An App-O-Rama Primer: How to Profit from Credit Card Offers

An App-O-Rama (also known as an “AoR,” or stoozing if you’re in the UK), simply put, is when you apply for many credit cards at once to take advantage of their signup bonuses and introductory balance transfer offers. If you have good credit, you can easily make thousands of dollars from this technique, with very little real effort.

Today, I’ll step through the process at a high-level. Please note that this strategy is definitely not for everyone. If you fit any of the following profiles, I would heartily recommend not pursuing this strategy:

Who Should NOT Do an App-o-Rama

• Anyone who is not fiscally responsible — applying for a lot of credit cards and balance transfers means taking on A LOT of new debt. Anyone who cannot be trusted to safely invest this borrowed money should just stop reading here.
• Anyone who is not meticulous with recordkeeping — the penalties from late or missing credit card payments would wipe out any potential benefit from this strategy.
• Anyone who needs a new loan soon — an App-o-Rama will trash your credit score in the short-term, so if you will be in the market for a new mortgage, car loan, etc. in the near future, you should hold off on your app-o-rama.

Step 1. Preparation

If you truly want to maximize your profits, you’ll need to do some prep work beforehand to max out your credit score and make yourself as attractive as possible to credit card companies so they will approve you for many cards with high credit limits.

There are a couple of easy ways that you can help your score out. First, try to avoid applying for any new lines of credit for at least six months to a year before starting your app-o-rama. Each time you apply for credit, your credit score takes a slight hit. Ideally, you would minimize the number of credit inquiries you’ve had within the last year, since that is roughly the time frame in which inquiries affect your credit score. Applying for new credit is also bad since opening a new line of credit will decrease the average age of your credit accounts, which is another factor that weighs in your score.

It would also be wise to pay down any existing credit lines that you have to manageable amounts, as the percentage of available credit you utilize is another important factor in your credit score. You will definitely want to stay below 50% utilization of credit, but the lower, the better.

As you’re putting your credit profile in order, start doing research into the credit card offers that you intend to apply for. An admittedly biased source (me) thinks that this blog is a great resource to use to find worthy credit card offers. In particular, check out the credit card offers database.  You should pick not only cards that you intend to use long-term as everyday cards, but you should also single out cards that offer good signup bonuses or introductory balance transfer offers. Be especially wary, however, of balance transfer fees associated with introductory rates–even if a credit card offers a 0% intro rate, it may not be worthwhile to take if it comes with an uncapped 3% balance transfer fee, since it may be difficult to find an investment that would recoup that cost.

Step 2. The Application Process

Once you’re ready to start, the application process itself should be fairly straightforward. Since there is a small lag time until an inquiry shows up on your credit report, you’ll ideally want to apply for as many cards in as short a period of time as is reasonable. Obviously, if a bank can see that you’ve already applied for ten credit cards very recently, they’re far less likely to approve you for your eleventh. For this reason, it’s probably best to apply for cards all on the same day. It’s also preferable that you apply for your most desired cards first, since the likelihood of rejection will increase as you go along.

Step 3. Profit!

Your work is not all done after you’ve been approved for a bunch of new cards.
For one thing, there’s the record-keeping. If you applied for a number of balance transfers, you’re going to have to be meticulous in tracking when to pay them, how much to pay, and when their intro period ends. If you can’t do this properly, it will end up costing you. Set up automatic payments, track it in Excel, use online reminders, or use an aggregator like yodlee–track it however you like, just make sure everything gets paid on time.

Also, unless the balance transfer offer comes with an accompanying low-interest rate offer on purchases, you’ll want to put the card away and make sure it never gets used until the balance is paid off. A standard clause in credit card terms and conditions trips up many newbies. That clause states that any payments will go towards the lowest interest rate debt first. This means that if the intro APR is 0%, and the standard APR is 20%, if you mistakenly purchase something on your card, you’re stuck paying 20% on that purchase until the whole balance is paid off.

Last but not least, you will need to invest all of your newfound balance transfer money. I personally would advise against putting this money into anything that isn’t risk-free and liquid. Right now, the FDIC-insured E-loan savings account paying 5.5% fits the bill nicely.

In Summation

This game has reached very widespread popularity in recent times, because of the ease in which signup bonuses and intro offers can be turned into profit. I suspect that is the reason that we’re seeing several card issuers tighten up the terms of their introductory offers. The times of easy money aren’t likely to last forever, so it pays to take advantage while you can.