Looking back, 2011 was a great year for credit card sign-up incentives. The major issuers rolled out some new cards and features and offered up big bonuses to get you to try them out. By picking up the tastiest offers, you could have reaped thousands of dollars in bonuses even with average incomes and without spending more than normal. If you have good to excellent credit, why not earn some money with it? Here’s what Mrs. MMB and I decided to jump on last year:

Chase Sapphire Preferred: $625 in travel
The Chase Sapphire Preferred® Card gives you 50,000 bonus points after you spend $4,000 in purchases within the first 3 months. With this new card, Chase is basically trying to make a premium card that competes with American Express, with their Ultimate Rewards rivaling Membership Rewards. (It’s metal and heavy, too!) For example, you can now transfer Ultimate Rewards points to Continental/United, Southwest, British Airways, Hyatt, and Marriott. This the same system the Chase Freedom card uses now as well.

But my favorite features are the cash options and the 20% bonus towards travel. 10,000 points = $100 cash = $120 towards travel at no markup (same price as Expedia, Travelocity, etc). You can mix points and cash however you like, which means 40k points = $500 towards any airfare or hotel nights. No annual fee the first year, $95 after that.

Ink Bold Business Charge Card: $500 cash or $625 in travel
The small business version of the Chase Sapphire, this card also offers a huge sign-up bonus. The Ink Bold® Business Charge Card from Chase gives you 50,000 Ultimate Rewards points – after spending $5,000 in the first 3 months your account is open. For more details, please see my Chase Ink Bold review post, including details on what constitutes a small business.

Citi ThankYou Premier: $500 in gift card or $665 in airfare
The Citi ThankYou Premier Card is another travel-oriented premium credit card gives you 50,000 ThankYou points after spending $2,500 within 3 months of account opening. The special feature here is that it offers you a 33% premium on when used towards travel. That means those 50,000 ThankYou points can be redeemed for $665 in airfare. They also have their own airfare portal with the same prices as Expedia, and you can also mix and match cash and points if you don’t have enough points to pay for the entire amount. For more details, please see my Citi ThankYou Premier review post. (Now expired)

Gold Delta SkyMiles Credit Card from American Express: 30,000 miles
The Gold Delta SkyMiles® Credit Card from American Express is not a great deal for everyone, but it works out very well for us. (It’s actually our second card, I had one previously.) My wife and I both fly cross-country together to a city primarily served by Delta at least once a year to visit the parents. The sign-up incentive is pretty good – 30,000 Skymiles after just $1,000 in purchases within your first 3 months.

More importantly, the card comes with a buy-one-get-one-for-$99 companion voucher (now expired) that saved us $250+ this year since it’s usually during a holiday. We’ve used this voucher before, and the prices are comparable to online travel engines, but you do get stuck with the taxes of $50 or so. The annual fee is free the first year, and $95 after that. You also get a free checked bag on every flight for you and up to 8 travel companions (so one card gets us two free bags as a couple, a $50 value per person each roundtrip). The total one-year value of this card is at least $600 if value a mile at a penny.

Grand total: $625 + $625 + $665 + $600 = $2,515
That’s just for four cards from three different issuers, which is far less than the most cards I’ve applied for in a year on my own. This means a couple could make over $5,000, which is 10% of the 2009 US median household income of $50,221 per US Census. As for us, we plan on making good use of this money to cover future airfare and hotel expenses. This total also does not include any earnings from cash-back rewards credit cards.

If we include the Ink Bold Business Charge Card, the required spending total was $11,000. Exclude the Ink Bold, and it goes down to $6,000, which if you use time-shifting techniques like pre-paying bills such as insurance/utilities or buying gift cards for groceries/gas, works out to a reasonable $500 per month. That’s well within our normal spending anyway.

Honorable mentions go out to three other cards:

• The Chase British Airways 100,000 miles offer came back in 2012, but both my wife and I already jumped on it previously and have already used it for a luxurious business-class trip around Europe.
• The Southwest Airlines card offered up 50,000 points (expired) which was good for over $800 in Wanna Get Away airfare after just one purchase of any amount. The current offer is 25,000 points for a still-respectable $416 in airfare. We don’t fly Southwest all that often, so we passed on this card this year.
• The Hyatt Card offers two free nights at any Hyatt in the world after any first purchase, which includes some rather swank hotels. There is a $75 annual fee. My sister got this card and we were pretty close to applying, but we wanted to hold off until we had firm travel plans since I believe you have a certain time to redeem.

