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I get a few very common questions about the techniques I recommend on this website. Most questions pertain to the use of credit cards. Hopefully the answers I provide below will put your troubled mind at ease!
FAQ #1 – “But, won’t applying for all of these credit cards destroy my credit score…?”
This is easily the most common question. In a single word – No.
Allow me to explain. Hard credit inquiries do affect your credit score, but they have the lowest impact of any credit factor. Average account age can also be negatively impacted due to new account, but these small hits are outweighed by the positives.
If you are approved for multiple new cards, you will now have access to more credit. This will decrease your credit utilization ratio – one of the largest factors in your credit score! I can verify this personally, because my credit score actually increased from 755 to 823 after my first round of applications!
There is one caveat. DO NOT miss a payment!! This can, and will, hurt your score. Payment history is also one of the largest credit factors. Be sure to stay organized and take advantage of auto-payments through your credit card account online, so that you never accidentally forget a payment.
FAQ #1.b – “But, but, but Dave Ramsey said…”
Let me be clear. I do not care what Dave Ramsey says about credit cards. His black and white stance – that credit cards are evil – serves his particular audience well. He helps people dig out of mountains of debt. Here at Loophole Travel, we are debt averse, but we realize the immense benefits of credit card bonuses. If you have a problem with abusing credit cards and carrying a monthly balance, this website is not right for you.
FAQ #2 – “This seems too good to be true. Are you sure this is not illegal?”
Yes. This is all perfectly legal, and almost too good to be true. Once you dive in with the points game, you will wonder why EVERYONE is not doing this. While this activity skirts the intended use by the credit card companies, they are well aware of it. They make their money on transaction fees charged to merchants and interest payments from people who carry a monthly balance.
FAQ #3 – “How do I select the right credit card offers? There are just too many!”
If you are having trouble picking through all of the various credit card offers, I recommend two approaches.
- Plan a trip first. Select your dream adventure. Plan out where you want to go first, and then identify the credit card offers that will most effectively make that dream a reality. If your goal is domestic travel within the USA, the Southwest Companion Pass is fantastic. For cheap flights to Europe, American Airlines off-peak point fares are hard to beat. For more complex itineraries, United’s flexible routing rules may be optimal.
- Go for flexible rewards. Chase Ultimate Rewards, American Express Membership Rewards, Citi ThankYou Points, and Starwood Preferred Guest points offer great flexibility. You can use these points to transfer to partner airlines or hotels, or you can use them as currency to pay for your trips.
FAQ #4 – “What if I am declined or not given instant approval for a credit card?”
Any time you do not receive instant approval from an online credit card application, you should call their reconsideration line. Usually they will ask a few clarifying questions and issue a decision.
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For personal cards, you should be ready to explain why you want the card. Name a specific benefit that appeals to you, or that you want to keep some of your spending segregated on this new card. With Chase, you may be denied because they do not want to issue any additional credit lines. However, if you offer to lower credit lines from your other Chase cards, they will likely approve your new card.
Business cards usually require some additional information. For example, American Express simply wanted to know the nature of my business and what my expected annual spending would be. Chase had a few more direct questions, including number of employees, annual gross and net income, and time in business. Go into these calls with a game plan, and be able to think on your feet.
For your best chance of approval, always… always… always be courteous to the credit card agent! They get the final say, so don’t be a jerk!
FAQ #5 – “This seems like a lot of work. Is it really worth is?”
If you do not already recognize the significant value here, I will likely not be able to convince you. Sure, you may have to do a bit of research, plan a bit of manufactured spending, and manage some credit cards. Trust me, when you book that first free trip to explore Europe, it will definitely be worth it!
FAQ #6 – “This sounds awesome! How can I get started immediately??”
I’m glad you asked that… check out our guide to getting started with Miles & Points!
What other questions do you have??