When Kevin first approached me about the idea of writing a post and conducting a personal case study on himself about “App O Rama”, I had no idea what he was talking about. After a brief explanation, I was intrigued…very intrigued.
Why? ‘Cause I’m all about hacking certain strengths to achieve real and quantifiable benefits.
I hate credit card debt, but I use a credit card for everything I buy. We pay it off each month, collect our reward points (usually cash) and we’re on are happy way.
If you are responsible enough, credit cards are not evil.
To me, App o Rama is taking it to the next level. What’s it all about? Read on to find out….
Fair warning: I’m about to take most things you know and love about your credit score and turn them upside down. Please buckle up, it might be a bumpy ride.
Your credit score is precious.
It is something to be loved, cherished, and above all… protected at all costs. (Or at least… most costs.) We put it into a high security vault and make sure nothing ever touches it. We pay off our debts, set up automatic payments, and do whatever possible to avoid foreclosure and bankruptcy.
Personal finance bloggers, financial planners, and pundits all love to heap praise upon the mighty credit score. Your credit score is the thing that can rescue you from thousands in errant interest payments and help your refinance to lower your costs. It’s one of the things people in debt most worry about. That’s why you see a ton of articles out there about how to improve your credit score.
And that’s great. Most people simply don’t understand how much of an impact their credit score can have on their life.
But your credit score has a limited shelf life, right? Once you’ve got your finances on the right path — out of credit card debt, saving money to pay cash for your next vehicle, and so on — and you’re into a long term home with a long term mortgage, the value of your score goes down tremendously.
Because if you’ve got your mortgage locked in and have no need for any other type of loan in the future… what good is your credit score to you?
Keeping it locked up in the vault isn’t doing you any good. So let’s release the power of your credit score for your own gain.
Today I’m going to show you how to profit from wisely using your credit score after you no longer have a use for it.
It’s called doing an App-o-Rama.
What is an App-o-Rama?
You’ve gotten junk mail in the past for credit cards with sign up bonuses in the past, opened them, and promptly shredded them. You have no need for evil credit cards, right?
But you’re throwing away potentially hundreds of thousands of airline miles, hotel points, and big cash back bonuses when you do that.
You might be interested in some of the offers, but you know that opening up a new credit card every month will have a detrimental impact on your credit score. (Which it will — don’t do it.)
That’s where an App-o-Rama or AOR comes in.
You apply for the cards all on the same day to avoid the credit card companies seeing all of the inquiries from your past applications. (If you waited a few weeks in between, the old inquiries would be on your credit report when you applied for the new cards. This might lead to denials of your application.) It also helps to have all of your inquiries hit on the same day in terms of the impact to your credit score, just like you would apply for a car or home loan on the same day with multiple lenders rather than spacing it out over a 30 day period.
How Does an AOR Work?
You’re probably thinking this:
“Wait, so you’re telling me you intentionally apply for a ton of credit cards all on the same day?”
Here’s how it works:
Identify the Best App-o-Rama Credit Cards
First you need to know what cards you want to target. As you can imagine with the amount of junk mail you get, there are a lot of offers to consider.
It is usually easiest to break it down into what you need:
- Some people want 0% balance transfer with no fee (or minimal or fixed fee) to transfer huge balances to
- Others want to rack up as many airline miles as possible so they can travel for practically free
- And others want to get as many cash back bonuses (or points that can then be converted to gift cards) as possible
- Lastly, you can mix all of these together depending on your needs
Have a Plan to Meet the Minimum Requirements
Each of the cards you select will have a spending requirement in order to receive the bonus. Once you know which cards you want to target, tally up what your spending requirements will be in a given period of time. You might have one card that needs you to spend $1,000 in 3 months and another that requires you to spend $3,000 in 4 months.
Know how much you need to spend to hit the minimum requirements in order to get the bonuses. If you have so many cards that you will never be able to meet the requirements there is no pointing in having those cards in your AOR. Save them for a future date so you can get another bonus in the future.
Tally up how much you’ll need to spend: let’s say it is $5,000 in 4 months (with $1,000 of that being in 3 months). You need to then have a plan on how you’re going to meet those requirements without buying stuff you don’t need. If your regular spending won’t cover everything you might have to find some creative ways to meet credit card minimum requirements. (I’ll give you some ideas on this in the future.)
Apply for Cards at the Same Time
Once your browsing data is clear, it is time to open up the links to the credit card applications. You will rarely need to wipe your data in between applications, and if that’s the case you should know it. (For example, there is one card that is offered both as a Visa and an AMEX where you need to do this.)
Type in all of your information on all of the applications, then verify, verify, verify. If everything looks good, click apply on all of the applications.
Sometimes you receive an immediate response (“You’ve been approved!”) and sometimes your information is sent in for manual underwriting. You may get a “ding” letter that says you’ve been denied a few days later; if so, there is a number you can call for reconsideration.
If you’ve got stellar credit history (and a great credit score to go with it) and kept to the 2 (or 3) card max per issuer, you should be fine.
Receive, Activate, and Set Up Automatic Payment on the Credit Cards
This is another really, really important step. If you get credit cards for the purpose of earning bonus miles, points, or cash you will greatly diminish the value of your efforts by paying interest and fees to the credit card company.
Here’s how to avoid that problem.
About a week later you will start receiving your cards in the mail. Make sure you keep all of the paperwork and call the number that is on the activation sticker on the card. As soon as you activate the cards, you need to do two things:
1. Sign the back of each card
2. Go to the credit card company’s website, open an account (or add the card to an existing login), and setup automatic payment of the credit card bill.
We don’t want that.
So set up automatic payment of the bill for the full statement amount on the due date. (And make sure you check on the first due date just to make sure everything went smoothly.)
Start Spending to Meet Requirements
Now you’ve got a handful of shiny new credit cards all waiting for you to hit a spending requirement before they’ll pay out those bonuses you want. You have a plan in place from the above steps on how you’re going to meet those requirements without going into debt or buying stuff you don’t need. Get going — the clock is ticking.
Which Credit Cards are Best for an App-o-Rama?
We plan to share with you some of the top cards to target for an App-o-Rama each month. We’ll dive into specifics on why the cards are the best five that month.
Stay tuned until the next post for more on App o Rama!
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