April 2018 credit card applications

It's been a long time since I've applied for a new credit card. So long, in fact, that I was astonished to log into the credit monitoring service I got for free from one of our semiannual security breaches (or maybe from one of the semiannual security breaches of the credit monitoring services; who can say at this point?) and see that I've only signed up for one new credit card in the last two years.

This practically puts me in the position of a complete newbie to the travel hacking game, albeit a complete newbie who already has a ton of credit cards. So I thought I'd take the opportunity to run down a list of the credit cards I'm considering and give readers a chance to chime in — especially if they have a particularly brilliant powerplay I should consider!

Bank of America Alaska Airlines Visa

I've never had one of these cards (not that that particularly matters given Bank of America's approval process), but virtually all my family members are on the West Coast and the 30,000-mile and $0 first-year companion fare ($99 after the first year) are both good deals for a $75 annual fee.

While I'm generally a very strong skeptic of companion tickets, the Alaska Airlines companion ticket differs from the companion fares offered by the American Express Delta Platinum and Reserve credit cards because you can use any credit card to book it (as long as the ticket is for the Alaska Airlines credit cardholder or the credit card used is in the Alaska Airlines cardholder's name). That means it's easy to combine with travel statement credit cards like the US Bank Flexperks Travel Rewards card (with Real-Time Rewards), Barclaycard Arrival Plus, or Bankamericard Travel Rewards card.

Chase Slate

I don't want to bore longtime readers with everything I love about the Chase Slate card, but for new readers, it offers:

• no balance transfer fees for the first 60 days;
• 0% APR on up to $30,000 in balance transfers for 15 months ($15,000 cap per 30 days, but you have 60 days to transfer with the $0 balance transfer fee);
• ability to product change to a new Chase Freedom (or Freedom Unlimited if you don't have one already).

I don't know how valuable 15 months of free money is to you, but 15 months of free money is extremely valuable to me.

Consumers Credit Union Visa Signature Cash Rebate Card

I've had a Consumers Credit Union Free Rewards Checking account for years, since it offers 3.09% APY on balances up to $10,000 when you make 12 $0.50 Amazon balance reloads per month (yes, this process is exactly as boring as it sounds).

But the account really shines when you combine it with a credit card, since spending $1,000 per month on that card increases the interest rate to 4.59% APY on up to $20,000 in deposits.

Unfortunately, they seem pretty stingy with credit card approvals, and I haven't been able to get approved for one of those cards yet. Now that my credit report is practically clear, hopefully they'll give me a chance.

American Express Amex EveryDay Preferred or Premier Rewards Gold

These two cards offer flexible Membership Rewards points and bonus points at US supermarkets, which make them obvious candidates to rack up some big Membership Rewards balances, even if I were just to transfer them to Delta SkyMiles.

The Premier Rewards Gold has a $195 annual fee, but it's waived the first year, which makes it a possible candidate for a one-year effort to accumulate a big balance before cancelling.

Meanwhile, the EveryDay Preferred card is the kind of low-key card I can imagine keeping for the long term, even though its $95 annual fee isn't waived the first year, since it can earn 27,000 Membership Rewards points per year with minimal time or effort.

Conclusion

It's no secret that most professional travel hackers pursue big signup bonuses much more aggressively than me. But it's also no secret that they constantly have big unredeemed and unredeemable points balances!

Simpleton that I am, my view has always been that your least valuable mile or point will always be the one you don't redeem, and so I devote all of my energy towards earning miles and points I'm sure to redeem, instead of accumulating them speculatively.

With that in mind, what big signup opportunities do readers see out there that my personal blinders have kept me from noticing?

Final status report on my personal finance application cycle

Last June I wrote about my personal finance application cycle, in which I applied for a Chase Slate and Citi Double Cash credit card in order to run up high balances and use the resulting negative-interest-rate loans to finance other projects. Since my 0% APR introductory periods are coming to an end, I thought readers might enjoy a final update.

Did it work?

My strategy worked perfectly, as it had to.

Fees and interest rates, unlike other terms and conditions of credit card agreements, are heavily regulated and cannot be changed by the banks to retroactively apply to existing balances (as long as you stay current on payments). In fact, even if my Chase and Citi accounts had been closed for some reason, I still would have been entitled to continue making only the minimum payments on the two cards until the introductory interest rate period elapsed.

I had no trouble moving my existing Chase credit lines to my new Slate card, as I explained in the original post, and was able to transfer $15,000 in balances to the card at the promotional 0% APR. I also didn't have any problem manufacturing my $5,200 credit limit on the Citi Double Cash, maximizing the amount of cash I was able to borrow at a negative interest rate.

What happened to my credit score?

When reading about this tactic, many of my readers grow agitated about the horrific damage that must have been wreaked on my credit score by nearly maxing out two credit cards on an ongoing basis.

In the 12 months of FICO score history Barclaycard provides, my score has bounced around between 677 and 729. In the last 6 months, Citi has me between 667 and 683. And in the last 12 months American Express has my FICO score between 670 and 720.

