Starting down your credit card points and miles journey can seem overwhelming in the beginning. There is a lot of new information to take in, new terms and phrases to learn, and various “rules” that you need to learn to maximize benefits and rewards. I remember feeling like points and miles were a scam at first because I didn’t fully understand how they worked, and thought I was going to end up spending a lot of extra money with no upside.
Today my goal is to make one aspect of the points and miles universe easier for you to understand: knowing the right time to apply for a new rewards card.
There are several factors to consider and I’ve compiled a list of what I think about when I’m in the market for a new credit card. This isn’t an exhaustive list, and different items will carry more weight with some than others. My goal is to provide you with some critical points to help guide your choice, and to think critically before applying.
Know Your Credit Score
This is probably THE most important factor to consider, especially for beginners, so I’m listing this one first. The best rewards credit cards usually require a high credit score. It is imperative to know your score before you apply. The reason for this is simple: why apply for a card that you will not get approved for?
It is generally a good idea to have a handle on your credit score and credit report regardless if you want to apply for a rewards card. Your credit score will impact whether you can take out a loan at a bank for larger purchases like a car or home. Credit scores typically range from 300 to 850. The higher your score the better for getting the best terms and interest rate when taking out a loan and applying for a new credit card.
If you do not know your score there are various ways to get that information. Personally, I signed up for Credit Karma so I can get updates on my score daily. Not only is this app great for checking out your score, but also seeing activity on your credit report. With so much fraudulent activity in today’s world it is good to receive notifications on any new accounts opened with your name or social security number.
There is so much variability with credit scores that I do not want to get into specifics on what scores are required for specific cards. There typically isn’t a one-size-fits-all anyways as banks take several factors into consideration. My tip is to search online for a card that you are interested in, and try to find the credit score range required for approval. Always make sure you are getting your information from reputable sources.
If you do not have a score required for a card you want, apply for a card that you will get approved for. This is important for beginners or anyone who is working on rebuilding their credit score. Everyone has to start somewhere and it is better to get approved for a card with lesser rewards than denied for the one you want. Work on establishing positive financial habits to watch your score improve over time until you can apply for the card that you want.
Big Upcoming Purchases
If you know you have large purchases or additional expenses in the coming months it could be a great time to apply for a new rewards card. This will make it easier to hit the minimum spend requirement. It also makes those bigger expenses a little less painful knowing that you are earning a sign up bonus on a new card.
For practical reasons it is best if you apply for the card at least a few weeks in advance to allow your time for shipment of your new rewards credit card. This can vary with credit card issuers so it is best to plan accordingly so you can actually use your card when you need it.
Tip: After applying and getting approved for a card, call the issuer and ask if the card can be expedited in the mail. This can vary by bank and by card, but it never hurts to ask.
Once you have selected a card, but before applying for it – add up an estimated total of your big purchases or extra expenses in addition to regular credit card purchases each month. Do you meet the minimum spend requirement for the card you want? Will you make the purchases within the allotted time frame (typically 3-6 months)? A typical bonus could be structured like this: Spend $3,000 within the first three months of card membership for 75,000 miles. Always make sure you are clear on the terms and that you can meet the minimum spend before submitting an application.
After adding up your total expenses it is possible that the spend threshold will be out of reach. I always preach that you should not spend extra to meet a spending requirement. This goes double if you think you might struggle to pay the balance in full at the end of the month. If you happen to be short of the spending requirement I recommend searching for a different card that will help you earn a bonus naturally. If you are close to meeting the requirement check out my additional tips on meeting a minimum spend requirement.
A Historic High Bonus Offer On a Specific Card
If there is a card you have been keeping an eye on for a while and there is a new bonus offer that is higher than previous offers you have seen, it could be a good time to apply for the card. It can be difficult and frustrating at times to know when a sign-up bonus is a “good” or “historic” offer. Tracking this information can be difficult as well as there could be multiple factors to consider.
I recommend doing some research of your own if you want to make sure you are getting the best offer possible.
Tip: Always read the terms of conditions of an elevated offer. It is easy to focus on the higher sign-on bonus, but make sure you can comfortably reach the minimum spend requirement.
