Playing the travel credit card rewards miles game can be tricky. For those who try to master it, the activity can quickly grow from hobby to part time job. It isn’t uncommon for the savviest travel card wranglers to have 5…10…20! And yet, it’s still possible to do this without having the whole operation spiral out of control.
A large percentage of those interesting in upping their rewards miles game do so with a sense of caution. While this is a wise feeling when considering opening up new credit cards, a little knowledge and planning can get you where you want to go without wrecking your credit score of making you go bankrupt. Here are some tips to get you on your way.
It’s important to know how credit scores are tabulated. First of all, the amount of debt you carry and your history of payment makes up ⅔ of your score. If you don’t carry huge balances and you always make your payments in a timely manner, than this part of your score should be rock solid. If you don’t have this kind of credit behavior locked down, I wouldn’t recommend taking on any new credit cards until you’ve got this under control. If you do carry debt, in addition to paying it off, ensuring that no account’s balance exceeds 30% of its credit limit will keep your score from suffering. When your debt-to-credit ratio exceeds this watermark, you start to look financially vulnerable to the credit reporting agencies, like maybe you’re one financial emergency away from defaulting. Move some of your debt around until all accounts are below 30%. Also remember that any new credit card you apply for will hit your score a temporary 2 to 5 points.
Now that you have your current credit card life under control, evaluate the cards you already have. Do they have annual fees? Are they really paying off for you? You should do this once a year at least. If any of your cards aren’t pulling their weight, or are weighing you down, cancel them. This doesn’t apply to your oldest account. Never close that one. Credit Reporting Agencies like age when it comes to your accounts. It proves that you aren’t a rookie. It’ll keep your score up. Also, don’t close cards that you’ve recently opened, say, within half a year or so. Let them marinate a little more before canceling, so you don’t seem finicky in your credit behavior.
By now, you’ve probably learned a little bit about credit cards, just by paying closer attention to the ones you already have. You’re ready to apply for a travel card or two. I’d recommend just one. Shop around for the best perks, rates, and fine print that matters to you. Make sure that every new card you add to your fold is something that you understand completely. It’s easy to get giddy and hurt yourself by signing up for cards you don’t fully understand, and can easily forget about. Add cards only so often that your credit score can recover from the blow it takes from applying for new credit. I don’t get new cards more than every 6 months, and I certainly wouldn’t do it any more often than every 3.
Since you aren’t applying for cards all the time, luxuriate in the time you have to research potential opportunities. Look at American’s promotions following their merger, Aeroplan points, stackable and multiplyable plans, etc. There’s a lot out there, and you’ll start to put it together quickly. Once you’ve made some headway, apply for the best card out there and start enjoying your free travel.