Just getting into credit cards?
There’s some really important information here that you’ll want to know before you begin.
Please read this whole page before applying to any cards!
By: Randy Clinton
Table of Contents Show
FAQs
Do I need to have an established relationship with an issuer to get their credit card?
Most of the time, you do not. There are a few notable exception such as the US Bank Altitude Reserve or the Charles Schwab American Express Platinum; but this is not the case for most cards.
Do I need good credit (>685 credit score) to get these cards?
For most of the travel cards yes. Good credit is essential to having the best chance of getting approved. I have another article (coming soon) with suggestions on how to get approved to a credit card with a lower credit score.
My credit limit is low, should I request more credit?
Everyone’s situation is different, however for most people I would suggest not to. Requesting a higher limit on your card is another hit to your credit and will temporarily lower your score. Some issuers, like Chase allow you to move available credit from one card to another. Some might argue that for those just starting out with only one or two low limit cards, requesting a higher limit would decrease credit utilization. This is only true for those maintaining a balance. While life might have its tough moments, I never recommend maintaining a balance on any credit/charge card.
What is a SUB?
SUB stands for sign up bonus. Most credit cards tend to have a sign up bonus; an example: spend $500 in 3 months for a $200 statement credit.
How can I hit a SUB? I can’t spend $4,000 in 3 months!
There are many ways to be creative with SUB’s without overspending. One way that I did in college was through tuition and rent payments. Another option could be tax payments or paying the bill at a restaurant and having others pay you back. Another alternative is Plastiq which allows many types of payments (check out there site for the most up to date details). Even if there is a small 2% or 3% fee it is usually worth it for hitting a SUB. In theory, you should always pay $10 for someone to give you $100 right?
Should I maintain a balance of any sort to build my credit score?
Absolutely not! Unfortunately it is not uncommon to believe that maintaining a balance will help your credit score because it shows an issuer you are capable of continuing payments or something similar. This is 100% false. You do not need to and absolutely should not ever maintain a balance on any credit/charge card.
What makes a charge card different?
If you were to rewind to 2019 the biggest difference was that you were expected to pay off your charge card in full each month without fail. American Express is the most common issuer of charge cards. In the more modern times of today, they have an option called “Pay over time” for certain eligible purchases that lets you do exactly that (for a fee). Most charge cards, particularly the ones from American Express do not have a preset spending limit like credit cards.
Which point currency is the best?
In my personal opinion it really depends on your willingness to put in effort to get the most value. If you want to book travel fast without much checking back and forth I would say Chase Ultimate Rewards Points (UR); if you are willing to put in more time for a greater opportunity American Express Membership Rewards might be more value able to you.
Can I use my credit card at an ATM to withdraw money? What is a cash advance?
Yes, this is a cash advance, but this is a terrible idea and should never be done. Many issuers have an instant 25+% interest fee.
How can I find out my credit score? There are so many sites with different scores!
The gold standard for credit scores would be your FICO score. Credit Karma and other sites offer you their version of a credit score; however, the one used by most major issuers is your FICO score. I recommend using Discover, they give you a free updated FICO score every month!
Will having many credit cards hurt my credit score?
Many people believe that having multiple credit cards will hurt your credit score, however, having many credit cards is not inherently bad for you or your credit score. What matters most is being responsible with your credit cards and paying them off IN FULL each statement period. Its possible to have 100 credit cards and still have a perfect credit score. I have 15 at the time of writing this and still have a “very good“ credit score.
What can I do to maintain or increase my credit score?
#1. Turn on autopay for statement balance and pay in full each period. Everyone makes mistakes, but you don’t want to make the mistake of missing the minimum payment!
#2. Check your credit cards every week. Over 34% of Americans have been the victim of credit card fraud!
#3. Space out all credit card applications by at least 3 months. Requesting credit too often will negatively affect your credit score!
#4. Spend no more than 35% of your total available credit. If your maximum available credit is $1000, do not spend more than $350.
#5. Do not let credit cards go unused for more than 3 months. Buy some candy or gum, issuers may cancel your card if they see you do not use it!
#6. Do not cancel $0 annual fee credit cards; when possible, downgrade annual fee credit cards to free ones rather than cancelling. Cancelling credit cards lowers your length of credit history!