My psychic powers tell me that some of you are wondering about this ;), so here’s the answer: How Opening and Closing Credit Card Accounts Affects Your Credit Score.

“Disclaimer: This content is not provided or commissioned by the issuer. Opinions expressed here are author’s alone, not those of the issuer, and have not been reviewed, approved or otherwise endorsed by the issuer. This site may be compensated through the issuer’s Affiliate Program.” 

“The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.”

I’ve been taking advantage of credit card bonuses and rewards for over 10 years now, earning thousands of dollars in perks while paying zero interest. I can honestly say that sign-up bonuses have never been larger than today. My rule used to be that I would only apply in exchange for at least $100, but now cards with $500 bonuses have been around for several months. I basically paid for all my holiday shopping with them!

A common reader question is – how does opening and closing all these cards affect your credit score? I’ve answered parts of this question here and here, but here’s the all-in-one answer.

Credit Score Basics

Credit scores come from proprietary mathematical formulas, the most popular one being Fair Isaac (FICO). The input is the history and data from our credit reports. The output is a numerical prediction of our creditworthiness. Since we have 3 different credit reports (Experian, Equifax, Transunion), we have 3 different credit scores. They’ll never reveal all the ingredients to the secret sauce, otherwise they’d have nothing to sell us. Thus, we must make do with what we have. FICO has released this breakdown for us, along with many other collected details over time:

Effect of Opening New Credit Cards and/or Closing Existing Accounts

35% On-Time Payments. Not surprisingly, the biggest chunk of the score is your record of timely payments. If you pay your bills, you’re likely to… keep paying your bills! Briefly, anything 30-days late or worse can show up here, although a 60-day late or 90-day late is even worse. If you just barely miss a due date and pay it off within 30 days, it shouldn’t show up here. This factor has nothing to do with opening or closing credit cards.

30% Capacity Used. This refers to how much of your available credit you are using, also known as utilization ratio. The lower the better. Being maxed out on all your cards is obviously not a good sign. Utilization ratio is tracked both on an overall level and on a per card level. For example, having five different cards with a $1,000 balance each and $10,000 credit limit each (10% ratio x 5 cards) is better than having 4 cards with no balance and one card with the $5,000 balance (50% ratio on 1 card).

In the long run, having more credit cards would be a good thing as it should mean more available credit and a lower utilization ratio. For the same reason, you should never close a credit card unless not doing so would cost you money. You want to keep all the available credit you can.

15% Length of Credit History. The longer your credit history, the better. Both the age of your oldest account and the average age of all your accounts are tracked. Continuously opening new credit lines will thus hurt your credit score. At the same time, having a lot of old cards can “anchor” your average account age as well. If I already have 20 cards averaging 8 years old, adding another new credit card won’t make that average budge hardly at all. Recently, I learned that closing a credit card actually has no effect on your average age of accounts or credit history length. The closed account will stay on your credit report for 10 years.

If you have “young” credit history, you’ll need to balance the desire for new accounts (which will one day be old accounts) with how good your other factors currently are to keep a good credit score. Another strategy is to be added as an authorized user on someone else’s account with a long age. (They took this away for a while due to abuse, but brought it back. Just make sure it’s legit, for example with your spouse/partner or parents.)

10% Types of Credit Used. We’re getting to the lesser factors. How do I know? This factor refers to the mix of different credit accounts out there – revolving credit like credit cards, retail accounts (store cards), installment loans like auto loans, and home mortgages. Having a greater mix is better. However, I have never had a store card, auto loan, or a mortgage on my credit report, and my credit score has remained excellent. You definitely don’t need all of these types to have a good credit score.

Now, I do think it is a good idea to have at least some form of credit to show that you can handle the idea of borrowing something and paying it back. A credit card allows you to do this within the monthly grace period without paying any interest.

10% Past Credit Applications. This what everyone worries about, but it’s again we see it is only a 10% weighting. This factor makes sense though, as applying for a lot of credit in a short period of time is an indication of financial troubles. Therefore, you should be very careful with what are called “hard” credit inquiries. Hard credit inquiries (“pulls”) are usually from loan applications (asking for more credit). Soft credit inquiries occur when you are just checking your own credit score, or when other financial companies check your credit history as identity verification or for pre-approval offers (here, you didn’t ask for it).

Hard pulls affect your credit score negatively for a temporary period of time. For mortgage and auto loans, there are special accommodations by FICO for “rate-shopping”; All hard inquiries within a 14 day period for mortgages or auto loans will only count as one inquiry.

