Rejected By Capital One! Which Cash Back Card To Get?

I just recently got this email from a reader

I apologize in advance for this long post. I’ll try to keep it as brief as possible. I’d like to get the above- mentioned card. I don’t have a debt problem, nor am I carrying any balances. I have always paid my balances off early. I have no current outstanding loans. I own my home outright – I took out a 30 yr. mortgage and paid it off completely in 15 years with no missed or late payments. I have never declared bankruptcy. In Nov. 2009 I applied for the Capital One card and was turned down. Reasons given: 1) income insufficient for amount of credit requested (I didn’t request any given amount of credit) 2) too many revolving accounts 3) revolving account balances are too low 4) new account balances are too low.

It’s true that I have a lot of credit cards – 15 in all, which I realize is way too many. I want to reduce that number greatly. I also have a couple of lines of credit and 2 charge accounts at department stores. I’ve never used them. In total, I could POTENTIALLY rack up over $90,000 in debt if I worked at it. I have a low income, so I realize that I could never support a debt load like that.

So my question is, how do I make myself attractive to Capital One for their cash rewards card? Do they see the potential for my getting deeply into debt the biggest problem? Or is the fact that I never carry a balance the issue? I can understand that if they’re giving someone cash back on purchases, would they want them to always carry a balance so they can make their money back on the interest? I hesitate to just start closing accounts. Things that I’ve heard reflect badly on your credit report are closing a lot of accounts quickly, closing older established accounts, or asking to have your credit limits lowered.

I’m tired of all the points and mileage rewards cards and want to make the Capital One card my “go to” card for everything. I just don’t want to apply again and not get approved and have to wait another six months before applying again. Thanks for reading.

So I asked him a few more questions..

don’t mind me asking how much is your income and how much do you spend on your card?

and can you list the cards you have…perhaps one of them is actually really good?

cos to be honest, cap one does not have the best cash back cards!

This was his reply:

Thanks for taking the time to give me advice. My income is about $34,000/yr., but I’m single with no dependents. I paid off my 30 yr. Mortgage completely in 15 years and have no other debt. I got my credit score the other day from CreditKarma.com and it was 788, although I’ve heard that might not be accurate.

My current cards are:

Citi Business Card – Thank You Network – 1 point/dollar spent. I’ve used this as my primary card and charged about $4,000 to it last year
Chase United Mileage Plus – 1 mile/2 dollars spent
Citi Aadvantage – 1 mile/2 dollars spent
American Express Delta Skymiles – 1 mile/2 dollars spent
US Bank Flex Perks – 1 point/dollar spent
USAA Platinum – no rewards program

The following cards I’ve either never used or only used once:

Chase Priority Club – 1 point/dollar spent
Bank of America World Points – 1 point/dollar spent
US Bank REI – 1 point/dollar spent
Chase United Mileage Plus (same rewards as above, basically a duplicate card – different acct. #)
Chase Slate – no rewards program
PayPal Plus – not sure if there’s a reward program
Wells Fargo – 1 point/dollar spent

I also have two charge cards for JC Penney and Sears that I’ve never used, and have a $5,000 line of credit with US Bank.
I want a pure cash back card now because I’m tired of points and airline miles and having my rewards limited to what is offered. Also I’ve found that points rewards usually work out to about just 1% anyway and I might be able to do better with a cash back card. Also, the Capital One card doesn’t charge a foreign exchange fee, and I travel overseas frequently. Do you think that if I closed my seldom used accounts it will damage my credit score?
Any suggestions would be appreciated. Thanks again!

Dave

Answer – David – firstly here are a couple of observations.

1. You do have a lot of credit cards – considering how much you spend.

2. You have quite a few frequent flier credit cards which you are actually paying fees on and are not using!

3. You must have recently applied for a new credit card because you have the Chase Slate card (which is relatively new)

4. Capital One does not like your absolute level of credit lines.

Here’s what I think you should do – Rather than getting a new card right away, since you got turned down recently, I would actually call Chase and ask to convert your Slate card into a Chase Freedom(Sm) Visa&#174 card (which is a cash back credit card). Given the amount you spend, this would be an appropriate card. You can earn cash back and use your points to book airline tickets on their travel portal as well (without the headaches of frequent flier points).

Secondly, over the course of the next year, you should slowly cancel the frequent flier cards you have because you should not be paying fees on cards that you do not use. The Citi AAdvantage, Chase United, Amex Delta, and your US Bank Flexperks.

Thirdly, after about six months of so (after you have got rid of your airline credit cards, you could then apply for another cash back credit card. I would suggest that you get the PenFed, Visa Platinum Gas/Cash Back Rewards Card because you can earn extra rebates on gasoline (5%) and supermarket (2%). But more importantly, unlike other cards, there is also no foreign transaction fees with this card. You do have to pay a one-time $20 fee to join PenFed if you are not connected to the military, but the small fee is probably worth it. I would only apply for this card after you have taken step one and step two.