Too Aggressive With Opening New Credit Accounts

My mistake, when it comes to credit, is that I sought too much credit too quickly. Going from zero accounts to twelve in less than two years has landed me in the position where the credit agencies consider me a risk when it comes to opening new accounts. The only remedy is to let my existing accounts age until they collectively reach an average of 2 years.

A downstream problem is that Chase credit cards have the 5/24 rule, meaning that you can not have opened more than five new credit cards in the prior 24 months. Otherwise, it is an automatic denial for a new account. This is significant because there are only a handful of credit cards that are worthwhile getting to take advantage of travel perks. Of those cards, American Express and Chase are the top providers. Other banks have decent credit cards with travel perks considered to be lower in overall value. Not horrible, just not as great as Chase and AMEX. This effectively puts me out of the travel hacking game for a few months until I qualify for Chase cards under the 5/24 rule.

If you are going to be on the travel hacking bandwagon, you need to be opening new credit card accounts periodically to cash in on the sign-up bonuses. The danger is that if you are too aggressive like I was, you spoil your chances of getting approved for the slightly less desirable cards well. This brings us to my current situation. But, as it turns out, I'm not in too bad a situation. My family churns out a few thousand AMEX points every month on top of airline miles and hotel points. It's enough that we can accumulate a free flight or stay here and there.

Other travel hackers will tell you that "organic spending" is not a significant source of points and miles. They will tell you that the sign-up bonuses are where the bulk of their miles and points originate. I believe them. The only objection I have to churning credit cards is that if you are spreading your monthly spending amongst 10 cards, none of them will be a significant source of points or miles. If, on the other hand, your spending is done primarily on one or two cards, chances are that they will yield a sizeable amount of miles and points too. One thing I have learned in this hobby is that the points all add up. Furthermore, the only reason that organic spending miles do not amount to much is that personal spending, in general, is not significant. If you have a business that requires a lot of travel, advertising, shipping, and other typical expenses, you could easily accumulate more points organically than frequently switching cards for the sign-up bonuses.

The point in all this is to say that perhaps there is a point of diminishing returns in travel hacking. With all the annual fees and spread out spending, you also have to consider how many points you would have earned with your favorite card that you are not earning anymore in order to meet the minimum spend requirements. There is a real opportunity cost from hopping cards. Your bonus, minus the lost points, may not amount to much other than the pleasure of the sport.

This shouldn't be construed as sour grapes. I know that in time I will qualify for Chase credit cards. However, I am thinking ahead. Do I really need another credit card system to manage? I already have one of the two top rewards programs. There is little value in splitting my spending with another program unless I completely change over. My only sore point with AMEX is that their points do not transfer to United, the better airline option where I live. Even so, I have other means to earn United miles without jumping ship on AMEX.

Do you have multiple travel rewards programs? Does splitting your spending produce enough benefit to justify the hassle? Let me know.