Apply For Rewards Credit Cards Soon, They May Become Harder To Get

One Mile at a Time says if you’re going to apply for a rewards credit card do it soon – like this week. He suggests,

  • We may see lower bonuses, as issuers spend less money to acquire customers
  • We may see some products stop taking applications altogether

While Lucky offers some reasons to believe banks may be less generous, I’m actually going to go a bit further in the analysis.

He says “we’re essentially in limbo, and nobody actually knows what’s going on anymore.” Companies are cutting spending and I’d add that includes marketing spending except where it’s contractually required (and then then…). Second quarter budgets may be delayed or slashed. And then he posits this,

Many credit card issuers are giving people the opportunity to delay making payments, and I imagine in some cases they’re suddenly going to see a lot more people financing purchases, which may throw off some projections

It’s not simply that projections will be thrown off. Let’s be clear. A lot of people are becoming unemployed. To a credit card issuer that means late payments and eventually chargeoffs.

The reason banks sometimes reduce credit lights, and tighten lending standards, in a down economy is because there is more repayment risk. This reduces their exposure to bad debt.

So it’s not just that we could see less attractive bonuses – that’s not a foregone conclusion, but there may be a pause in big bonuses for travel companies while travel is so limited – but we may see tightened approval standards. In other words it may become more difficult to get approved for cards.

I’m still excited for the long term of rewards cards. Thanks to the government’s money printer go brrr right now the cost of credit to banks is unbelievably low. So as soon as there’s a better handle on risk we could be in for a wild rewards card ride. Remember that it was during the Great Recession that we saw the first 100,000 mile initial card bonus.

Money Printer Go Brrr from r/Jreg

I’m curious to hear experiences of readers, have you been applying for cards and if so what were your results? Anything that’s surprised you? We don’t have broad industry-wide data yet to know what’s going on but it would be great to get data points on where things are going.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Only Apply every 2 years or so or risk shut down like they have been shutting down for those who keeps applying for bonuses . Amex
    Specially chase and American airline have been closing accounts only for getting bonuses on short time . Nothing to do with mailers as many of those who got shut down for shut down only because they kept applying for bonuses every 6 to 12 months

  2. Given that you personally might benefit from folks applying for these cards, should you at least caveat your statement by noting that you should only apply for these cards now if your financial circumstances remain robust? I agree with you that it’s possible that credit cards will get more difficult to obtain, and bonuses may get smaller, but there are real reasons for this. In the best of times, there are millions of Americans who get in trouble with credit card debt.

  3. This is the WORST advice I can think of:
    There are bloggers who live their lives for this stuff, than there is 99.999% everyone else:

    *Points are becoming worth less and less..
    *Your credit :IS SO IMPORTANT right now. No inquires that are not needed!
    *If you do not have any credit cards or need more credit to build credit and MUST get a card, grab a card with lower interest rates just in case you become strapped and have to finance on a credit card (emergency only). Discover is free and even lets you get cash from Wal-Mart for free without charging the cash advance rate.

    If you are wealthy and have not a care in the world right now, get a points card. If you are dealing with less income, tough financial times or your job is on the line…AVOID any card with an annual fee.

  4. Jim: your, errmmm, “logic” is even worse than your shitty writing.
    Signed,
    He who continues to do everything he can every 3 months to get back as much as possible from corporate terrorist banksters, no matter how much floggers try to whore for their multi-national terrorist overlords (in this one case, amounting to well over 100k every decade.)

  5. Of course Leff will use any excuse he can, including an ongoing global health crisis, to peddle a few more credit card referrals.

  6. I must agree with Chopsticks and Ryan. For most people now is not the time to be in a rush to apply for credit cards.

  7. If you have a job and want or need a new card, why not apply now? If you don’t want or need a new card, best to hold off for a bit.

  8. Banks are here to lend to people in need. Unlike 2008 when banks had so many bad assets, banks are very well capitalized today and are lending to their existing consumer and business customers. They are being very generous with deferring payments for a month or two until people get their checks Trump has pushed for and also some get unemployment checks. NYC and some coastal cities in California, Washington State and New Orleans now are hotspots. We’ll see how quickly some business activity can resume in a couple of weeks in the rest of the country.

    It seems the cards that people need now if they need them are 0% balance transfer or 0% apr on purchase cards. Cheap credit is always helpful in an emergency. Banks I think will have plenty of people utilizing these non premium cards and they may not be inclined to pay up for the travel customers. Gary is right that they will do this by raising approval requirements. The big bonuses will remain but less will be approved and I don’t think we’ll see a push of travel cards. A lot of people are using banking services now. Banks don’t need more customers at the moment. No one should be traveling until 2021. People don’t need to worry about travel benefits, travel credits and lounge access. The only people who need to travel are those who need to see family and for major business. This virus may be curtailed but risks still remain. Stay home (I am in nyc) and don’t be planning trips until 2021.

  9. Thanks Gary, always appreciate your writing and advice. I have followed you and your advice for 3-4 years now and it’s been a beacon of consistency and honesty.
    Obviously don’t get a credit card if you can’t afford the annual fee or you know that’s not a safe tool in your hands. Gary isn’t peddling anything here, just given historical evidence and experienced analysis on the situation for readers to make their own decision.
    I was going to apply for the Delta Platinum Amex yesterday just before the deadline as I need to travel from Europe to the US in the summer (flights from WRO – MCI are just 25,000 points +$150 on Delta quite low for what is normally offered), but I was already feeling…there’s a bit more instability than I feel is necessary to rush in to at this point as if there are flights then, I imagine they can be even cheaper.

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