In regards to apply for new credit cards, it’s difficult to know the effect of a hard inquiry by itself, as a new credit card account will also affect the other factors above (average age of accounts, credit limits, utilization ratio). For someone with a longer credit history, a new credit card application will have little effect. For someone with zero credit cards, it will have a larger effect. The general consensus is that each hard pull knocks about 3-5 points off your credit score, and the effect decreases as time passes – after 6 months the effect is reduced, and after a year it is gone. The recording of inquiries does stay on your report for 2 years.

Takeaways

1. For a high credit score, the most important things to do are to pay your bills on time and not use all of your available credit limit. Don’t lose sight of this.
2. Applying for new credit cards will affect your score negatively for the short-term, with the effect going away over time and gone in a year. However, that doesn’t mean they aren’t precious. Only apply if it’s worth it through lowering your existing interest rates, upfront bonuses, cash back, or travel rewards. Hard pulls are the same as cash for me!
3. Never close an existing credit card unless you are avoiding a fee or in exchange for something worthwhile (like a mortgage approval). Closing an account never helps your score, but only really hurts if it makes up a huge chunk of your existing credit limit.

Based on my own experiences, my personal choice is to limit myself to about 3-5 credit cards per rolling 6-month period (more when there are good offers and less when there isn’t). My primary concern is not really the credit score, but more the fact that individual issuers might not approve me just due to the inquiries even though my score is fine. I’ve scored over $2,000 in bonuses the last year alone, and that’s not even including my wife.

p.s. It’s not FICO, but now you can get your free credit scores with no trial periods from all 3 major credit bureaus. Tracking them regularly can alert you to significant changes in your reports.

NavyFed Credit Union has a limited-time promotion going on until Sunday, December 11th where if you do a balance transfer from an external financial institutions to your existing Navy Federal card, you’ll get a fixed 0% promo APR for 12 months with no balance transfer fee.

Membership eligibility for NavyFed is primarily restricted to military personnel including Army, Marine Corps, Navy and Air Force – including retirees and family members – but also include some civilian employees in Department of Defense. From the “existing” wording, it doesn’t appear that this applies to new card applications.

December 11th is Balance Transfer Day. It’s also your opportunity to save big! When you consolidate credit card balances from other financial institutions onto your existing Navy Federal card, the savings really add up. Get a 0% fixed promo APR* on balance transfers for 12 months. After that, your current standard variable purchase rate applies. And you’ll save even more because we don’t charge a balance transfer fee. You pay absolutely nothing—unheard of anywhere else!

Well, although it is indeed hard to find a no balance transfer fee 0% APR offer these days, it’s not “unheard of anywhere else”. Last month, the Chase Slate® also came out with 0% introductory APR on both balance transfers and purchases for 15 months with $0 balance transfer fee and $0 annual fee. All you have to do is initiate your balance transfer within 60 days of opening the account.

Either way, both are a good opportunities to lower the interest rate on your existing balances and accelerate that debt-free payoff.

“Disclaimer: This content is not provided or commissioned by the issuer. Opinions expressed here are author’s alone, not those of the issuer, and have not been reviewed, approved or otherwise endorsed by the issuer. This site may be compensated through the issuer’s Affiliate Program.  “The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.”

(Update 2: I’ve been notified that 12/22 may be the last day to apply for this $500 gift card offer from the Citi ThankYou Preferred card. The promo details remain as noted below, but I should point out that the Citi ThankYou Premier Card is also offering a bonus worth 50,000 points = $500 in gift cards. Learn more about the Premier card offer here.

Briefly, the Premier card allows you to get a 33% bonus when redeeming towards airfare. And it’s easy to use! Prices are the same as Expedia, and you can mix cash and points when redeeming. That makes 50k points with a Premier card worth $665 in airfare. The spending requirement for the Premier is lower as well. However, while the Premier has no annual fee the first year it is $125 for subsequent years, while for the Preferred card there is no annual fee period. Decisions, decisions.)

The Citi ThankYou Preferred Card has upped their game with a 50,000 ThankYou Point bonus broken down into two parts: You get 25,000 bonus ThankYou Points after $5,000 in purchases within 6 months of account opening, and you get an additional 25,000 bonus points after another $5,000 in purchases are made within the next 6 months after that. You do not need to qualify for the first 25,000 points to be eligible to earn the second 25,000 points. See below for details on how this is worth $500 in gift cards, airfare, or a check towards your student loan or mortgage. No annual fee.

This offer is both better and worse from their last 50,000 point promo back in June. The required spending is higher, although spread out over a much longer period. You basically have to spend $5k within 6 months twice, for an average of $833 a month. However, the last offer was for the Premier card with a $125 annual fee. This Preferred version has no annual fee.

