Why It Makes Sense To Apply For Credit Cards Sooner Than Later

Filed Under: Credit Cards

I’ve been making a point of not actively promoting credit cards right now (especially not ones where the primary benefit is lounge access, at a time where most people shouldn’t be flying), despite that being a major source of income for the blog.

However, there have been several questions about “what to do with cards” in the current environment, and I do have some general thoughts to share for those considering applying for a card in the near future.

If you were going to apply for a new credit card anyway, do so soon (like this week)

If you’re going to apply for credit cards soon, personally I think it makes sense to act sooner rather than later in applying for cards. I don’t have any inside knowledge here, though in general my expectations would be that we’ll see at least one of the following with one or more card issuers as we approach Q2:

  • We might see less generous welcome bonuses on some cards
  • We might see some card issuers stop accepting applications for some cards altogether

Why? Because at this point we’re essentially in limbo, and nobody actually knows what’s going on anymore. As it impacts credit card companies:

  • The stocks of many card issuers have plummeted in the past couple of weeks (though some are rebounding a bit today)
  • The initial response for many companies right now is to cut all unnecessary spending, and I imagine that could in some cases include new member acquisition bonuses
  • Many credit card issuers are giving people the opportunity to delay making payments, and I imagine in some cases they’re suddenly going to see a lot more people financing purchases, which may throw off some projections
  • We may see banks reduce unused lines of credit, as a way of limiting their exposure
  • The second quarter starts next week, and I imagine there will be shifts in budgets and strategies for at least some card issuers

Essentially what it comes down to is that the current offers and bonuses all reflect decisions made months ago, and the start of a new quarter is a good time to change direction, especially in a time of uncertainty.

For many card issuers, the focus right now may be on serving existing clients as we see what’s going to happen, and then deciding on a plan from there.

Isn’t a bad economy (sort of) good for card issuers?

One way that credit card issuers make money is through financing charges, so in some ways card issuers do pretty well when the economy is weak.

However, at this point I wouldn’t even say the economy is bad, per se, but rather the economy is just paused altogether. We’re all sitting here waiting to see what happens. It’s that short-term uncertainty that makes me think we may see some changes soon.

What cards should you be considering?

I’m not going to make this a post about “42 different cards you should consider getting now,” and for that matter I’m not even saying that anyone should get a card right now.

Rather I’ll just link to some past posts if you’re one of those people who was considering applying for a card soon, and suggest that if you were going to do so, it could make sense to apply sooner rather than later.

Here are a few routes to take:

Bottom line

If you are considering getting a credit card, in general I’d recommend doing so sooner rather than later. Right now we have some truly great welcome bonuses, and I wouldn’t be surprised to see them get worse in the second quarter due to the uncertainty we’re seeing right now.

The whole world is struggling to make sense of the current situation and companies are cutting costs wherever they can, and I expect that will extend to acquiring new customers.

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  1. I don’t think the reason banks’ stocks are down has much to do with the state of credit cards. The Fed just slashed rates leading to lower lending income.

  2. @ Daniel — Sorry if I wasn’t clear, I’m not suggesting that’s the reason the stocks are down. My point was primarily that this is sending banks into panic mode.

  3. If the things you think will happen now, happened back in 2008/9 (I wasn’t paying attention to CC’s then), these are good guesses.

    If they didn’t happen then, they’re just guesses.

  4. I’m not so concerned about getting more credit cards right now or meeting spend thresholds. That’s insane. I’m keeping my credit score as high as I possibly can. Poor advice to go chasing credit cards right now for near-worthless points. Only people who should even consider it are those with high interest debt if they can get approved for a long term 0 interest offer. Most point cards offer no such thing.

  5. I’m not signing up for any new cards because I don’t see myself being able to hit the spend threshold for a sign-up bonus when I’m sheltering in place. My spending has gone way down, as I suspect it has for most people. (And playing the manufactured spend game has never appealed to me.)

  6. Ehh I disagree. If 2008 taught us anything, it is that post-crash, the banks needed creditworthy customers, so they offered crazy bonuses. There aren’t any super great bonuses at the moment, so it is better to wait. My guess is that 5/24 might even get dropped in the next year but who knows.

  7. Done with any credit cards for the foreseeable future.

    This is a debt problem, and people taking on more debt should be the LAST thing they do.

    Would love to see what this country would look like with no CC and people actually had to have the money before they consumed something!!

  8. @ Ben (Lucky), I’d love to see an article about what card issuers are going to do with cards that have high annual fees that assume very frequent travel. For example, CSR, Amex Plat, Hilton Aspire, United Club Card etc. Might the cc companies offer a partial rebate of fees since it looks like very few of these benefits will be used for at least 3 months this year, if not longer?

  9. @Ryan, if you’re that worried about your credit score, you shouldn’t have credit. With rare exception, that’s indicative that you want to ability to attain more debt.

