As I prepare for my App-o-Rama, one of the first steps is to figure out what the credit card companies will see when they pull my credit history. This is important for a number of reasons:

• Credit Score

  If your credit is bad you are not going to get much in the way of new credit.
  I plan to sign up for one of the free trial offers so that I can measure the impact of the App-o-Rama on my credit score.

• Credit Utilization

  If you have maxed out your credit then new companies will be more cautious. You want to have as much ‘free’ credit available as possible so that once you withdraw the balance transfer money you will keep your total credit utilization under 50%. Right now my credit utilization runs about 3%.

I have put together a list of my credit cards from what is showing on my Credit Report. The next step in an App-o-Rama is usually to call and get your credit limits bumped up. This helps lower your overall credit utilization percentage and allows you to reallocate the credit limit from one of the old cards to a new BT card if they are from the same credit card company. With over 100k right now, I don’t see the reason and I don’t want to chance a hard credit pull. Once I do the 0% BTs I will call all the cards and request an increase since it then won’t matter if they do a hard credit pull.

Current Credit Cards

To Do

• Continue reading FatWallet App-o-Rama threads
• Choose a Credit Reporting Service Free Trial Offer
• Collect data for the new credit cards I plan to apply for in this App-o-Rama
• Create App-o-Rama Index Page page to document my strategy and its implementation.

Update:
I called for a credit increase on the Macy’s & Sears since they were my smallest credit limits.
Macy’s did bump up the limit $500 but Sears would not. We don’t really use the cards so that is probably the reason. Will be interesting to see what the declination letter from Sears says.

As I struggle to read through the plethora of material on the forum at FatWallet Finance (FWF) regarding 0% Balance Transfer (BT) Credit Card Arbitrage I am trying to come up with the strategy I wish to employ.

The primary strategy employed appears to be to apply for every card that gives a sign-up bonus or 0% BT. Then maxing out the BT to 90% (or more) of the card limit, putting the cash into an online savings account that pays between 4% and 5%, all the while making minimum payments on the cards until the BT period is up and you pay back the card from the savings account. Then it is time to wash, rinse, and repeat.

A big problem this method, as pointed out by DaveHanson on the FWF, is that it undervalues your ‘credit score’:

The current conventional wisdom at FW seems to be that credit scores aren’t any big deal. It is true that IF the above rule is followed, so that no payments are ever late, then much of the damage that can be done to credit profiles by using 0% money is reversible in fairly short order. But after an increase in the influence of credit profiles in recent years, yours is ABSOLUTELY CRUCIAL for reasons that go well beyond the traditional ones, like getting a good mortgage rate. A credit profile can determine whether you get a job, what insurance rates you get, what mortgage rates you qualify for, what student loans you can get, generally what hot financial deals you’re targeted for, and of course, what other tasty CC offers you receive. So, it is FOOLISH to put it at risk for the sake of a few extra BT $. If in doubt, don’t risk messing with your credit profile!

Instead of only considering the money you can make over the next 6 to 18 months, he recommends you take into consideration the money you can make if you are able to continuing doing this, as he has, for years. Treat it like a business. Every time you apply for a credit card you are taking a ‘hit’ and in a sense are ’selling’ a portion of your credit score.

For example, I might be able to choose between a $75 sign-up bonus, and keeping enough inquiries & new lines off of my report to take an existing $20K line and double it to $40K. While that $40K line may not make me any money today, it might very well bring with it a great offer next year (say 0% for 12 months.) By setting myself up now to prepare for these options, I can save FAR more by using this extra line flexibility next year than I might by “selling” my credit for a relative pittance.

This is not to say you should never ’sell’ your credit score, some deals are too good to pass up, but your credit score is worth more than a free t-shirt with every new application. It is true that the app-o-rama minimizes the consequences of multiple credit applications application hits on your credit score, but it does not remove them entirely. Why not minimize the damage and, if you plan on using BT arbitrage as a second income, use the app-o-rama strategically?

My current plan is to do an App-o-Rama and max out the BT offers from each card. Then, following a strategy DaveHanson lined out, I will repay each card so that I have just under 50% of the card’s credit limit (CL) outstanding before the last day of the card’s billing cycle. Doing this allows me to ask for the max CL when I apply for a card but keeps this high utilization from ever showing on my credit report. Keeping the CL utilization below 50% protects my credit score which will help me not only get more 0% BT credit cards in the future but might also prompt my existing credit cards to send me more 0% BT offers.

Each month I will pay the minimum payment rounded up to nice $5 increment. This hopefully will keep me off any ‘only makes the minimum payment’ credit-looser list, and will make it real obvious if some stray interest or other charge gets applied to my card.

Too much today rides on our credit score to let it tank just for a short-term reward, especially when the potential long-term return is so much greater. The old, stock market adage is “Bulls make money, bears make money, pigs get slaughtered.” Pigs are the high-risk investors looking for the big score. I am in this for the long term and so will treat this just like I do with my other investments. I am, in a sense, investing my credit score and I don’t want to risk the principal at too much.

I am going to stay conservative here at the start, but in the future I might consider paying the BT down to 50% in stages rather than all at once, first down to under 70% (before the first billing cycle closes), then to 60% and then 50%. I don’t want to do this now, while starting out, because I don’t want to have 5+ cards with 70% utilization, but once the BTs age then I am not worried about having one or two cards at the higher utilization for a short period.

