Why Having a Credit Card Strategy is Important

Different banks have different application rules. 

One client came to Wuhoo Group smugly with multiple no annual fee credit cards talking about how he got so many $200 bonuses after spending $500 on so many of these similar credit cards (e.g., Chase Freedom Unlimited, Capital One Quicksilver). While this client had the right idea to chase after sign-up bonuses, he did so in a method that was actually a disservice. First, he could have grabbed business credit cards that would not show up on his credit report (and receive higher bonuses) - this would have helped him avoid Chase's 5/24 rule. Chase's 5/24 rule prevents applicants from being approved for most Chase cards if they have opened five or more personal credit cards (from any issuer) within the past 24 months. By being aware of such rules and planning applications accordingly, one can increase the chances of approval and maintain a diverse portfolio of cards. If this client had a grounded strategy, he would have applied to Chase cards first to avoid getting locked out of them after applying to so many other personal credit cards. 

Another rule that was made recently (this year) is the order of obtaining personal American Express cards. If you get the American Express Platinum first, you disqualify yourself from ever getting the sign-up bonus on the American Express Gold, which can go as high as 90,000 points. Without knowing these rules, your strategy can lose out on a lot of bonus points. 

Don't spread out your points too thin

Here's a different client story: this guy chased after all the domestic credit cards - going after their sign-up bonuses and then using their miles for free trips. We've already talked the reasons you shouldn't get an airline card, but it gets even worse when you spread the points out among all these ecosystems. Having points scattered across multiple ecosystems can make it difficult to accumulate enough for valuable redemptions. Now obviously as you dive deeper into the credit card game, you'll naturally diversify and know which point ecosystems you need to build up points in. But near the beginning, it's better to know which points you need and amass those. Focusing on a few ecosystems, such as Chase Ultimate Rewards, American Express Membership Rewards, or Citi ThankYou Points, allows cardholders to pool their resources and maximize the potential for lucrative rewards.

Capitalize on sign-up bonuses

Granted, not everyone is open to constantly opening up new cards and pursuing sign-up bonuses for the most points. However, when a large spend comes up, such as a new house appliance or even a vacation, the bright side of these expenses is that they can easily be put towards a new credit card sign-up bonuses, generating a huge return in points. By planning ahead for large expenses and aligning them with sign-up bonus spending requirements, cardholders can earn significant rewards that can be used for travel, cashback, or other perks.

Here's a real-life example of a client paying for their property tax with a new credit card - even with processing fees. 

• I just paid my 2nd half property tax with a credit card. It was $4,132.22 + a $97.11 service fee. 

• I used my new Chase Ink Unlimited where I will earn 1.5% back or $63.44 in points. This also helps me get to my sign-up bonus faster of 90,000 points. (so around $600 worth of points) 

• Furthermore, with my 0% APR intro offer for one year, I can put that $4k into a money market account or CD earning 5% interest instead of paying off the bill immediately. This would generate me around $200 before having to pay the bill next year. 

• In total with this purchase, I more than recoup the service fee and maximize the money in my own pocket.

Ensure there aren't any overlapping perks or earn rates. 

Many credit cards offer annual statement credits or bonus earn rates for specific spending categories. Keeping track of these benefits is crucial to avoid missing out on potential savings and rewards. However, sometimes credit cards will have overlapping benefits, such as cell phone protections, lounge access, travel insurance and more.  It's important not only look at each card individually and the benefits you're receiving from them, but also look at your holistic set up. 

For example, is having the American Express Gold earning 4x back on dining and groceries going to be that much better than earning 3x back on dining on a no annual fee card? For some, the answer is yes because of Amex Membership Reward redemption or the huge amount of dining expenses. For others that may not eat out as much, the answer might be no.