    @August: 100%!
    I love my points and miles, but frankly I think the whole economy would thrive more without CCs, and my income would go up beyond what I get in value from those points.

  10. Lucky, can’t you write about the impact the previous crisis of 2008 had on the aviation, hotel, miles and travel industry, and try to make an educated guess of the outcome of the current one, which is having an even bigger impact on this market?
    Your blog started the same year of the subprime crisis, you may recall the promotions that occurred (stay two nights at any cheap hotel of a chain, receive a free night on any hotel; double miles and qualifying miles for flying…) and how everything changed (airlines consolidating, credit card SUB explosion)…

  11. I think that you’re right that welcome bonuses will recede for the immediate future. There will be an increased demand for credit in the foreseeable future (people are out of work but still need food and to stay on top of bills if they can). There will be less of a need to incentivize people to apply for credit and the people who are applying for credit right now will tend to be riskier (and thus more expensive long term) than usual. I don’t see that changing until the economy gets back on its feet.

    Of course the counterargument is that because there is a bunch of new demand for credit, lenders will be trying to compete for the new customers who will likely be looking to carry a balance. So…

  12. I don’t envision Chase reigning in bonuses. They may be pretty cautious about approvals, but as a former employee I know they look at challengingly times as an opportunity to leverage their financial strength and gain share. Can’t speak to the other issuers.

  13. I think you are mistaken. The economy is toast for a while. Assume that people go back to work in a month, do you really think the economy will go back to normal? No, people missed paychecks and need to save money and pay back debts they are late on.

    Also companies are always faster at laying people off than they are to rehire. Do you think everyone will go back to travel, eating out, etc. More than a few will be very cautious for months, if not longer, especially in higher risk categories. I think you are way too young to lived through this stuff. In 08 what were you, 18?

    And if things do start to improve then companies will be likely to increase bonuses to gain new customers. Suggesting now is a good time is wrong IMO.

  14. I have a 0% credit card Iused it to the max, then early last year I started paying it off I finished paying 2 weeks ago now the 0% has finished end of march I am so pleased I don’t owe anything on it only thing is now we have this dreaded Corona viris I was a contractor and have lost my job so my timimg was good to pay it off I wouldn’t get another credit card with awards or 0%. I think it makes it too tempting to spend I say pay for things with your money if you don’t have the money go without or save for it.

  15. @Carlos – in 2007 at the beginning of the downturn, Hyatt had an amazing offer. Every 5 nights (not stays, but actual nights) at any property got you a certificate for a free night at a Category 1-4 hotel. The promotion started in the fall and ended right before Christmas.

    I was traveling to Chicago for work each week and over the course of the promotion I earned 8 nights. I started looking where to go. Hyatt Regency Bali was calling my name. It was a great trip. I went in late January, the resort was quiet, not busy at all. And due to my paid nights I was top elite tier so had the private pool area and the lounge which was a large pagoda over the water with complimentary breakfast and afternoon cocktails and nibbles.

    Best overall trip ever. I cashed in 130K miles for a first class round trip flight from DFW > NRT > DSP. That will never happen again. Best flight ever was first on Air France to Rome via CDG. Two of us in first. I never felt so pampered and the champagne flowed so well.

  16. Hi, I don’t think it’s in important to get anymore credit cards. It will be hard inquiry and it will knock your credit score down, especially if you have plans soon. This new FICO 10
    And 10T is looking at your lat 24 months of history that’s something to think about, if your scores are strong then your in a good place.

  17. @ Carlos

    If Lucky could predict the outcome, he wouldn’t need to write a blog to make a living!

  18. @ Carlos @PlanMoreTrips — That will all come, but likely not in the next 90 days. There’s a distinction between soon and eventually, and we’re likely to see things contract before they expand.

  19. I agree with @PlanMoreTrips. The last few months before COVID-19 witnessed various card issuers (Citi as the most prominent one, I guess) withdrawing from the premium market and cutting benefits. The year witnessed wholesale benefit cuts to everyone (with exception of Amex early this year). This suggests an overly saturated market.

    Different from @Sam, though, I don’t think credit cards would be how most people bridge the gap. The interest is too high. It’s definitely *not* premium credit cards.

    As such, I think we should wait a few months.

  20. Lucky – your honesty, openness, and coverage of topics your readers care about in these times without trying to cram in as many referral links as possible is why, when I do apply for cards, I will always use your links. Keep up the good work.

  21. @ john
    In the points and miles game, getting new credit cards is not the same as ‘acquiring more debt’. In fact, if you carry a balance on any card, that is if you actually acquire debt through credit cards, then you should not be playing this game at all.

  22. @johnnyBoy, getting a credit card for points or miles is acquiring more debt. Some people (not all by any means) pay it off. The future is especially uncertain these days. There are times to be conservative. I think this is one of ’em.

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