Why would you want to wait to apply for a card until there is an elevated bonus? Well, the first and most obvious reason is more points and miles! The other reason is that for most credit cards you can only earn the bonus once every two to four years, or in the case of American Express once-in-a-lifetime. If you can only earn a sign-up bonus on a specific credit card every so often you want to make sure you are getting it when you can earn the most rewards.
Tip: If an elevated or historic bonus becomes available right after you have applied for the card, it is worth a call to the issuer to see if they will give you the higher offer. Some banks are better about this than others, and it never hurts to ask!
You Have A Specific Trip Or Redemption In Mind
Do you have an upcoming trip or event that requires travel? Maybe you have an anniversary trip you want to plan, or a spring vacation for the whole family? This could be a great time to apply for a card as long as you do so well in advance. Ideally you would want to apply for rewards cards to help cover for an upcoming trip around a year in advance, however this timeline varies on several factors.
I say to apply a year in advance because you have to apply for the card, earn the sign-up bonus and additional rewards, and use your points and miles. Earning the bonus could take three to six months depending on your spending habits. You will need the additional months for planning your trip and booking far enough in advance so there is seat or room availability! Business class and first class tickets for flights typically only have a handful of seats available per flight that can be booked with miles so if you want to plan for a luxury experience you may need even more time to check for availability.
If you have more flexibility in your schedule you would not have to plan this far in advance, however it is always nice to have options.
When You Are Under Chase 5/24
My more advanced points and miles enthusiasts have likely heard of the Chase 5/24 rule, along with rules from other issues. If you are a beginner, you are probably thinking, “what?”
Let me explain. Chase has a rule that a person will not be issued a Chase credit card if they have opened more than five credit cards with any bank within the last 24 months. This is regardless of income, credit score, or any special status.
When you start going down the points and miles rabbit hole it can be an exciting time! You will want to earn as many points as possible, and one of the best ways to do this is through new cards with high sign-up bonuses. Chase implements this rule as risk mitigation to their business since being issued a lot of credit within a short amount of time could be a sign of a person with poor financial habits. It also prevents miles enthusiasts like ourselves from opening and closing cards at a rapid pace just for the sign-up bonus since that kind of activity would not be profitable to the bank.
What does this mean for us? It means we have to be self-aware and keep track of our 5/24 status. You will want to become strategic about how often and which rewards cards you choose to apply. Are you getting close to opening five cards within the last two years? You will want to be extra selective of which cards you apply for to make sure it is worth one of your five slots. Of course this only matters if you plan on applying for credit cards at Chase in the future.
Each credit card issuer has a version of this, however the Chase rule gets talked about the most. As you become more comfortable with opening up more rewards cards you will want to continue to educate yourself on these types of rules to decrease your chance of an application denial.
The easiest way to track your Chase 5/24 status is with an app like Credit Karma. Credit Karma provides your credit score and details such as all of your open accounts, credit utilization and credit history. This is automatic so there is no need for you to manually track this information. I am currently at 3/24, so I need to be selective for the next few months since I am always in the market for a new Chase credit card bonus.
When NOT To Apply For A New Card
I believe it is just as important to know when NOT to apply for a new card as knowing when it is the best time to apply. I mentioned some of these throughout this post, but I think the reasons for not applying are important enough to mention briefly in its own section.
When you cannot pay your bill in full each month. This is one of my top rules for rewards cards that I’ll be repeating in the future. Do NOT try to earn credit card rewards if you cannot pay in full each month. Interest rates tend to be higher on rewards cards so you will quickly negate any travel benefits earned if you are paying interest. Going into debt is not worth it.
When you have a low credit score or unsure of your score. Some exceptions apply here, and I think this is worth repeating again. There is no need to apply for a high rewards earning card if you are not sure of your credit score and face a chance of denial. If you are rebuilding your credit I recommend applying for a card that suits your current situation. If you do not know your credit score please find out what it is before applying for any type of card!
Final Thoughts
The points and miles world is an exciting place, especially when you are new and just starting out. It can be difficult to know when is the best time to apply for a new card, but hopefully I have given you a few ideas of what you need to consider before applying. This isn’t an exhaustive list, or necessarily even the most important factors of each individual’s situation, however I think I have listed some of the most critical.