A reader writes:

Hi Gary:



I’ve been reading your blog for quite a
while now and find it highly enjoyable and informative.
Thanks!



However, I’ve never seen one question asked or answered. How frequently can you sign up for an airline or hotel credit card, get the signup bonus, cancel the credit card, then sign up again? I’ve signed up for the various airline and hotel credit cards, used them for a while, then canceled them since I never actually used them much. My credit rating is good enough that it can suffer another round of hard inquiries on my credit reports if I were to sign up for those credit cards again and would be worth the extra signup points.



I’m somewhat puzzles that this isn’t a more frequently asked… Perhaps I am missing something.

This is actually one of those ‘dirtly little secrets’ that isn’t discussed very much but which some people take advantage of tremendously. I hope that posting about it doesn’t facilitate closing of loopholes.

The ability to claim multiple credit card signup bonuses differs by issuer.

While there are some exceptions to this, where the issuers don’t track properly or experience some other snafu, USBank (which issues the Northwest Visa) will only give a signup bonus once. American Express will give a signup bonus for a particular card once, but if a new signup bonus is better than the original one, Amex will give you the DIFFERENCE when signing up for a new card (e.g. you signed up for a Hilton Amex @ 7500 bonus points, cancelled, and the new offer is 10k bonus points you’ll get 2500).

Citibank, which issues the Hilton Visa and American Airlines Mastercard, allows multiple signup bonuses — though I don’t know how frequently. What’s nice is that the Hilton Visa comes with no fee and there are often no fee promos with the American cards that usually delay the fee for six months, long after the bonus has posted.

BankOne is by far the best and easiest for this. They issue the United Visa, British Airways Visa, Southwest Visa, Priority Club Visa, and Marriott Visa.

The Priority Club card is no-fee. The Marriott cards are no-fee the first year. And there are often first year fee waived promos with the United card. What’s more, the bonus points usually post with the first statement and the fee with the second, so if you cancel after the points post you may not even deal with a fee (and you could cancel even after the fee shows up and still not owe the fee provided you deal with the issue with customer service).

But there’s even a better way of dealing with the card than cancelling — BankOne allows you to combine credit lines from multiple cards, so just add the credit from the card you want to cancel into another credit line and zero out the card. That’ll prevent a fee from being assessed, in my experience. Furthermore, I’ve heard that you can apply for each BankOne card every three months though I haven’t tried it that frequently.

Bank of America I’m less familiar with. They issue the USAirways Visa, America West Visa, and Alaska Visa. I don’t know whether they’ll give you multiple signup bonuses.

In all cases you can certainly get different TYPES of cards (e.g. personal and business cards, as we all have businesses… “Your Name & Associates”)

Two credit line clarifications are in order.

The reason that it’s better to keep an account open, especially if it has no fee, is that the more credit you have that goes unused, the lower your utilization percentage, the higher your credit score (in general). The logic is that you demonstrate you can have credit without maxing it out, and thus are a responsible user.

Second, every time you apply for credit, a “hard inquiry” shows up on your credit report. If you apply for too much credit in a short period of time, your credit score falls temporarily. The fear is that you might be prepaing to go on a credit binge. I believe that hard inquiries appear for six months, so if you apply for a bunch of cards your credit score may fall for six months and then recover.