"Abusing" Credit Card Sign-up offers

[drcam]

I have wondered how it is theoretically possible to "abuse" promotions from credit card companies to gain a large number of points and fly from them.

At the beginning of the year, I had basically a zero points balance.

I received 30000 bonus miles for signing up to Amex QFF Premium and another 10000 for ANZ QFF Visa Card.

I work in Melbourne and my family live in NSW. I make about 5-6 return trips there a year. I am also going to Tokyo for 2 weeks this August.

As of August 2008, if I don't earn any extra points until then, I will already have a total of a potential 70,000 after transfers.

There is another offer with Earth+ (15000 points) and I am considering taking it up.

I have a Commonwealth Bank Visa Card and a Citibank BP card as well, I intend to cancel both this year - before I next get charged for fees. I also plan to upgrade to the Amex Ultimate Card when another of these offers come into being.

Of course, nothing I am doing is really against the rules. However, I am sure that these credit card companies impose a limit of these. I assume that cycling through credit cards is not possible because an offer from each bank/company can only be taken up once.

And one day I will burn all these points on a J class trip to Hong Kong.
Your few cents on this?

 

[opusman]

Lots of people do it - there's nothing illegal about it and few would argue it's immoral. Having a lot of credit applications show up on your credit file can cause problems if you ever need to apply for a home loan but other than that - if the banks are offering, go for it.

 

[oz_mark]

Arguably the credit card market in Australia is saturated, so the only way a bank can grow its cards on issue is through churn - hence the plethora of signup offers as an incentive to do just that.

Nothing illegal about doing it, as it really is just keeping within their marketing strategies. But you may run into problems with your credit history if you do it to much.

As for Amex they have in the past offered me points to change cards!

 

[Harpoon]

As I'm likely to be applying tor a mortgage sometime in the near future, I've made the decision not to take up these credit card offers, despite the lure of QFF points.

I have no evidence to suggest that it would impact my ability to get the home loan of my choice, but common sense tells me it's better to be on the safe side. So I'll be sticking with my one QFF credit card until then at least.

 

[Alanslegal]

I'd prefer to call it as 'making the most of' credit card sign up offers

 

[simongr]

I agree that I don't see any abuse here. The only problem I see is "the long game" - as more people do this or the CC companies have to up the incentives this will potentially lead to a further dilution of the value of FF points.

 

[oz_mark]

As I'm likely to be applying tor a mortgage sometime in the near future, I've made the decision not to take up these credit card offers, despite the lure of QFF points.

I have no evidence to suggest that it would impact my ability to get the home loan of my choice, but common sense tells me it's better to be on the safe side. So I'll be sticking with my one QFF credit card until then at least.

Your credit report forms part of the overall assessment of your credit risk. Different providers put different emphasis on what is in there, but I would guess that for the most part they are looking for any evidence you have failed to pay debts as they fall due. The number of CC appilcations is probably a lesser concern, but I do know that at least some credit providers consider the number of applications for credit.

 

[Harpoon]

Your credit report forms part of the overall assessment of your credit risk. Different providers put different emphasis on what is in there, but I would guess that for the most part they are looking for any evidence you have failed to pay debts as they fall due. The number of CC appilcations is probably a lesser concern, but I do know that at least some credit providers consider the number of applications for credit.

Thank's for the tip.

I guess my thinking is, anything I can do to wipe any doubt out of a bank managers mind, then it's worth doing - even if it's a very minor thing like how many CC's one has applied for in the past.

 

[Nutcase]

Thank's for the tip.

I guess my thinking is, anything I can do to wipe any doubt out of a bank managers mind, then it's worth doing - even if it's a very minor thing like how many CC's one has applied for in the past.

Unfortunately, the amount of applications (whether or not you actually were approved is another story) can be a negative influence on your credit file. Financial institutions are very wary about people with multiple applications on file.

If you apply for a mortgage, its actually not so bad as they ask for your bank statements. This allows them to actually see how you are managing your debt. EG - If you are "Bpaying" credit cards, these will show up on your bank statement as well as your credit file which they can cross reference and can determine if you have lied on your application.

Once you have the mortgage, you will be seen as much more credit worthy and should have no problems with getting credit.

With applying for credit cards, given the volume of applications, the scoring system is more automated and rigid and can knock you out immediately if you have too many applications. If you do get past the automatic decline and someone reviews your file manually and it reads.

Application - American Express, Westapac Earth, Citibank, Diners Club, ANZ Visa -

They will assume that you are hunting around for points deals and may knock you out of contention as you will not be a very valuable customer for them as you will likely "churn" to the next offer.

Advice - Get your housing loan first, then go hunting for points later - The offers will always be there and you will be more likely to be approved.

 

[bambbbam2]

Once you have the mortgage, you will be seen as much more credit worthy and should have no problems with getting credit.

Indeed, within a few weeks of getting a Westpac home loan, I received a pre-approved Citibank Gold Card. I had been knocked back from Citi before..

 

[JohnK]

If you apply for a mortgage, its actually not so bad as they ask for your bank statements. This allows them to actually see how you are managing your debt. EG - If you are "Bpaying" credit cards, these will show up on your bank statement as well as your credit file which they can cross reference and can determine if you have lied on your application.