When to sign up for a credit card?
It is really important to consider if a card is worth it. Questions you should be asking yourself before applying should include:
#1. Will the benefits outweigh the annual fee (if applicable).
#2. Am I willing to keep long term?
#3. Can I hit the sign up bonus (SUB) minimum spend, without overspending?
#4. What is the opportunity cost?
We never want anyone to sign up for a card they cannot afford. Credit cards should be a way to compliment the spending you already do and reward for you it. Credit card SUB‘s should NOT be used as an excuse for excessive spending.
Here’s an example with the United Club credit card.
I once flew United once to Gillette, Wyoming with Michael. We flew out of Orlando (MCO) with a layover in Denver (DEN). I could have signed up for the United Club credit card to get access to the United Club at both MCO and DEN, but I don’t really fly United all that much and the day pass cost is much less than the $525 annual fee. I already have the AAdvantage Executive Card, which grants access to Admirals Clubs and OneWorld Alliance Lounges. Primarily, I fly American domestically, so there’s no reason for me to keep the United Club card long term. I didn’t have any large expenses (taxes, tuition, car insurance, electronics) coming up, so I would need a creative way to hit that SUB. I was 3/24 at (more on this next) the time so it would have left me with only 2 Chase card slots for 1 year. Based off of this it didn’t make sense for me to sign up.
Not all issuers play by the same rules
Rules of the game
Chase 5/24
Chase will only consider issuing you a credit card if you have had less than 5 personal cards opened in the last 24 months. Business cards do not add to this statistic; however if you are 5/24 or greater you will still be denied a Chase Business card.
If read or hear someone say they’re 5/24’ed it means they can’t get Chase cards. If someone is 3/24 they can only get two more Chase credit cards until they finish the 24 month period on the oldest card within that 24 month period.
Chase SUB Rules
Chase will typically only allow you to receive a SUB once every 48 months.
Even after you wait 48 months, you must either product change your card or cancel it, then reapply.
American Express SUB Rules
The majority American Express credit cards are a once per lifetime SUB. This means that if you were to apply to any American Express card, make sure that it is the best offer. American Express will not honor higher SUB offers you find elsewhere after the fact. You will get the SUB that you signed up for at the time of application submission.
There are some exceptions where the application does not include “once per lifetime language”, but for the most part, once you receive a SUB, you cannot get another one for the same card.
Product changes and specific card rules
One alternative to cancelling cards is product changing a card with an annual fee to one without one. There are some rules to keep in mind.
ChaseOn the personal credit card side most of the time you can swap any Ultimate Rewards credit card 1 year after having it. This includes the Chase Freedom (no longer taking new applicants), Freedom Unlimited, Freedom Flex, Sapphire (no longer taking new applicants), Sapphire Preferred, and Sapphire Reserve. You cannot product change between personal and business card offerings such as the Ink Business Preferred, Ink Business, and or Ink Cash Unlimited.
You can have multiple of the same card for some situations, but keep in mind, you can only have one Freedom Flex card, additionally you can have only one Sapphire card at a time. It is possible to have multiple INK business cards.
You are also allowed to product change between co-branded Hotel cards such as the IHG Premier and Traveler or the Marriott Boundless and Bold. This is valid with airline cards such as the United Explorer and United Club card.
You cannot switch between different card issuers. You would not be able to product change a Chase Marriott Boundless to the American Express Bonvoy Brilliant.
American ExpressSimilarly to chase, with American Express you can product swap between the American Express personal Membership Rewards (MR) charge cards. This includes the Platinum, Gold, and Green card. You are not able to product change between a regular cashback credit card like the Blue Cash Everyday and a MR earning card such as the Everyday credit card.
You can also swap between co-branded Hotel cards such as the Hilton Aspire and the Hilton Surpass. Additionally this also applies to co-branded airline cards such as the Delta SkyMiles Gold and Delta SkyMiles Platinum card.
Outside of upgrade offers where an issuer may specifically give you a small bonus for upgrading, product changes are not generally eligible for a SUB.
There are other issuers who allow product changes and have additional rules for SUB’s and or applications, but for simple understanding only Chase and American Express were listed here. More detailed information on other cards, their downgrade and or upgrade paths and more general information offers will be listed on the card specific information page.
