Why Now is NOT the BEST Time to Apply for New Credit Cards

The offers are out there – 100,000 miles for this credit card, 100,000 points for this credit card, 130,000 points for this credit card – and on, and on. But, do not be a rush to apply for credit cards right now just because of the situation going on in the world. While there are some great deals to be had, it doesn’t mean that this is the best time to apply for new credit cards.

Why Now is NOT the Best Time to Apply for New Credit Cards

The uncertainty is extremely thick right now but one of the things we know in this space is that the banks are tightening things up. From marketing dollars to credit lines, the banks do not want to get stuck with a lot of unsecured debt when people in the US are looking at high employment rates.

Already, there are some reports of people that have had their big credit lines slashed when they are good customers. Unused credit lines can be a tough call for banks at a time like this and if you are not currently utilizing a good amount of it (or at least on a regular basis), it is a cautionary move by banks to prevent credit from being run sky high.

Last month before the US was even plunged into this economic uncertainty, US credit card debt was over $1 trillion. Now, with many facing unemployment and many people in the US not having a $400 emergency account, there could be many more leaning on their credit cards to get them through this time. Which brings us to…

Minimum Spending

Now, if you are someone who is secure in your job and you have a very healthy savings account, the uncertainty may not be there for you. But, for everyone else – as well as the banks – the uncertainty is real right now.

Applying for a credit card today to earn miles and points may sound like a nice way to plan for the future of travel but meeting that minimum spending may end up costing way more than you think.

During good months, I get questions from people on how to meet the spending of like $4,000 in 3 months on a new credit card. With many of the old ways drying up, for some, it is part of their process when they apply for a card. So, it could be a very real concern about applying for one or more credit cards where the spending requirements top $4,000 in the next 3 months. Who knows what things will look like in 3 months? Why strap yourself to that minimum spending just to get the bonus?

Again, if you are able to handle it in stride, go for it. But, if you are unsure about things, do not apply for a travel credit card today just because you are afraid they will lower the bonuses tomorrow.

Travel Credit Cards for Miles or Hotel Points

Like always, the best card currency to rack up is with flexible points. Especially at a time like this, I would not want to apply for airline credit cards when the airlines are making desperate moves to hold on to any cash they can. Sure, the airlines in the US will be there when this crisis ends. But, they will not look like they do now.

That means fewer routes, fewer seats, and possibly less of an interest to release empty seats for award reservations. Cash is king and while the miles are big businesses for airlines, they get that money already. Letting you redeem those miles for seats will restrict them from earning new money.

It’s not all dire – right now, there are some amazing awards available. But, the airlines are not the ones I would want to be racking up miles on new credit cards with – right now.

On the other hand, earning points with banks like Chase or American Express is always a good move. But, there are still some things we do not know when the dust settles. Will all the partners still be with those banks? Will the transfer ratios stay the same? Will those credit card perks that totally were worth the annual fee last month still be worth it next month?

Again, just do some serious thinking about it before you apply just before it is 100,000 miles – is it the best move for you, right now.

Oh, remember this – banks like Chase just signed huge extensions with airlines like United. They are going to need customers to apply to make their money back. That means that they will need you, eventually.

Tomorrow May Not Be All Bad

Remember that some of the best times for credit card bonuses was back when banks were struggling to get new customers. My guess is that when everything settles, the banks will be looking to lure customers in again but they are not going to be overly generous for all customers. They are likely going to be more selective about credit worthiness so a credit score that may work today may not work tomorrow.

But, back to them getting customers, some of their best customers on the basis of credit worthiness are likely the ones that they have and have had before. That means that there very well could be a loosening of some of the restrictions that we hate – things like Chase’s 5/24, American Express and their once-per-lifetime, other cards and their one-card-bonus-per-card-family-every-48-months.

If the banks want to get customers that are interested in travel currencies, they are going to need to target those customers. Some of the best ones are likely ones that have had those products before. That means they don’t need marketing dollars to get those customers since the customer knows the value and the bank has a relationship with that customer already.

So, we could see more generous application rules and possibly more generous bonuses – but for higher credit scores.

Bottom Line

I, like pretty much every other points and miles blogger, have an affiliate relationship with many credit cards. That means I get paid if you are approved for cards on this site. Obviously, for me right now, I would like you to apply and get approved for as many as possible! 🙂

But, this time also seems to be to be the biggest “offering ending today” time we have seen since I started blogging. There are going to be many that feel the pressure to apply for a card today out of fear of what comes tomorrow.

At the end of the day – these are just miles and points. There are a lot more valuable things around us and travel will always be there for us. Will it really hurt that much if a credit card bonus drops 20,000 points? That is about $350 worth of travel if you have the Chase Sapphire Reserve and those are Ultimate Reward points. Yes, $350 is great, but I’m not someone that thinks you should jump today on the chance that $350 of that value will disappear tomorrow.

Again, you are the one that needs to make the decision. There are definitely reasons to apply now but I definitely do not think this is the BEST time to apply for credit cards.