Credit Card Application Guide for Beginners
I started the Clean Slate Series a month or so ago, discussing what I would do over the next 3 years if I was starting out now. It was an exercise discussing how I would deal with all of the banking rules and regulations that keep popping up in this ever changing hobby.
But what would I do if I was unable to get business cards?
I decided to try and answer this question and make it as a guide to beginners. Remember this is my advice and everyone will have their own thoughts depending on their goals and their location. This is not a one size fits all problem.
Things to Consider
There are few things worth mentioning first:
- Always define your goals before applying for credit cards
- Try to plan 12-24 months out
- Only apply for credit cards that are useful to you not because the bonus is big etc.
- Research all of the banking regulations when it comes to applications
- Focus on Chase’s 5/24 rule when starting out since it is the most punitive against long term players.
- Don’t ever carry balances and don’t spend more money than you normally would just to get credit card rewards.
- Start slowly and get comfortable with everything before ramping up. You need to develop a system before you go gangbusters.
- Transferable currencies are your friend (Chase Ultimate Rewards, Amex Membership Rewards, Citi ThankYou, and SPG points) because they give you options.
- I am assuming you have had 0 credit applications in the last 24 months as well.
My Application Suggestions
I am going to focus on Chase during this guide because of the 5/24 rule. You may have different thoughts based on your plan and needs but this should at least give you an idea of what to focus on when making your decisions.
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Chase Airline Credit Card – Southwest or United MileagePlus Explorer card.
I would personally start out with both Southwest credit cards in order to earn the Companion Pass. I believe that the Companion Pass is the most valuable perk in travel so I would get the Plus and Premier version which would net me 104,000 of the 110,000 points I needed to earn it. Here are some options to earn the remaining 6,000 points needed.
Timing is key when it comes to the Companion Pass since you have to earn the points in the same calendar year. You get the Companion Pass for the rest of the year you earn it in and the following year. It is best to earn it as early as possible in the calendar year. If you are starting out and it is past the first few months of the year it would be better to move on to number 2 & 3 and then circle back to #1 at the start of the next year.
If Southwest doesn’t service your airport or you don’t want to mess with Southwest’s cattle call boarding procedures you could go with the United MileagePlus Explorer card instead. The United card comes with some nice perks like extra award space available to card members. If neither of these airlines suite your needs then you can skip forward to #2 on the list.
CLICK HERE to compare these and other airline credit cards
2. Chase Sapphire Reserve or Preferred card
The next one on the list is a decision between two cards, you can only get one or the other with Chase’s new 1 Sapphire card every 24 months rule. Both cards earn valuable Ultimate Rewards points and are solid cards but your spending patterns will be the deciding factor.
If you spend a lot of money on dining out and travel expenses than the Sapphire Reserve is the way to go. If you don’t then the Preferred may be a better fit. Read here for more information comparing the two cards.
Which ever one you choose the card should be a long term keeper since these cards make Ultimate Rewards points transferable. The only other card that can do that is a business card.
CLICK HERE to compare these cards with other travel rewards credit cards
3. Chase Freedom
The Chase Freedom is a no annual fee card that comes with rotating 5x earning categories. This card is an easy way to rack up Ultimate Rewards points. The sign up bonus isn’t great (although sometimes the offer is better at a Chase branch) but the long term value of the card is high. This is the only way to earn 5x Ultimate Rewards points if you are not able to get a Chase business card.
The points earned for this card are supposed to be used for cash back redemptions. If you transfer the points to your Sapphire Reserve or Preferred card then you are able to transfer them to travel partners. This makes the points 50-100% more valuable!
5/24 Program Interruption
If you applied for the 2 Southwest cards then you would be at 4/24 at this point and some Chase cards would no longer be available to you. If you skipped over #1 or only applied for the United card you would have 1 or 2 spots left. My recommendation would be the Marriott Personal card which would pair nicely with the 4th card on the list (American Express‘ SPG Card) since you can transfer points between the two programs.
4. American Express SPG Card
The American Express SPG card is unique since it is a hotel rewards program that earns a transferable currency. SPG points are transferable to airlines and you receive a 5,000 point bonus when you transfer them in 20,000 point chunks. The points also transfer to Marriott points at a 3 to 1 rate and vice versa.
I put it towards the top of the list because with the Marriott & SPG merger it is rumored to be going away. So it is better to get it sooner rather than later.
CLICK HERE to compare these cards with other travel rewards credit cards
Conclusion
I am going to end the guide here because I think that would get you through your first year of applications, or longer. By then you should be on solid footing and have a good understanding of the hobby. The next round of applications would be based on your next set of goals.
This guide was meant to help someone who is just getting started. And it was intended to focus on Chase because of their 5/24 rule. After the first year you can move on from the Chase 5/24 cards and branch out to other banks and points currencies.
Remember that you can space these applications out as much as you like. Do whatever you are comfortable with. I hope this at least gives you a road map of how to navigate your first year.
Feel free to ask any questions you may have in the comments section.
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The SWA strategy is good if planning on upcoming air travel. If the need is more towards hotels, I would replace the 2 SWA cards with a hotel card offering a free anniversary night + a card with bonus categories different than the Chase Sapphire cards. The SPG/CS points can then be used towards air travel if later needed.
Restructuring spending to rack up credit card bonus points (instead of gas/debit card) on everyday spend like gas, groceries, & utilities is really important that first year. I think it takes on a compounding effect towards realligning the payment of ALL expenses.
Great job, Mark! I like your practical, usable info that really provides a nice cohesive service.
Thanks Pam – I appreciate it!
Started Aug of last year in 2 player with the CSP for me and the wife
Sept – 2 southwest cards for me to get the CP in mid Jan
Nov – picked up SPG personal and Ink Cash (for 5x) for myself.
Going to have my wife product change CSP to freedom or FU and apply for the other.
Should I apply for Marriott personal and SPG biz before the merger completes to pickup some extra SPG points?
Loving this new hobby and your blog. Only wish I would have started years ago.
Thanks for reading David. I would get the Marriott personal since that is a 5/24 card. I think the SPG business card is going to be staying around but it was just increased to 35k but with a big 7k spend number. Something to consider if you can do the spend without MSing any of it. If not then wait until the personal card is coming up for renewal and then get the business card. It is the better long term keeper with Sheraton lounge access – that is my opinion at least.