Don’t Apply for Your 2nd or 3rd Credit Card Until You Read This Essential Checklist for expats in the US

In the US, consumers are encouraged (or bombarded) to apply for multiple credit cards constantly. It is not uncommon to receive multiple offers via mail monthly. And, of course, you can be invited to open new cards at shopping malls, Costco, etc… I can understand that as a foreigner in the US, you may not have many choices when opening the first credit card. But once you have built up your credit score and are looking to have more credit cards, the below tips are for you.

1. Why do I need or want multiple credit cards in the first place?

Well, different credit cards offer different benefits, from direct cash back, to points, to airline/hotel/ride sharing/food delivery credit, to sign-up bonuses.

So knowing how to leverage a combination of different credit cards can give you substantial added benefits like a free flight for the family using points or free hotel stays. However, just like any tool, don’t let credit cards control you or push you to spend on something you don’t want to or intend to. Generally, the benefits or discount will not help you to cover 100% of the cost of the purchase.

With this warning out of the way, here are my top tips

2. Check your 5/24 status

This is specific to Chase. It simply means Chase will not approve your new credit card application if you have opened 5 or more cards across all US banks over the past 24 months. Is it an official rule on the Chase website? Nope, it is not, but this is crowdsourced, and you can read more about it here.

Given that Chase’s ultimate reward points are very versatile and useful, many people use the strategy of maxing out on Chase’s credit cards first before they go ahead with other credit card brands. Each Chase point is worth 1 cent to 1.9 cents, depending on how you use them.

3. Typical sign-up bonus is worth about $500+

While this may change in the future, as of Dec 2022, when you sign up for a new credit card, you often receive a sign-up bonus. A typical sign-up bonus is worth about $500+. How do I come up with this number? By converting from points to dollars for popular cards. For example:

  • Chase Sapphire Preferred is currently offering 60,000 points as a sign-up bonus. Each Chase ultimate reward point is worth between 1 cent to 1.9 cents so that means the sign-up bonus is worth about $600+
  • American Express gold offers 60,000 membership reward points as a sign-up bonus. Each point is worth between 1 cent to 2 cents, so again that is $600+.

So if you come across an offer that doesn’t have a similar sign-up bonus in value, reconsider.

4. Check out where you can use the reward points carefully

Not all reward points are created equal. For certain co-brand cards, you can only use the points with a specific partner. So unless you have a specific plan in mind, it may not make sense to sign up for that card.

Also, certain credit card programs offer a wider range of transfer partners than others. For example, when it comes to the travel category, Chase and American Express points are considered the most flexible and valuable because you can transfer them to many different airlines and hotel chains.

5. You can earn points by paying rent

Rent is often one of the biggest monthly expenses for many families. So would it be great if you could earn credit card points when paying rent? Before the Bilt master card was introduced, you could pay rent with your credit card, but you needed to pay transaction fees between 2% to 4%. This defeats the purpose of earning points, as the point value is often less than 2%. As of Dec 2022, Bilt is the only credit card in the US that allows you to earn points by paying rent, Without any transaction fee!

Bilt has a wide range of transfer partners too, so that you can transfer Bilt points to many hotels (like Hyatt, IHG, etc…) or airlines (like American Airlines, Air Canada, etc…). If you need more information about Bilt, check out my post here.

6. Hard inquiries from credit card applications are not a big deal

Every time you apply for a credit card, the financial institution will make a hard inquiry into your credit report. This results in a few points reduction from your credit score. Don’t fret. They will go away after a short amount of time, and your credit score will increase back to normal.

If you freeze all of your credit reports across the three credit bureaus, remember to thaw or unfreeze the reports before you apply for a new credit card.

7. Evaluate if the annual fee is worth it?

Depending on how you use the card and leverage their sign-up bonus and benefits, you may or may not earn enough to cover the annual fee. It doesn’t make sense to sign up for that specific credit card in that case.

8. Credit score and income requirement

It is important to remember that each credit card application may have different requirements in terms of credit score and income. So make sure to research the card before you apply and make sure that you meet the criteria for approval. Credit cards may also come with other fees, such as balance transfer fees, foreign transaction fees, and cash advance fees. Make sure to read the fine print to understand the full list of fees and charges associated with the card before making a decision.

In conclusion

Once you have a few cards, it’s important to manage them properly. Make sure you’re paying your bills on time, as late payments can damage your credit score. Also, try to pay off the balance each month, so you don’t incur any interest charges. Finally, be mindful of the credit limits on each card and don’t overspend – it may result in a penalty fee or an increase in interest rates.

Last but not least, I recently created a group on Facebook called Asian Expats in the US so that we can share/discuss more tips directly. Feel free to join.

Good luck!

Chandler

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