No more App-O-Ramas for me.
The term “App-O-Rama” (also known as AOR) is a name many people use for the process of applying for a bunch of credit cards in one day, earning huge piles of rewards, and then repeating every 91 or so days.
The original reason for bunching up applications in this way was that it increased your chance of approval since banks wouldn’t be able to see your other inquiries for a few days. And, the reason for waiting 91 days was that the impact of recent inquiries on new approvals seemed to go down after 90 days. Technology has progressed since the dawn of the App-O-Rama process. Today, credit inquiries are available to credit card issuers immediately. In fact, the last few times that I applied for cards, both Credit Sesame and Credit Karma sent me new inquiry alerts while I was still watching the hourglass spin after pressing the apply button. It is effectively instantaneous.
Credit card companies are less likely to approve people who have recently made many requests for new credit. The primary reason is that people who do so appear to be financially desperate. They appear to need access to more credit and therefore they’re a bad risk for the bank. Today, most credit card companies understand the other reason that a person may apply for lots of credit cards: for the rewards. In this case, the people applying might not be a bad risk, but they’re almost certainly unprofitable customers for the bank.
So, today, I’d argue that App-O-Ramas reduce chances for approval. Banks can see that you applied for other cards that same day and that will count against your chances for approval.
I’m far from the first to question the old approach. In fact, Julian, the Devil’s Advocate, argued against the wisdom of App-O-Ramas in April 2014: App-O-Ramas Are Your Father’s Oldsmobile. That happened to be one of the posts that led me to ask Julian to contribute to this blog in the first place! He now publishes a series called “Bet You Didn’t Know” every other Friday, right here on Frequent Miler.
I introduced readers to Julian in the post “Devil’s Advocate stolen and unmasked,” where I wrote:
Julian’s second post, App-O-Ramas Are Your Father’s Oldsmobile, was another great one. There’s no doubt that applying for credit cards with big signup bonuses is the fastest way to earn points and miles. However, “Julian” calls into question the idea of bunching up your credit card applications into “app-o-ramas”. Regardless of the fact that I’ve always hated the term “app-o-rama,” I think that Julian makes several good points here. It could very well be that applying for credit cards sequentially is the better way to go. What do you think?
Even though I agreed with Julian’s argument in 2014, I continued with the general App-O-Rama approach, but not for any particularly good reason. Now, I’ve finally come around. I now think that a better process is to sign up for a single card (with some exceptions that I’ll discuss below), meet the spend requirements, then sign up for another card. The spacing between the signups can be one to three months or even longer, depending upon how aggressive you want to be. In this way, when you sign up for new cards, you’ll never have more than one or two recent (90 days or less) inquiries on your report.
Julian pointed out that this sequential approach to credit card applications has a great benefit: sometimes great new offers come along but are available for only a very short amount of time. In those cases, it would be a shame if you had just applied for 5 or 6 cards a few weeks earlier since your chance of approval would then be lower and meeting the minimum spend requirements, if approved, would be harder.
The validity of Julian’s argument hasn’t changed over time, but recent events have finally pushed me over the edge…
- Diminishing Manufactured Spend Opportunities: With big App-O-Ramas comes great spend requirements (with apologies to Spider Man’s Uncle Ben and others). As opportunities to manufacture spend dry up, it will become harder and harder to take on tens of thousands of dollars in required spend. With a sequential approach, it is easier to avoid taking on more than you can handle.
- Amex once in a lifetime rule: Now that Amex will only let you get a signup bonus for a given card once, it’s now more important than ever that you signup for the best Amex signup bonuses when they come around. With App-O-Ramas you can easily miss out on those best of the best limited time offers.
- Chase tightening up on approvals: Chase has recently made it difficult to get approved for new cards if you’ve opened 5 or more accounts in the past 24 months. At first, this “5/24 rule” was limited to a few cards, but it now looks like the rule will soon expand to include business cards and co-branded cards. As a result, it makes sense right now for many people to focus only on acquiring Chase cards before it’s too late. It makes sense, for example, to sign up for a business card now and then a co-branded card (or two) a month from now. In other words, start the sequential app process now, with a focus on Chase cards, before it’s too late. For details, please see: Chase calls an end to the game. Should we seek quick wins or long term benefits?
Astute readers may be thinking “Greg, just last week you applied for 3 cards in one day, and now you say that it’s better to just do one at a time! What gives?”
The idea behind
the Sequential App Process (for lack of a better term) an App-No-Rama is to continue to earn signup bonuses while minimizing the number of recent inquiries that are on your credit reports at any given time. So, when there’s an opportunity to earn more rewards without increasing recent inquiries, it’s worth looking into.
Often, when multiple inquiries are made to the same credit bureau, from the same bank, and on the same day, the inquiries are combined into one. In my case, Chase has an irritating habit of making hard pulls from two credit bureaus when I apply for a single card: Experian and TransUnion. That’s the bad news. The good news is that when I apply for more than one Chase card on the same day, any additional hard pulls are combined. Whether I apply for one, two, or three Chase cards in one day, history tells me that I’ll end up with just one inquiry on each report: Experian and TransUnion.
Note: Credit issuers may use different credit bureaus for different cards and in different locations and for different reasons. My experience with Chase is unlikely to match your own.
No more than 2: In response to last week’s post where I wrote about applying for 3 Chase cards in one day (see: Chasing 395,000 points), a couple of readers mentioned reports in which people had their Chase accounts shut down for applying for 3 or more cards in one day. Unfortunately, I don’t have any way of verifying those reports. Until we learn more, I’ll declare that it’s safer to limit apps to 1 or 2 at a time.
To find out whether or not it makes sense to apply for two cards from a particular bank, use the “Jump To:” links on my Best Offers page to view the App Tips for each bank. There you’ll find information about what is known about applying for more than one card in one day.
To summarize the multi-card exception: if you believe you can sign up for more than one card without adding extra inquiries to your report, then go for it.
Multi-Card Credit Score Impact
When credit inquiries for multiple applications are combined, applying for multiple cards has no impact on your recent inquiries vs. applying for just one. However, it can have both positive and negative effects on your credit score. If your new accounts led to you having additional credit with the bank, then your credit score may be improved since this will help with your credit utilization ratio. On the other hand, the average age of your accounts will likely decrease even more with two new accounts instead of one. This will most likely have a slight negative impact on your score.
UPDATE: After a Twitter poll, we decided on the name “App-No-Rama”.
Readers, is there already a commonly used name for what I’m calling the Sequential App Process (SAP)? Or, can you think of a better name? I spent some time Googling synonyms for words like “sequential”, “methodical”, etc. For fun, I was hoping to come up with a name that sounded similar to App-O-Rama, but one that conveyed a slower, sequential, and/or methodical approach. I came up with a few ideas, but I don’t like/love any of them:
“App-O-Matic” is probably my favorite (or least disliked), but it wrongly conveys the suggestion that it is somehow automatic even though the idea was driven by the word “systematic”.
Oh well. I never liked the term App-O-Rama anyway. It’s too sensational and salesman-ish. Perhaps, its better to have a staid term like “Sequential App Process”. And, Google tells me that “staid” means “sedate, respectable, and unadventurous.” That sounds like the opposite of “App-O-Rama” to me. Perfect.
Not for everyone
I have no doubt that many readers have done App-O-Ramas for years and are happy with the results. Some will no doubt argue persuasively that App-O-Ramas are objectively better than the App-No-Rama. And, that’s fine. I’m not arguing that everyone should ditch App-O-Ramas, just that it’s my current plan to do so.