But I don't care about my FICO score, and the "damage" didn't keep me from being approved for a new Chase Hyatt credit card.

As should be obvious, everyone's situation is different: if you have just a few cards, or a short credit history, then high utilization on one or more cards might do significant damage to your credit score, potentially keeping you from getting approved for the credit cards you want.

If you have a lot of cards, and a long credit history, it's more likely to have only a nominal effect on your score, as it did on mine.

What did I do with the money?

Not much! I funded my Consumers Credit Union Free Rewards Checking account with $10,000, and used the rest of my newfound cash flow to increase the speed and convenience with which I manufactured spend on my other credit cards. Even if you diligently pay off each of your credit cards with the same spend manufactured with that card, there are still inevitable delays connected with depositing funds and making payments. Having a substantial amount of cash on hand smooths out those inconvenient delays and increases my overall return.

What's next?

This month I paid off the balance on my Citi Double Cash, and have already started using the card to manufacture unbonused spend. It's a somewhat inconvenient product since you have to pay off your balance in full before your statement closes in order to earn a full 2% cash back on your spend each month. Still, 2% is a perfectly reasonable return on unbonused manufactured spend, so the card still has its uses to me.

After I pay off my Chase Slate balance at the end of the month, I'll call to request a product change to the Chase Freedom Unlimited, which earns 1.5 Ultimate Rewards points per dollar spent everywhere, and that card will enter my rotation as a go-to card for unbonused manufactured spend.

Once that's complete, I'll wait a few weeks until I'm safely out from under the shadow of Chase's 5/24 guideline for new account approvals, and apply for another Chase Slate. I'll move available credit from my new Chase Freedom Unlimited account, and start this process over again.

Should you do this?

I don't give advice. I don't know your situation, and have no idea whether a 15-month, negative-interest-rate loan is right for you. But there are a few reasons you might consider it.

First, there are purchases that you might be considering paying for over time, like a car, which will cost less in total if you accelerate your payments using a negative-interest-rate loan.

Second, holding borrowed cash in a high-interest checking account, as I did, can serve as an "emergency fund" to protect you from job loss, emergency medical bills, or losses in the stock market. Even if, like me, you don't find the idea of an emergency fund particularly interesting from a personal finance perspective, you'll still earn more in a high-interest checking account than you will in a fixed-income mutual fund, a subject I've written about elsewhere.

Third, if you're a reseller or the owner of a business that needs access to capital in order to grow, you might consider financing expansion with a negative-interest-rate loan, especially if you work with vendors who only accept cash or give a discount on cash transactions.

Chase Sapphire Preferred is terrible, get Slate instead

I'm going to do my readers a favor and assume that by the time they've graduated to blogs like mine from the training-wheels affiliate bloggers, they're perfectly aware of my objections to the Chase Sapphire Preferred, so I won't relitigate that case today. Suffice it to say, the only person who should even entertain the notion of paying a $95 annual fee for the card is a business traveler who's reimbursed for their travel expenses and is allowed to pay for their own hotels and meals while on the road. Even then, I'd be skeptical.

But whenever I rail against the Sapphire Preferred, someone inevitably comes back with their supposed trump card: "Sure," they say, "you'd have to be crazy to keep the Sapphire Preferred, but a 40,000 Ultimate Rewards-point signup bonus makes it worth applying whenever you're eligible for a new bonus."

That's wrong too. Here's why.

Both Sapphire Preferred and Slate can be product-changed to Freedom

While Sapphire Preferred is an Ultimate Rewards-earning card and Slate isn't, both products are "own brand" Chase credit cards, and cardholders can call in to request a product change to the best no-annual-fee Ultimate Rewards-earning credit card: Chase Freedom.

That means the end game is the same with both cards: a product change to Freedom. The only comparison worth making is the advantages of signing up for each card in the first place. So which card offers bigger rewards for signing up?

What are 40,000 more Ultimate Rewards points worth to you?

A lot of bloggers will try to tell you what 40,000 Ultimate Rewards points are worth. A night at the Park Hyatt Vendôme costs 672 Euro, so 40,000 Ultimate Rewards points must be worth $810!

But I don't really care what 40,000 Ultimate Rewards points are worth in the abstract. I care what 40,000 more Ultimate Rewards points are worth.

And the answer is that if you're not going to redeem them, they're worth $400.

Now, maybe you are going to redeem them. Maybe you keep your Ultimate Rewards balance as low as possible by continually redeeming them for premium cabin international trips and luxury hotels. But even if so, don't value 40,000 more Ultimate Rewards points at the highest value you get from the program; value them at the average value you get across all your travel redemptions.

What is a $30,000 negative-interest-rate loan worth to you?

I wouldn't have thought it was possible, but last week I understated the value of the Chase Slate introductory balance transfer offer of no balance transfer fee for transfers within the first 60 days, and a 0% interest rate on balance transfer for 15 months.

I wrote, "for the first 60 days of a Slate account membership, you can transfer up to $15,000 in balances with no balance transfer fee."

