Getting the Credit Card Itch
The trouble with long-term projects is that they allow you too much time to think. This is true of things like paying off debt, getting into shape, or trying to change personal habits. One such project we have at the moment is raising the credit limit on the Apple credit card. The card is managed by Goldman Sachs, who are venturing into consumer financial products.
One of the advantages of the Apple Card is that Goldman Sachs are generous with their credit limits when you demonstrate that you use the card frequently and pay it off in full every month. It is not unheard of for some people to get upwards of $40K in credit. They do this by requesting credit limit increases every 91 days. At some point, their financial numbers will have them top out their credit limit. It may not quite reach $40K. However, it's worth trying.
The negative side of trying to achieve this is that you need to shift all of your spending to the card and pay it off every month. This isn't necessarily bad, except that you forego use of other credit cards that offer better rewards. And, it could take months or years to top out your credit limit. That's a lot of forfeited rewards.
During that time, you have time to fantasize about other credit cards you could get to earn rewards. You get an itch to apply for new cards for the sign up bonuses. Except that by doing that you lower your spend on the Apple card.
At the moment, I'm straddling between Apple card and American Express. I have an AMEX card that has not yet earned its sign up bonus, which needs $3000 worth of spending within 6 months. That's $3000 that could have been spent on the Apple card.
On the other hand, I can't put all my spend on the Apple card. It doesn't have enough credit to fit all of my spending. The old saying is that if you chase two rabbits, then you catch none.
This experience and the itch are making me think about what exactly I am trying to achieve. One goal is greater credit limits. Another goal is credit card rewards. Third, which should probably be first, is cheap credit with 0% interest. These do not always work synchronously. For example, 0% interest balance transfer cards often do not earn significant rewards, if at all. Larger credit limits require having larger spending on the account. This sacrifices optimal rewards. And, reward optimization often means that your spending is spread out. If I had another goal of having a good credit rating, then things would get even more challenging. Business credit cards offer larger credit limits. However, they also do nothing to improve your personal credit.
Perhaps the credit card game is an addiction. Maybe that's what's causing the itch. I'm trying to keep from opening any new credit card accounts. At this time, it sabotages my efforts. At this time, I am thinking that I need to stick to what I have. This helps me maximize the existing accounts in terms of both credit limits and rewards. The annual fees and effort that goes into managing so many cards makes me think that a few cards that reward a majority of my spending is better than multiple cards that maximize the rewards.
More importantly, I am thinking that rather than win at the points and miles game, my focus should be to win at the wealth game. Good credit is important. But, ultimately, what do I intend to do with that credit?
Posted Using LeoFinance Beta
