Rejected! A Story of Vikings, Spreadsheets, and Credit Scores

For the past five years, I’ve used a Citi-branded rewards card as my primary credit card.  We’ve had a good relationship; I earned Thank You points and redeemed them for flights at a cash-back-equivalent rate of 1%.  Pretty standard.

Last week, I login and try to use my points to buy flights to San Diego for the Holiday Bowl.  Per my research and 1% historical precedence, I should have more than enough.  Wrong.  At some point Citi has devalued their Thank You points, so that where 100 points used to be worth 1 cent, those same 100 points are now only worth approximately 0.71 cents, depending on how you choose to redeem them.

Not cool, I say.  No Thank You, I say.

At this point I am reminded of the Capital One Venture card, the one with the annoying viking commercials that are always on.  Annoying, but apparently effective.   After some online research, I verify the Venture card pays 2% cash back on all purchases, and pays a $100 bonus after spending $1000 over the first three months.  Compared to other rewards cards, it was the most compelling for my level of spending, but it comes with a $59 annual fee (waived for the first year).

So like any good math nerd I created a spreadsheet to compare my various options.  The credit cards I chose to compare were:

1. My current Citi card.  The path of least resistance would be to do nothing.
2. An open but long-dormant Chase card.  It hasn’t been used for years but I never closed the account.  I could activate it tomorrow and go to town earning 1%.
3. The Capital One VentureOne card.  Call it Venture-lite.  Cardholders earn 1.25% cash back, but pay no annual fee and get no bonus.
4. The Capital One Venture card.

I also looked at the past three years of statements from my Citi card to determine my average monthly spending, which turned out to be $865.  I took the numbers out to three years, at which point I could re-evaluate, or maybe get a Centurion card if I move enough shoes.

I learned that the Venture card would earn me almost $400 extra dollars over my Citi card over the course of three years, even after subtracting its annual fee.

So I apply for the Capital One Venture card, and am promptly declined.  I was really surprised, for a couple reasons:

1. That Capital One would spend that much money on advertising, only to reject applicants.
2. That I was somehow not considered a good credit risk.  Capital One says the Venture card is for people with excellent credit, which I have (at least for now), so it was surprising.  They said they would send a letter of explanation via snail mail so I’m eager to see what it says.

The rejection hurt, especially after all my research and homework.  But after the initial shock wore off, I devised a theory.  Do you think credit card companies look at certain applicants as having “too good” of credit, realize these people will never carry a balance, and reject them?  These are for-profit businesses, and they have every right to refuse service to customers they can’t make money off of, right?

For a little more background, I’ve been a Capital One cardholder for business and personal accounts for almost 10 years.  Over that time, they’ve paid out thousands of dollars worth of rewards, but haven’t made a dime in interest from me.  I can’t say for sure whether that was a factor in their decision, but I definitely wouldn’t be surprised if it was.  And who can blame them?  I’ll be the first to admit I was only trying to maximize their generous rewards system.

Guess I’ll dust off that old Chase card, even though it’s hardly worth the trouble.

UPDATE: Turns out I was rejected before they even checked my credit score for having “too many Capital One accounts.”  Interesting… What happened to “What’s in your wallet?”  Apparently a fist-full of Capital One cards is no bueno.

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