Friday, April 10, 2015

Tightening Credit

I've been busy the past few months trying to figure out how to spell my name, so that I too can start applying for travel reward credit cards.

Why? Because my parents are starting to hit their limits. Many of the desirable credit cards these days don't let you earn the sign up bonus again and again. For example, American Express only allows you to earn the sign up bonus 1x per lifetime (for their personal cards). Given my parents have had all the good Amex cards already, they're done.

Additionally, I think they're starting to hit their limit with other banks as well. Notably, Chase is less interested in giving them more and more Chase Ultimate Rewards sign up bonuses.

Last month, my father's Ink Bold card (the business charge card for his painting company) was coming up on on its first anniversary. That meant his free first year was over, and that he would be charged $95 to keep the Ink Bold card for another 12 months. His plan, however, was to apply for the Ink Plus (credit card) and earn another 50,000 Chase UR points as a sign up bonus since it was a different product from the Ink Bold.

However, when he applied, his application went pending. When he called the Business Credit Card Reconsideration number – (800) 453-9719 – he was grilled on the painting business' financial performance. While it was easy to open a credit card for a new business venture, it was actually harder to open one up for an existing one. Go figure!

They mentioned something about the business not being old enough, not enough profitability, already having enough credit extended to him.

Now, my father knew all the counter-arguments to respond with:

  • "I have a perfect payment history"
  • "I have an 800 FICO credit score"
  • "I'm willing to close my Bold card so it's not extending me any additional credit"

But nothing would change their mind. Perhaps they just realized my father wasn't going to be a profitable customer. After all, paying out all those UR points on Office Supply store and Telecom spend costs Chase money - likely more than they're making on transaction swipe fees.

Because the card is worth keeping (5x on office supply stores and telecom spend, 2x on gas), we earn more value in bonus points each year more than makes up for the $95 annual fee. However, my father will likely close his 2nd Chase Ink Bold card that he has for his consulting business. No need for two annual fees.

Well, if this gravy train is coming to an end, then so be it. Back to the drawing board...

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