Tuesday, June 18, 2013

App-O-Rama - Part 1

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Part 5 - Affect on your credit score

What is an App-O-Rama?

App-O-Rama is the Personal Finance term used when applying for many credit cards on the same day (App is short for application if you didn't figure that one out).  One can sign up for different credit cards and get lots of bonuses all at once.

I will have a paycheck for the first time in July so July will be the time to try an App-O-Rama.  I have been reading about them for the past couple of years so I have some good ideas on how I want to approach it, but this will be a learning process for me as well.

What's the point?

Organization.  It's easier to keep track of when annual fees kick in if you applied for a bunch of cards at the same time.

Practical.  You are more likely to be accepted for each card if you haven't had a lot of recent inquires for credit on your credit report.  If you applied for 3 cards in the last 3 months and you are applying for a new one this month that's risky behavior in their eyes.  If you are applying for 4 cards on one day, the inquiries from the other banks will all register in their system, but you don't have the recent history against you.

How many cards should I apply for?

That's up to you and there is no correct number.  The more you apply for the more sign up bonuses you get and the more money you need to spend to reach those spending thresholds.

It all depends on the level of risk you are willing to assume.  This may sound simple, but credit card companies are out to make money, not give you free miles.  This is a marathon, not a race.  You have the rest of your life to collect sign up bonuses.  If you are a non-profitable customer to the company, you run the risk of the credit card company closing their relationship with you, sometimes for many years and possibly forever.  You may do better in the short term but is it worth?  Up to you to decide.

Before you decide, take a look at this post on Fat Wallet about companies Blacklisting people for extreme behavior.  Some of the stories are really fantastic.

Some blogs advocate signing up for 3 or 4 credit cards from the same company on the same day so that you will only get one hard inquiry on your credit report.  This may be true for your credit report, but the credit card company still has its own records and knows what you have been doing to them.  Just because you can get away with it now doesn't mean you can get away with it the second, third or fifth time.

How frequently can you do it?

Same answer as before.  Whatever you are comfortable with.  Some blogs will advocate every 3 months.

I personally plan on starting with the every 6 months plan.  Every 3 months for me and every 3 months for my wife.  I don't travel so much so that should more than cover my miles needs and 2-3 cards a year per company doesn't seem too much to me, but who knows where life takes you.  Also, if one of you are applying every 3 months you are unlikely to miss out on any short term promotional sign up bonuses.

As I apply I hope to update how it goes and what I need to do to get all the cards approved.