Last Friday Kara racked up 140,000 miles and points by applying for two new credit cards! In my estimation, these points are worth $2,440 in free travel! To understand how this was possible, you first have to understand the art of the app party!
[Don’t care to learn about app parties? Scroll to the second half of the post to see which two credit cards Kara applied for the receive 140,000]
What is an app party?
An app party is a fancy term travel hackers use when applying for new credit cards. Most of the time an app party consist of applying for multiple credit cards. In the Buchanan household, an app party usually occurs 3 to 4 times per year. During our app parties, Kara and I usually apply for 1 to 3 new credit cards each.
Why have an app party?
The fastest way to earn large amounts of miles and points is by applying for credit cards and receiving the sign up bonuses. In order to get approved for the best travel credit cards with the highest sign up bonuses, you need to have a really good credit score. Applying for credits cards every 3 -4 months is a strategy used by travel hackers to ensure that their credit score is in the best possible shape every time they apply for new credit cards.
How do app parties affect your credit score?
[Disclaimer: I am not a financial expert. I am not offering financial advice. The information provided in this blog is based solely off of personal experiences and a lot of research.] Every time you apply for a new credit card, the credit card company will check your credit score to decide whether or not to approve you for their credit card. When a credit card company checks your credit score, this is known as a “hard pull.” On average when there is a “hard pull” against your credit score, your credit score will drop 3-5 points. So every time you apply for a new credit card, your credit score will decrease (at least in the short term). However, it only takes around 3 to 4 months for your credit score to recover from this decrease. This is why a lot of travel hackers apply for new credit cards on a quarterly basis.
Here’s what the cycle looks like: Apply for new cards (credit score drops). Wait three months (credit score increases). Then do it all again. It’s a beautiful cycle. By implementing it, Kara and I have been able to travel to some amazing places over the last 2 years.
Why apply for multiple credit cards during an app party?
To be completely honest, I don’t know the answer to this question, but I do have a couple theories. With that being said, I was exposed to the idea of applying for credit cards quarterly when I first started travel hacking. I’ve been doing it for almost 2 years now. My credit score has stayed in great shape, and I’ve earned over 500,000 miles. Needless to say, I’m not stopping anytime soon.
Theory 1: By applying for multiple credit cards on the same day, your credit score doesn’t have time to update and reflect your latest applications. Example: If you were applying for 2 credit cards on the same day, your credit score wouldn’t have time to update. Credit card company B wouldn’t know that you’re also applying for credit card company A’s credit card on the same day. This would also mean that the “hard pull” from credit card company A wouldn’t have time to decrease your score before credit card company B checked your credit score to make their decision. Therefore, credit card company A and B are both seeing your credit score when it’s at it’s best.
Theory 2: If you plan to apply for more than one card every 3-4 months, your credit score will be higher when applying for new cards if you strategically lump your “hard pulls” together. Assuming that your credit score recovers from a hard pull in 3 months, even if you applied for 3 credits card and your score dropped 12 points, your credit score would be completely recovered by the time you were ready to apply for your next round of credit cards (3 months later). If you were to apply for 1 credit card every month for three months, each time you went to apply for a new credit card, your credit score would still be down from the prior two applications.
Kara’s Latest App Party
During Kara’s latest app party (7/18), she applied and was approved for 2 new credit cards. After meeting the minimum spending requirement for both cards she’ll receive sign up bonuses totaling 140,000 miles and points.
The Platinum Card from American Express
The first card Kara applied for was the Platinum card from American Express. This card earns Membership Reward Points. Membership reward points are great because they are extremely flexible. You can use them pay for travel at a 1:1 ratio. 1 point is equivalent to 1 cent. So in order to pay for a $1,000 plane ticket you’d need 100,000 membership reward points. BUT you can get WAY more value by transferring your Membership Reward points to a travel partner. A few of their notable partners include Delta, British Airways, Frontier Airlines, Starwood, and Hilton. By transferring to one of these travel partners, you can easily get at least 2 cents worth of value from each Membership Reward point!
Why Kara Applied for the Platinum Card from American Express
The current sign-up bonus for the card is 40,000 points after spending $3,000 within the first 3 months. A couple weeks ago Kara, received a targeted offer in the mail to apply for this card and receive 100,000 points after spending $3,000 within the first 3 months. 100,000 point sign up bonuses are few and far between. So when Kara received this targeted offer, we knew we had to take advantage of it. When I normally apply for credit cards, I have a good idea of how I plan to use the points. In this case, the offer was too good to pass up. Since the points are really flexible, we went with the strategy of applying for the card now and figuring out how to use the points later.
There is one big draw back to this credit card. It has a $450 annual fee that isn’t waived for the first year. However, it comes with a $200 statement credit that can be used to cover incidental airlines charges such as baggage fees. Kara and I are traveling enough this year that we will easily put this $200 credit to good use. So in reality, the annual fee is more like $250 instead of $450. Plus, this card comes with some other awesome benefits. The most notable being: free lounge access to Sky Club and Centurion Lounges, priority boarding, and free TSA pre check.
Barclay Arrival Plus World Elite MasterCard
The second card Kara applied for was the Barclay Arrival Plus World Elite MasterCard. This card has recently earned a reputation as one of the best travel credit cards on the market. The sign up bonus is 40,000 Arrival Miles after spending $3,000 within the first 3 months. Like Membership Reward points, Arrival Miles can be redeemed for free travel at a 1:1 ratio. 1 point is equivalent to 1 cent. So if a flight cost $400 you would need to redeem 40,000 points in order to cover the cost of the flight. Unlike American Express, Barclay doesn’t have transfer partners. So this is the only way to redeem these miles for free travel.
Why Kara applied for the Barclay Plus World Elite MasterCard
Kara and I have a big trip planned at the end of this year. We’ll be visiting both Europe and Thailand. While in Europe, we’ll be traveling from Milan, Italy to Prague, Czech Republic. In between we’ll be stopping in Zurich, Switzerland and Munich, Germany. We’ll be traveling by high-speed train in order to get between these cities. I’ve calculated that our train tickets will cost us a little less than $600. We plan to use the 40,000 Arrival Miles that Kara got as the sign up bonus for this card to make our train travel more affordable. $600 – $400 = $200!
The second reason Kara applied for this card is because it earns 2 points per $1 on every purchase! So when Kara’s not trying to meet minimum spends with other credit cards, she’ll be buying everything with this card to earn 2x points!
Why 140,000 miles = $2,400 in free travel
When you redeem Arrival points for travel expenses, you’ll get a 10% rebate. So in the case of the $400 flight above, if you redeemed 40,000 Arrival Miles you would get 4,000 back! This makes the 40,000 point signup bonus actually worth 44,000. Since each point has a value of $.01 this sign up bonus is worth $440 in free travel.
It’s a little harder to put an exact value on 100,000 Membership Reward Points. I plan to transfer these points to one of their airline partners. If I had to guess, I’ll end up transferring them to British Airways to book free flights with their distance based award cart. By transferring these points to British Airways and redeeming them for free flights, I’m estimating that I’ll get around $.02 of value from each point making this 100,000 point sign up bonus worth $2,000 in free travel. When you combine the value of the two sign up bonuses, that’s $2,440 worth of free travel – which Kara got just by applying and getting approved for 2 credit cards!
If you’re interested in having your own app party and wondering which credit cards you should apply for, use the contact form to send me an email. I’d be more than happy to help!
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