know your credit score.

If you’re interested in learning more about FICO and VantageScore you can ready this article by Credit Karma here.

 

My Credit Card Strategy

As I said before, now that I’m under 5/24 I can apply for Chase credit cards again.

Chase credit cards are awesome and here’s why. First of all, Chase offers so many useful and valuable credit cards. There’s a variety of hotel branded cards, including the IHG, Hyatt, and Marriott credit cards. And there are a number of airline cards as well, including Southwest, United, British Airways, and other airline credit cards.

In my opinion, the best Chase cards are the ones that earn Ultimate Rewards (UR) points. Chase UR points are valuable because they are so easy to use, relatively easy to accumulate, and they can be redeemed in a number of ways. You can easily redeem them for cash, flights or hotels on the Chase travel portal, or transferred to hotel or airline partners for outsized value.

Chase Ink Business Cash Card

Once I was under 5/24, this is the card I immediately applied for.

I already have the Chase Ink Business Preferred, Chase Ink Business Unlimited, and Chase Ink Business Plus (no longer available). My credit card portfolio contains the entire family of Chase Ink Business cards, except for the Chase Ink Business Cash.

So I just had to complete the family by applying for it. I applied in July and was approved a few weeks later. Success!

The Chase Ink Business Cash is great because it earns valuable Ultimate Rewards points. And the current sign up bonus is pretty lucrative. You can earn $500 (or 50,000 UR points) after $3,000 in spending within the first three months.

It also earns a bonus (at total of 5% or 5x UR points) at office supply stores. This was incredibly convenient this past week because Staples had a promotional sale in which you can buy fee free Visa gift cards. It’s a great way to manufacture bonus points and get a great 5% return on all your expenses.

I easily met the $3,000 spending minimum to earn the 50,000 Ultimate Rewards points sign up bonus. This is mostly because I bought so many gift cards!

Another reason I signed up for the Chase Ink Business Cash card is because it’s a business card. This allows me to stay under the Chase 5/24 rule because most business cards don’t count.

A Reminder About Business Cards

Many people shy away from applying for business cards because they feel intimidated. But you shouldn’t be. Business cards should be a part of everybody’s credit card strategy.

Yes, you do need to have a business to apply for a business card. But it is common for people to have a business without realizing it. If you sell things online (using eBay for example) then you have a business. If you freelance or blog, that can be your business. House hack or AirBnb? That’s your business. Other examples include Uber/Lyft, handyman services, selling your stuff on Etsy, starving artist, and author in the process of writing a personal finance book. Any side hustle qualifies, even if it doesn’t make much money.

Pretty much anything can be a business. In many of these cases, your business will be considered a Sole Proprietorship.

The legal name of business can simply be your full name. Under Tax Identification Number, you can put your social security number. It’s fine to put “1” as the number of employees. And be truthful when indicating your annual business revenue and years in business. If your blog only makes $100, don’t put down that it makes $1,000,000. That would be fraud.

Below is a sample using my Chase Ink Business Unlimited application from the past. Obviously that is not my address or social security number.

Sample Business Card Application

So far, I have been approved for every card that I have applied for. Even with business cards.

Maybe I’m lucky. Or perhaps credit card issuers are more generous to me because I make a high income? That could be it, but I’m really not sure.

If you sign up for a Chase card and you’re not automatically approved, I found this chart on Reddit to be helpful.

Chase Ink Business Preferred Card

I love this card primarily because it has such a huge sign up bonus. After spending $5,000 in the first three months, you can earn a sign up bonus of 80,000 Ultimate Rewards points. The bonus categories are great as well since you can earn 3x points on travel, shipping, internet/cable/phone services, and advertisements.

As I mentioned earlier, I already have this card. However, my wife didn’t, so I referred her using my referral link. I basically filled the application for her using the same guidelines above (business type “sole proprietor” and her SSN instead of “Tax ID number”. I applied in late May and she was not automatically approved. However, I used the previously mentioned Reddit flow chart and she was approved a couple weeks later just in time to pay for our June tax payments.

By using her card to pay for our taxes in June, we earned a net 100,000 points. She earned 80,000 points. for meeting the minimum $5,000 spending requirement. And I earned 20,000 points as a referral bonus. Not a bad points haul if you ask me!

As an aside, you are are allowed to transfer points from one person’s Chase account to another person’s as long as they are in the same household. So in theory, my wife can transfer all of her points to my account if she wanted to. Transferring points to another person and effectively pooling your points can come in handy when you need a lot of points. An example of this could be if you are booking roundtrip premium class award tickets, which can run around 150,000+ points on business class.

 

Credit Card Strategy: Other Cards I’m Considering

So far this year, I’ve only opened two cards. The Bank of America Alaska Business card and the Chase Ink Business Cash card. And don’t forget I opened the Chase Ink Business Preferred Card for my wife.

If you noticed, all of the cards that I’ve signed up for this year are business cards. This is deliberate and intentional. The primary reason for this is because I want to stay under 5/24. Remember: most business cards don’t show up on your personal credit report and therefore do not add to your 5/24 count.

By staying under 5/24, I can opportunistically sign up for a Chase card if there is ever a huge sign up bonus that is offered.

In general, the best credit card strategy to generate a ton of points is by signing up for cards with lucrative sign up bonuses. But in 2019, the sign up bonuses have been pretty lackluster. As of July 2019, I am 4/24 and clearly under the Chase 5/24 rule. Signing up for a random personal credit card with a crappy sign up bonus would be a total waste of one of my 5/24 slots. I need to be selective!

