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Today, Roger Ma and his wife share the same checking, savings and credit card accounts. But before they got married, they took advantage of generous welcome bonuses by applying for credit cards separately.
"When we were planning our wedding, we had to put a deposit down for the venue, so we decided to open three credit cards to use for the deposit," says Ma, a certified financial planner at lifelaidout® and author of "Work Your Money, Not Your Life."
By opening a few different credit cards and easily reaching the minimum spend requirements thanks to their big wedding expenses, the newlyweds were able to use the sign-up bonus offers to subsidize the cost of their European honeymoon.
But Ma doesn't recommend everyone sign up for new credit cards to earn welcome bonus rewards. It can be a risky endeavor if you don't make careful plans.
Below, Select spoke to Ma about what he learned from opening multiple credit cards and why he doesn't recommend it for everyone.
Generally, opening up a new credit card with a generous welcome bonus requires you to spend a certain amount of money on the card within the first couple of months of opening the account.
While wedding planning, Ma opened a Starwood Preferred Guest® American Express Luxury Card. It came with the chance to earn 25,000 Starwood points in his first six months of having the card (10,000 points after his first purchase, plus 15,000 points after spending $5,000 within six months). The card has since been folded into the Marriott Bonvoy Brilliant® American Express® Card. Terms apply.
Ma and his wife also both opened a Chase Sapphire Preferred® Card individually to help cover the costs. At the time, Ma estimates that the welcome bonus on the Preferred Card was 50,000 points after spending $2,000 to $3,000 after three months. Today, the card offers 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Ultimate Rewards®.
Spending thousands of dollars in a three-month period can be a lot for the average consumer, but paying for a wedding presented Ma with a unique opportunity. He already had a lot of additional expenses and by opening new credit cards, he could earn travel rewards that would significantly decrease the cost of the honeymoon.
But you really have to plan ahead. You need to apply for the credit card, be approved and have the card handy to charge the expenses as they arise. Not to mention it's important to have a pay-off plan as well.
"In one transaction, we were able to meet the minimum spend required for each card," Ma says of paying for the wedding venue. "At the same time, we earned around 180,000 in travel points, which we used to pay for a large portion of our honeymoon in Italy."
For those who pay off their credit card in full each month and have good credit, paying for a wedding — or any other large expense — can be a great way to quickly meet the minimum spend on a credit card that offers a welcome bonus.
But Ma doesn't recommend it for everyone. If the spend requirement is higher than your normal living expenses, it can be difficult to earn the bonus on one credit card (let alone many credit cards).
Ma and his fiancé were able to pay off their balance in full, and he emphasizes that's crucial when opening a card to take advantage of a welcome bonus.
"If someone was thinking about doing this strategy, I would suggest they only proceed if they could pay off their balance in full each month," he says. "Otherwise, it's not really a bonus when you pay 20% interest to get the points!"
Not being able to pay your monthly balance in full is the biggest mistake you can make on a rewards credit card. The high interest rates that credit cards charge can quickly eat away at any cash back, points or miles you earn through a welcome bonus. And when you carry a balance month to month, you end up paying more than you earned — making your rewards not worthwhile.
"In the past, I've certainly felt this pressure to make sure I spend the minimum required to get the sign-on bonus, and sometimes that was stressful," Ma says.
And as lenders tighten requirements for new borrowers during this time, it's not as easy to get a credit card right now. If you are struggling to get approved for new credit, Ma recommends shifting your focus.
"Focus on getting the fundamentals right before trying to get any fancy credit cards or scoring free travel rewards," he says.
Start out with a low or no-fee credit card, sign up for autopay to make sure you pay your bills on time and keep the amount of credit you do use low. These are all steps you can take that will improve your credit score and prove to the banks that you are responsible with credit.