We've gotten a lot of questions over the last few weeks about earning miles by signing up for credit cards. We're earned about 350,000 miles over the last 6 months and plan on earning a lot more before the year is up. However, there are some things you should know before you type your SSN into a credit card application.
Outwitting the credit card giants to earn millions of miles without paying outrageous fees or hurting your credit reminds us of the old B & W TV show, Zorro. Every week, Zorro would battle the evil Commandante, the bumbling Sergeant Garcia, and dozens of other soldiers. Despite being vastly outnumbered, Zorro would defeat the enemy using his superior wits, swordplay, and his loyal spy Bernardo. In our case the credit cards companies would be the evil Commandante, you would be Zorro, and we would be your loyal spy Bernardo. As your loyal spy, we've compiled the following tips to help you sign up for credit cards safely:
1. Make sure you have good credit. If you ever max out your cards, are late paying your bills, or have some collections issues in the past, you should check your credit rating (it's available online). You'll need good credit to get the good credit card offers. You should check your credit history once a year anyway.
2. Don't cancel the card as soon as you earn your bonus miles, but don't pay an annual fee either. You could be flagged for canceling as soon as the miles post. Keep the card until the next annual fee is due. Then call the card company and try to negotiate for them to remove the annual fee. I've had two CITI AA card for 5 years and never paid an annual fee. If they won't remove the fee for your card, you could consider canceling, but hold the card for at least the first year.
3. Think about how many miles you'll really use. If you won't actually use 100,000s of miles to fly all over the world, you might be best off with just one miles card and one cash back card. Go to the airline website for the card you're thinking of applying for and check their awards chart to see how many miles you'll really use.
4. Be picky - You're a strong, beautiful frequent flyer and you deserve the best. Only get the best cards. Don't full around with 10,000 miles here and 5,000 miles there. We don't even look at a card unless it offers a sign-up bonus of at least 25,000 miles with no annual fee or 40,000 miles with an annual fee.
5. Do a screen grab of the application form in case you have to prove to the card company that you were promised a certain number of miles. A lot of the best offers we post (the ones that give you 50,000 to 100,000 miles) are only available for a short time or have other restrictions. If you have a screen grab, the evil Comandante (in this case AMEX) can't steal the miles of the innocent villagers of El Pueblo de Nuestra Senora Reina de los Angeles - who knew Zorro's town had such a long name!
6. Don't cancel your old cards. If cards don't have an annual fee, don't cancel them. An open line of credit that you're not using is better than opening and closing accounts. Always keep your oldest card (unless it has a high annual fee). Banks like to see that you've had a line of credit open for years and years. We have a Capitol One cash back card with no annual fee that we will keep until the bank fails.
7. Charge everything. IF you pay off your credit cards every month, they can actually HELP you to budget. It allows you to see exactly what you're spending and if you use a site like mint.com, you'll even get a chart that shows you how much you spend on food, gas, etc. If you've applied for a card that required you to charge $3,000 in 3 months and you're just a little short, you could consider buying some discounted gift cards at www.plasticjungle.com. But only buy gift cards at places you'll be shopping in the next couple of months anyway.