The lack of lucrative sign up bonuses and my desire to stay under 5/24 is why I’ve only opened two cards so far this year. In order to generate points this year I’ve had to resort to manufactured spending and calling the credit card companies for big spend retention offers.

Recently, however, there are several cards that have had increased sign up bonuses.

These are the cards I’m considering…

Southwest Performance Business Card

This is a new Chase Southwest credit card that has a huge sign up bonus. You would earn 80,000 Southwest points after spending $5,000 in the first three months. That’s incredible because after earning the sign up bonus, you’ll have at least 85,000 of the 110,000 qualifying Southwest points you need to earn the Southwest Companion pass.

My plan is to wait until October to apply for this card. That way, the card will be issued to me some time in mid-October. Then, I would apply for one of the Chase Southwest personal cards (likely the Southwest Plus card because of the low annual fee) in November. While you can apply for up to two Chase cards per month, I like to wait a month in between applications to be safe.

After being approved for both Southwest cards, I would not use them at all for the rest of 2019. I would wait until early January 2020 to complete the minimum spending by using both to pay for my January quarterly estimated taxes. By doing this, all of the sign up bonus points (110,000 + 40,000 = 150,000) will be earned in January 2020. This would qualify me for a companion pass that would be good for two whole years from 2020 through the end of 2022.

That’s a great deal!

Since this is such a lucrative sign up bonus that would help me earn a companion pass, I’m holding off on using my last 5/24 slot until I sign up for this card.

Let’s just hope that the huge sign up bonus of 80,000 Southwest points is still around come October. Otherwise, it would put in a wrench in my plans and foul up my whole credit card strategy!

Chase United MileagePlus Explorer Business Card

This is another card I’m considering. It has an increased welcome sign up bonus of 100,000 miles. HOWEVER, the spending requirement is pretty steep. You would earn 50,000 miles after spending $5,000 in the first three months. Then, you can earn an additional 50,000 miles after a total spending of $25,000 in the first 6 months. While I could easily meet the $25,000 spending by paying my taxes, there is a real opportunity cost by not putting that spending on other potentially more lucrative cards. The additional points beyond the first $5,000 of spend may not be worth it to me.

There are several reasons why I am considering this card:

• It’s a business card, and thus will not affect my 5/24 status. Therefore, I can apply for this card now and still be able to apply for the Southwest Performance Business card in October.
• The sign up bonus is relatively lucrative.
• I have never had the card before.
• It has enhanced access to United saver level economy awards, which can come in handy.
• Decent perks: Free first checked bag for primary cardholder and one travel companion when you pay with the card; Priority boarding; No foreign exchange fees; 2 United Club passes per year; Primary auto rental collision damage waiver; Up to $100 Global Entry or TSA Pre-check credit

If I decide to sign up for this card, I’ll probably apply some time soon so that I can receive the card in time for my September estimated tax payments.

Chase IHG Rewards Club Premier Card

This is a personal credit card that would take up the last coveted slot in my 5/24 status if I decided to sign up for it. Therefore, if I applied for this card, it would only be AFTER applying for the Southwest Performance Business Card in October.

I am primarily interested in this card because of the sign up bonus of earning 125,000 after $3,000 in spending after three months. This is the highest sign up bonus on this card that I’ve seen so far. Additionally, you would receive a free night certificate on your account anniversary.

There are some downsides to the card. First of all, it has an annual fee of $89. Also, while the sign up bonus appears to be lucrative, IHG points are not worth a whole lot. Maybe about 0.5 cents per point.

I probably won’t sign up for this card, but we shall see.

What About Other Credit Card Issuers?

This year has been a terrible year for credit cards from Citi and American Express. First of all, the current sign up bonuses for their cards are really weak. For example, Citi Prestige has a sign up bonus of 50,000 which is not great. Additionally, benefits are being reduced.

American Express cards have not had great sign up bonus offers either.

 

Credit Card Strategy Summary

• Lucrative sign up bonuses are the easiest and fastest way to earn a lot of points. This is how most people travel hack their way to luxury travel like flying first class!
• Consider paying your taxes or finding some creative ways to meet minimum spending requirements to earn credit card bonuses.
• Of all the major banks (Chase, Amex, and Citi), Chase Ultimate Rewards points are the most valuable because they are easiest to use, can be redeemed for travel, and have multiple transfer partners you can use for outsized value.
• Because Chase Ultimate Rewards points are so valuable, prioritize signing up for Chase cards first. Afterward, you can then diversify your credit card portfolio.
• Know the Chase 5/24 rule, how to check your status, and other things you should know about Chase.
• Since Chase business cards do not count toward you Chase 5/24 status, apply for them first. Some great Chase business cards include the Chase Ink Preferred, Chase Ink Unlimited, and Chase Ink Cash. (Yes, these are referral links. Thank you in advance if you use them to apply!)
• Yes, you can apply for a business card because you probably have some kind of business (freelance, Uber, blogging, selling online, real estate, partner in medical practice, etc.). Just put “sole proprietor” under business type and put your SSN instead of the Tax ID number. Be truthful with your numbers.
• ALWAYS pay your credit card balances in full and ALWAYS pay on time. Make it easier on yourself by setting up automatic payments. It’s important to know that the biggest factor in your credit score is your payment history!

 

What’s Your Credit Card Strategy?