ThankYou Point Redemption Options

Here’s a summary of your best values for ThankYou points, in case you don’t want to slog through all the many redemption options at ThankYou.com. In general, it takes 10,000 ThankYou (TY) points to redeem for a $100 gift card to retailers like Gap, Banana Republic, Barnes & Noble, Bath and Body Works, Bed Bath & Beyond, Cabelas, CVS Pharmacy, Kohl’s, Land’s End, LL Bean, Sears, Lowe’s, Home Depot, Staples, and Walmart. Bolded are my favorites. So with 50,000 TY points, you could get five $100 gift cards from different stores.

Want something closer to cash? For a check mailed to you, it costs 8,000 points for $50. For a statement credit, it’s 7,500 points for $50. A check mailed towards your mortgage payment or student loan (made out to your lender) costs 2,500 points for $25. This works out to 1 cents per point. Otherwise, it may be better to redeem your points for a Walmart gift card and then sell it for cash at a site like PlasticJungle.com that offers you 90 cents+ on the dollar. I just checked, and a $500 Walmart gift card would net you $455 in cash or $477.75 in Amazon gift certificates.

Now let’s look at the advertised airplane ticket option. A good question is whether a flight booked through the ThankYou Travel Center costs the same as through any other travel site like Expedia, Orbitz, etc. I have some old ThankYou points lying around, so I went to the redemption site and found that the prices are very closely aligned to what is offered at sites like Expedia.com. I did a few quick searches for random flights, and the cost of the flight matched up with the cost in points in a 100:1 ratio. For example, the exact same flight below that cost $360 including taxes and fees on Expedia would cost 36,000 TY points. ThankYou Travel Center screenshot:

Expedia.com screenshot:

Citi couldn’t stay way, given all the other $500 value offers still hanging around. I love that this is the new standard for a simple credit inquiry, and that basically my wife and I can score at least $2,000 in free money a year, exempt from taxes, with as little as two credit applications per year. (We actually do much better than this…) We just refinanced a mortgage and got a new homeowner’s insurance policy, so I know it’s not hurting us in other areas either.

Quick recap. 50,000 ThankYou Points = $500 in gift cards, ($500 Walmart Gift can be easily sold for $450+ online), $500 to pay down your student loan, $500 to pay down your mortgage balance, or $500 in airfare at the same rates as available at Expedia.com.

I like to keep track of the rotating categories of the 5% cash back cards out there, but one of the more disappointing areas was always Discover’s low purchase limits of only a few hundred bucks. From October 1st to December 31st, you can earn 5% cash back on up to $300 spent in the following categories: department stores, clothing stores, and restaurants. Not bad for gift-giving purchases, but Chase Freedom even had a commercial specifically about it, as their quarterly limits were $1,500.

Discover® More® Card
From October 1 to December 31, you can earn 5% cash back on up to $1,500 spent in the following categories:

• Online Shopping
• Department Stores

You must enroll online to activate the rewards each quarter. Discover card has a tiered cashback rate on other purchases (1% unlimited Cashback Bonus on purchases after your total annual purchases exceed $3000; purchases that are part of your first $3000 earn .25%.).

Essentially, for any quarter you can now earn $75 in cashback at 5% for certain categories, and usually one of them is useful like gas, restaurants, and department stores. These are also areas that you should be able to not spend more subconsciously just because it’s 5% cashback.

Update: This offer is no longer available.

The Capital One® Cash Rewards earns 1% cash back on all purchases, plus a 50% bonus on the cash back you earn every year. As long as your card is still open at the end of the year, that’s a total of 1.5% cash back. You can request the cash back as a credit on your account, or in the form of a check. In addition, it offers an additional $100 bonus if you spend $500 within the first 3 months of the account opening. The Capital One Cash Rewards has no annual fee and a 0% APR on purchases and balance transfers till June 2014. Added to Best Cash Back Rewards Credit Cards page.

Update: Also check out the Citi Forward® Card for College Students.

As I was reminded in my best cash back credit cards post, the Citi Forward card is a great rewards card for those who spend a lot on restaurants and at Amazon.com. That’s not everyone, but sure sounds like me in my 20s. Okay, okay… it sounds a lot like me now. What can I say, I still love food, friends, and Amazon Prime 2-day shipping. 🙂 I have this card saved as the default card on my Amazon.com account for the 5x points, choosing this card over the Amazon-branded credit card. Why?