Strategy Summary

1. Individual Card Utilization < 50% at statement closings
2. Overall Utilization < 50% - a given if I am able to do #1
3. Pay slightly more than the minimum each month

Pros:

1. Keeps credit score higher
2. Keeps possibility open for BT offers from existing cards

Cons:

1. Less money up front

Mapgirl is hosting the 90th Carnival of Personal Finance and has taken the large number of articles and divided them into 6 categories:

1. The Big Top Carnival - represents my editor’s picks.
2. Intermission - blatant publicity for two good blogs but stuff I might normally reject
3. Balance Transfer Booth - a natural grouping of posts
4. Carnival Sideshow One - articles I liked a lot but not quite ready for the Big Top
5. The Parking Lot - another natural grouping of posts
6. Carnival Sideshow Two - all the rest of accepted articles.

I submitted my last App-o-Rama post to the carnival and it is joined with a couple of other posts in the Balance Transfer Booth.

Thanks! MapGirl!

Well, I finally got my list put together and on the 7th of March I started early and applied for 24 credit cards. Quite an interesting process. I did download and use the trial version RoboForm. It filled in most of the repetitious info on all the apps, although I had to read through it carefully to erase incorrect entries - such as repeating my name and info in the spot for every additional card.

I have included links to the pages where I started the application process. None of them are sponsored links for this site. Those that CardOffer.com will pay you are linked to the CardOffer.com page for the card. If all the cards are approved I will receive $568 from CardOffer.com

The Reward column lists offers by the credit card company either in gift cards, credits to your statement, or redeemable points. If approved for all the cards I will end up with $315 in gift cards and credits as well as 90,000 points, which can be worth up to $900 but probably more like $500.

In my next post I will discuss the process of filling out the applications and the what approvals I have received so far. I received a number of instant approvals, no instant declinations, and a whole lot of “watch your mailbox” responses.

Applying for 24 credit cards at one time will definitely impact your credit score. I signed up for TrueCredit (and a couple others) to monitor my credit. A future post will discuss the different credit monitoring services, but for now lets get back to the credit score itself.

Before starting my App-o-Rama, TrueCredit reported my FAKO credit scores and the number of credit inquiries from the three credit bureaus as:

Not the best, but not too bad.

The day after my App-o-Rama the credit bureaus showed 22 new hard inquiries on my credit report, half of them on Equifax. If I had to make a guess, it appears that each credit inquiry dropped the credit score about 2 points.

3 days later, after all the dust has settled, it appears there were a total of 26 hard inquires on my credit.

Here is the list of ‘hits’ on my credit report. StateFarm takes the lead for running 3 credit reports for 1 card, a 3:1 ratio. Citi is next with 9:4 ratio. Some I can’t match up to the card.

Read the rest of this post »»

After a hectic week in the stock market, Steve is convinced that we should sell everything Chinese, as a matter of fact we should not invest in stocks or bonds but instead we should start hoarding bees.

He also recommends getting rid of computers and explains what happened with the subprime mortgage market.

HatTip: Boston Gals Open Wallet who pointed me to this Colbert show I had missed.

1.

My four younges kid’s ING DIRECT custodial accounts are growing wonderfully, thanks to those blog readers who have used the bonus links to receive their own $25 ING Promo Bonus when they opened an account! Each of them now have over $300 in their accounts that has grown $10 at a time from your use of the referral links! When we run out of referrals I may have to do the same for my two grandsons!

Thanks to everyone who has signed up. This link will show you how you can get $25 for opening an ING Direct Savings Account and help my kids save $10 towards college.

The U.S. Mint accidentally minted thousands of the new $1 coins without ‘In God We Trust’ inscribed around the edge of the coin according to CNNMoney.com.

While I did not even know the mint was coming out with these new coins, some who bought the recently released George Washington Presidential coins were able to put the coins up for sale eBay for about $200 each.

The coins also are missing the “E Pluribus Unum” inscription, as well as a mint mark indicating whether they were produced in Philadelphia or Denver. Also, the coins are missing edge inscriptions specially made for the new dollar.

I am not sure it would do any good to look for more, but I plan on checking out my bank in the morning since they are estimating about 50,000 of the new ‘god-less’ coins are out there.

I think I will want one, even if it is ‘correct’, as a collector piece. I don’t think I have ever seen a coin with edge lettering.

The Mint will be featuring four presidents each year on the coins, with John Adams, Thomas Jefferson and James Madison to make their debuts later this year. Each will have its own design and feature the Statue of Liberty on the back.

And hopefully “In God We Trust.”

If you got sick and would your family know what to do? Would your family be able to find your financial records if you died? The Insurance Information Institute (I.I.I.) has available for download a personal finance program called My Financial House. The free software will help you create a financial inventory as well as chart long-term financial goals.

The software helps consumers:

• Organize and create a picture of their current financial situation
• Work more effectively with financial advisers
• Identify gaps or overlaps in their financial circumstances
• Guide heirs and beneficiaries when filing claims

“This software was created to help people take control of their finances and prepare for their future,” said Dr. Steven Weisbart, vice president and economist at the I.I.I. Too often consumers underestimate the money needed to pay for such large expenses as college tuition or buying a home. They don’t purchase sufficient life insurance to cover a family’s day-to-day expenses if the household’s primary wage-earner were to die in the prime of his or her working life. This software helps consumers plan for and manage their personal income and gain control over their finances.”

Once you complete your financial inventory, you can share it with your accountant, financial advisor and/or attorney – someone you trust – to help you plan for your future, so that even in an emergency you will know if your financial house is in order. You can also email your inventory and save it to a disk to store it for safe keeping.