But that's not exactly right. You can transfer up to $15,000 from non-Chase-issued credit cards in the process of opening a new account, but that actually has nothing to do with the $0 balance transfer fee and 0% balance transfer APR: it's a restriction Chase places on all balance transfers.

In fact, Chase's rule is that only $15,000 can be transferred in each rolling 30-day period. Since the $0 balance transfer fee lasts for the first 60 days of card membership, you're actually able to transfer up to $30,000 under the no-fee, 0% APR offer.

Of course, that would require having a sufficiently high credit limit, but Chase does allow you to transfer available credit from other credit cards, so you can always scrounge up as large a credit line as possible from your worthless Marriott, British Airways, Hyatt, and Southwest credit cards, for example.

Before I dig any deeper, let's be clear on the math here: your $30,000, 15-month loan has a negative interest rate because you've transferred the balance from other, rewards-earning credit cards. Using conservative assumptions of a 2% cash back credit card with 1% in purchase and liquidation fees, your $30,000 loan is worth a minimum of $300 — before you even get around to using the money!

So, how should you use the money?

Money is fun. Lots of money is even more fun

So now you've got $30,000 in cash lying around, and you only need to make minimum payments on your new Slate card for 15 months. What do you do with the cash?

• Max out high-interest savings accounts. Maybe you're like me and you drip a steady amount into your high-interest savings accounts each month. That's no longer necessary: max them out and reap 5% or higher APY on your savings.
• Pay down your mortgage. While your home is hopefully financed at an extremely low interest rate, you may still be paying private mortgage insurance if you haven't yet built up enough equity. By bringing your equity up to 20% of your home's value, you may be able to save hundreds of dollars a month in mortgage insurance payments (I'm not your banker or insurance agent; check with them first).
• Pay down your student loans. I have a small Perkins student loan that's accruing interest at a rate of 5.6% APR. I'm going to pay it off, saving a few hundred dollars in interest payments over the life of the loan.
• Make retirement contributions. If you qualify for the retirement savings contribution credit, up to 50% of your contributions to qualifying retirement plans can be rebated when you file your taxes. I recently wrote a walkthrough of the retirement savings contribution credit over at the Saverocity Forum; there's a lot more information available there.
• Invest it. Of course traditional investment vehicles aren't paying much at the moment, but we're travel hackers: there are alternatives. You can fund Kiva loans with a 5%- or up-to-6%-earning credit card. If you belong to a bank or credit union that allows it, you can fund certificates of deposit with a rewards-earning credit card. A 6-month CD funded with a 2.22% cash back credit card suddenly adds 4.44% to your annualized return. 3-month CD's will double that again.
• Buy something. Of course this isn't strictly speaking a way of maximizing the yield on your loan, but if the alternative is to finance a car or appliance at a high interest rate, being able to make the purchase with cash may save you hundreds or thousands of dollars.

Conclusion

The options I listed above are just the first few that sprang to mind; you no doubt have your own ideas about what you'd do with a $30,000 negative-interest-rate loan. So do the math, and in almost all cases I suspect you'll find the loan is more valuable than the additional Ultimate Rewards points.

After all, Ultimate Rewards points are easy to earn — a lot easier than finding negative-interest-rate loans!

A personal finance application cycle

Last night I applied for two new credit cards which have nothing to do with miles and points. It was a strictly personal finance application cycle.

Citi Double Cash

When the Citi Double Cash was first launched, I explained why I wanted to sign up for the card: with its 2% cash back earning rate and 15-month introductory 0% APR on purchases, Citi is extending a fairly long-term negative-interest-rate loan. In life, when people offer you negative-interest-rate loans, you take them (present European finance ministries notwithstanding).

Before applying, I took the advice of my Twitter followers and lowered the only substantial credit line I had with Citi, a $13,700 credit limit on my Dividend Platinum Select card, to $3,000.

My online application for the Double Cash was immediately approved with a $5,200 credit limit.

Chase Slate

The Chase Slate and Citi Double Cash cards are two great tastes that taste great together: for the first 60 days of a Slate account membership, you can transfer up to $15,000 in balances with no balance transfer fee. Those balances are then interest-free for 15 months.

What this means is that I should be able to turn my $5,200 Citi Double Cash credit limit into a $20,200, 15-month negative-interest-rate loan by repeatedly manufacturing $5,200 in spend and then requesting balance transfers (in the first 60 days) from my Citi Double Cash to my Chase Slate.

Since I have over $25,000 in combined Chase credit lines, I didn't bother adjusting them before applying, knowing that if necessary I could reallocate my credit lines in order to have my Slate application approved.

That wasn't ultimately necessary. My online application was not immediately approved, and I was given an application reference number and phone number to call (877-260-0087). When I called last night, I was told Chase's "systems were not available." But when I called back this morning, after providing some information, I was told my application was approved, with a $500 credit limit.

Once the card arrives I'll call and have $15,000 of my existing Chase Freedom credit lines reallocated to my Slate card.

Conclusion

Of course, as great as long-term negative-interest-rate loans are, what's almost as great is being able to request a product change from my Slate card to a third Chase Freedom in 16 months!