The Citi Forward® Card earns 5 points for every $1 you spend on restaurants, book stores including Amazon.com, video rental stores, and movie theaters. On everything else, you get the plain vanilla 1 reward point for every $1 spent. The important part is that I have confirmed that all Amazon.com purchases count as a bookstore under their categorization system (books, textbooks, music, electronics, cool pumpkin-carving tools, etc).

The news here is that they just added a new 10,000 ThankYou point sign-up bonus, redeemable for $100 in gift cards for new cardholders to stores like Home Depot, Macy’s, Gap, etc. You must make $650 in purchases and sign up for paperless statements within the first 3 months. That is the best sign-up offer they have ever had for this card, as I got this card when it first came out.

Alternative for 10k points include a $100 Amazon.com gift card, or you can also get a check for $100 towards your student loan and/or mortgage. You also get another 100 points each month just for paying your bill on time and not going over your credit limit. No annual fee.

Citi Double Cash

• 2% cash back. Specifically 1% cash back when you buy + 1% cash back when you pay.
• No annual fee.

Bank of America Travel Rewards Card

• Up to 2.625% cash back when redeemed towards travel. This requires Platinum Honors status in the Bank of America Preferred Rewards program, i.e. $100,000 in assets held at Merrill Edge. If you are not a Preferred Rewards member, 1.5% cash back when redeemed towards travel.
• No annual fee.

Barlcaycard Arrival Plus

• Earns 2 miles per dollar spent. You can redeem 1 miles for $0.01 towards travel, and you also get a 5% rebate back in the points spent. This ends up being an effective 2.1% cash back towards travel.
• $89 annual fee. This annual fee means that you must spend $80,000 first to recoup the $89 annual fee vs. a 2% cash back card with no annual fee.
• However, the special factor of this card is the large upfront sign-up bonus which most cash back cards do not have. You can use 8,900 miles to pay for the annual fee.

Fidelity Visa

• 2% cash back. Rewards must be deposited into an eligible Fidelity account.
• No annual fee.

Alliant Credit Union Cashback Visa

• 2.5% cash back.
• $59 annual fee. This annual fee means that you must spend $11,800 first to recoup the $59 annual fee vs. a 2% cash back card with no annual fee.

Chase Freedom Unlimited (w/ Chase Sapphire Reserve)

• 1.5 Ultimate Rewards points per dollar spent. If you have the Chase Sapphire Reserve card, you can get 1.5 cents towards travel per 1 Ultimate Rewards points. If you earn via the Freedom Unlimited and redeem on the Sapphire Preferred, that results is 2.25 cents cash back towards travel.
• No annual fee. However, the Chase Sapphire Reserve does have a hefty annual fee, but I think this is a nice pairing worth mentioning if you already have the Sapphire Reserve.

If you’ve been sitting on some ThankYou points, you should know that Citi likes to put certain redemption options on “sale” from time to time. Right now, you can get a $50 Amazon.com gift certificate for 4,900 points.* That’s even better than the 1 cent per point you’d get on a student loan or mortgage check. Search for “Amazon” under the gift cards category. Here’s a link and a screenshot. It may go in and out of stock, so check back later if you don’t see it right away.

This is actually a great fit for me, as the primary way I earn ThankYou points these days is with the Citi Forward® Card, which earns 5 points for every $1 you spend on restaurants, book stores including Amazon.com, video rental stores, and movie theaters. I have confirmed that all Amazon.com purchases count as a bookstore under their categorization system.

I simply have this card as my default card on my Amazon.com account for the 5x points. You also get 1,000 points for signing up for paperless statements, and 100 points each month just for paying your bill on time and not going over your credit limit. No annual fee. Here are some other good ways to rack up ThankYou points:

• Citi ThankYou Preferred Card, 25,000 Point Bonus – Lower bonus, lower requirements
• Citi ThankYou Premier Card, 50,000 Point Bonus – Bigger bonus, higher requirements
• Citi Checking Account – Up to 40,000 ThankYou Point bonus – See link for details
• Citi mtvU Platinum Select Visa Card – similar to the Forward card with 5x back on bookstores, but targeted at college students. Get up to 2,000 free TY points a year just for faxing in a copy of your grades.

* I must note that Citi has apparently decided to vary their redemption ratios depending on what kind of credit card that you use to earn your ThankYou points with. I have a few cards linked to mine, all with no annual fee, so I don’t know what is fancy enough or not. If you see a different value, list your card in the comments. I don’t like this solution at all, if anything they should just offer less points if they want to promote one card over another. Don’t mess with the actual value of a point.