Is this a recent requirement? I have never been asked for bank statements when applying for a loan but the last loan application was a good few years ago.

 

[NM]

Is this a recent requirement? I have never been asked for bank statements when applying for a loan but the last loan application was a good few years ago.

I guess it depends from which financial institution you are applying for credit.

 

[Alanslegal]

And it depends if you go for a Lo-Doc loan (low document) which generally does not require bank statements.

But yes I've been asked for bank statements and when they see Bpay xyz Credit Card on the statement and my application said I dont own xyz CC they got a bit iffy... LOL

But made up some good excuse ie that was dad's CC & they said, Ok, all approved.

 

[JohnK]

But yes I've been asked for bank statements and when they see Bpay xyz Credit Card on the statement and my application said I dont own xyz CC they got a bit iffy... LOL

This is where passbook accounts are very handy as the transaction description does not provide much detail.

 

[oz_mark]

This is where passbook accounts are very handy as the transaction description does not provide much detail.

Passbooks??? How 20th century

 

[Nutcase]

Its actually not a bad idea if you are thinking of applying for a home loan to have a separate account for bill payments for 3 months. It may be a bit of a pain, but the bank doesn't ask as many questions and it makes you look squeaky clean. If they see recurring Bpay payments to other institutions, they may ask for statements for these accounts and this may mean giving up your pride and joy Citibank Gold free for life card or worse still, your beloved American express card if your deal is a bit skinny.

Having just been through this exercise, I can attest to how many questions the bank asked and how many statements they required. Luckily, I have 3 Macquarie Cash Trust Accounts - 1 of them expressly for bills. This is the account that they did not see. The others I was happy to supply.

As the credit market tightens, banks are going to get a lot tougher on lending. There will be a shift to more "prime" customers. The better you look in their eye, the easier it will be to get finance.

 

[JohnK]

Passbooks??? How 20th century

No need to change as long as the bank keeps issuing new passbooks.

Its actually not a bad idea if you are thinking of applying for a home loan to have a separate account for bill payments for 3 months.

Is there anything wrong with having a transaction account that is used for money transfers and BPAY but is never revealed to anyone? The account would not have a balance once the transaction is complete.

 

[kyle]

When I applied for my mortgage, my broker suggested that I get rid of the Citibank free for life. But then most places only require a 'verbal yes' to cancel the cards.

Its actually not a bad idea if you are thinking of applying for a home loan to have a separate account for bill payments for 3 months. It may be a bit of a pain, but the bank doesn't ask as many questions and it makes you look squeaky clean. If they see recurring Bpay payments to other institutions, they may ask for statements for these accounts and this may mean giving up your pride and joy Citibank Gold free for life card or worse still, your beloved American express card if your deal is a bit skinny.

Having just been through this exercise, I can attest to how many questions the bank asked and how many statements they required. Luckily, I have 3 Macquarie Cash Trust Accounts - 1 of them expressly for bills. This is the account that they did not see. The others I was happy to supply.

As the credit market tightens, banks are going to get a lot tougher on lending. There will be a shift to more "prime" customers. The better you look in their eye, the easier it will be to get finance.

 

[beardoc]

If they see recurring Bpay payments to other institutions, they may ask for statements for these accounts and this may mean giving up your pride and joy Citibank Gold free for life card or worse still, your beloved American express card if your deal is a bit skinny.

Having just been through this exercise, I can attest to how many questions the bank asked and how many statements they required. Luckily, I have 3 Macquarie Cash Trust Accounts - 1 of them expressly for bills. This is the account that they did not see. The others I was happy to supply.

The only problem I can see is that if you do run up expenses in a secondary account you are going to have transfer amounts of money across from your primary salary account into the secondary account - the bank will see your money continually being transferred to another account. If youi set up your salary such that a proportion of it goes into the other account, the amount of salary that the bank can see is severely reduced and may not match the amount of salary you declared on your application form.

Did this present a problem at all for you?

 

[Nutcase]

The only problem I can see is that if you do run up expenses in a secondary account you are going to have transfer amounts of money across from your primary salary account into the secondary account - the bank will see your money continually being transferred to another account. If youi set up your salary such that a proportion of it goes into the other account, the amount of salary that the bank can see is severely reduced and may not match the amount of salary you declared on your application form.

Did this present a problem at all for you?

Good Point.

The way I worked it was.

Full Salary deposited to NAB Account.

2 Bpay payments made to Macquarie CMT #1 and #2. Narrative on statement reads whatever you want it to (be creative) leaving "pocket money" in NAB account.

CMT #1 is for paying bills
CMT #2 is Savings /Investments.

(CMT is Cash Management Trust. Like an ING account but with full functionality)

When you apply for the loan, all you have to do is show the NAB account (which is where your salary is paid). This account is only used for cash withdrawals. You will also show them CMT #2. Most of the time this is all you will need to show.

Alternatively open a OnceOnline Bill credit account. OnceOnline

You can Bpay all your credit card bills from here and pay the account off from your savings account as a regular direct credit payment. This can also have which ever Narrative that you want on it. The other advantage is that you can get up to 45 days interest free on this account.