How to Start Applying for Miles & Points Credit Cards
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Million Mile Secrets reader Michael emails:
I have a friend I’m trying to bring into the miles game. He has good credit (740), but only has … wait for it …. just ONE credit card, which he’s had for years. Only a $2,500 limit. 100% pay on time.
Is he ready to apply for the big bonuses? Or should he get a few more cards and a little more cumulative credit limit by starting with cards like the Chase Freedom, and other beginner cards?
Basically, is a 700+ score and only a single card enough to swing for the fences and apply for 4 or 5 cards with 50,000+ bonuses right out of the gate?
This is a great question! What should you do if you want to start applying for miles and points cards, but only have ONE long-established credit card currently (with a good credit score)?
Before jumping in and applying for lots of cards, Michael’s friend should consider the impact applying for cards will have on his credit score.
He should start off with 1 to 2 cards and make sure he can stay organized. Then, keeping his travel goals in mind, he could start applying for more cards in a few months.
Rule #1: Start Slow
It’s tempting for folks who are new to miles and points
to start applying for as many cards as they can. But until you know how multiple card applications affect your credit score, and if you’re able to meet minimum spending requirements, it’s best to start slow and apply for just a couple of cards at once.
And make sure to pay the balance in FULL each month!
You’ll need to see for yourself if you can manage and track minimum spending requirements and payment due dates. It takes organization and planning.
You don’t want to overwhelm yourself at the start and get frustrated. There’s no rush and there will still be good offers.
Rule #2: Keep an Eye on Your Credit Score
Link: Credit Karma
Link: Credit Sesame
In the short term, yes, applying for credit cards will decrease your credit score (typically between 3 and 5 points per application, in my experience.) But if you make your payments on time (and pay balances in full), your credit score should bounce back after a few months.
Before applying for cards, you can check your credit score on free sites like Credit Karma or Credit Sesame
. Then, after applying for and using cards for a few months, you can see what impact it’s had on your score.
Your credit score is calculated on a number of factors:
- 35% Payment History
- 30% Amounts Owed
- 15% Length of Credit History
- 10% New Credit
- 10% Types of Credit
By far the biggest impact to your credit score is your payment history and amounts owed. So as long as Michael’s friend hasn’t maxed out his 1 credit card, and has paid his bills on time, the impact to his score should be favorable.
Where Michael’s friend may have an issue is in types of credit. But even if he only has 1 credit card, he may have other loans, mortgages, or store cards that add to the mix and improve his score.
When he applies for new cards, his length of credit history will decrease and amount of new credit will increase. That’s why his credit score will decrease temporarily. But as time goes on, provided he doesn’t carry a balance, there should be an improvement in the score because of the extra credit available to him and good payment history.
With a 740 credit score, Michael’s friend has a great chance of being approved for new credit cards.
That said, I don’t know that applying for 4 or 5 cards right away is a good idea. Michael’s friend may well get approved for all of them, but just because you can doesn’t mean you should! I’d start of with 1 or 2 cards and see if he’s comfortable applying for more.
Rule #3: Consider Your Travel Plans
Link: Bank Points Cards
Link: Airline Cards
Link: Hotel Cards
Before you consider applying for cards, it’s best to think about your travel goals. Do you prefer low-cost, coach class, domestic travel? Or are you dreaming about flying in Business or First Class to exotic destinations?
My advice to folks new to miles and points credit cards is to begin with cards that give them the most flexibility in using their miles and points. Points that can be transferred to partner airlines and hotels, or cards that give statement credits for travel expenses are a good start.
The Best Cards for Starting Out
Here are 3 of my favorites.
1. Chase Sapphire Preferred
Link: Chase Sapphire Preferred
The Chase Sapphire Preferred card might be a good starting point for Michael’s friend. I like this card because Chase Ultimate Rewards points transfer 1:1 to partner airlines and hotels, including United Airlines, Southwest, and Hyatt. You get 40,000 Chase Ultimate Rewards points after meeting minimum spending requirements, plus 5,000 more if you add an authorized user.
And there are lots of ways to earn extra Chase Ultimate Rewards points, like dining out (earn 2X points, or 3X points if it’s the 1st Friday of the month), shopping through the Chase Ultimate Rewards shopping portal, or using the card for travel (earn 2X points on categories like hotels, cruises, travel agencies, parking, and taxis).
Emily and I like transferring our Chase Ultimate Rewards points to partner airlines and hotels because we get far greater value from the points that way. For example, we’ve transferred points to Hyatt and stayed at some amazing hotels!
- Hyatt Regency Maui
- Hyatt Regency Huntington Beach
- Park Hyatt Vendome Paris
- Park Hyatt Milan
- Grand Hyatt Kauai
- Park Hyatt Goa
- Park Hyatt Zurich
So even if Michael’s friend doesn’t know exactly where he wants to travel, he’ll have a lot of options with Chase Ultimate Rewards points.
2. American Express Starwood Preferred Guest
You’ll get 25,000 Starwood points after spending $5,000 in the 1st 6 months on the American Express Starwood Preferred Guest card.
There are lots of ways to use Starwood points (you don’t just have to use them at Starwood hotels). They transfer to partner airlines, usually at a 1:1 ratio. But the best part is the 5,000 mile transfer bonus you get for every 20,000 Starwood points you transfer!
So if Michael’s friend gets this card, he’ll be able to transfer his points to ~30 transfer partners. That’s great flexibility!
3. Barclaycard Arrival Plus
Link: Barclaycard Arrival Plus
If you prefer getting cash back instead of miles, the Barclaycard Arrival Plus could be a good choice. You’ll earn 2.2% cash back when you redeem miles for travel. So the card’s 40,000 mile sign-up bonus is worth $440 when used for travel purchases.
And Barclays recently upgraded the card and expanded their travel categories, which gives you even more choices for how you redeem your miles.
This could be a good card for Michael’s friend if he doesn’t want to focus solely on airlines and hotels. That’s because you can get cash back for lots of other travel expenses, like cruises, campgrounds, public transportation, and tourist attractions.
Folks who are new to miles and points and want to sign-up for credit cards should start slow and only apply for a couple of cards to start. That way, they can see the impact to their credit score and decide if they want to apply for more later.
If you’re just starting out, you might want to choose credit cards that offer a lot of flexibility (airline and hotel transfer partners, for example) in how you use your points. That way you keep your travel options open, especially if you don’t have firm plans yet.
As always, do what’s comfortable for you.
Thanks for emailing, Michael!
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