App-O-Rama (also known as AppORama, Application-O-Rama, App-a-Rama, AOR) refers to a strategy of completing multiple credit account applications in a relatively short period of time to try and trick or fool financial institutions. This may be to obtain promotional temporary lower interest rates or signup bonuses while avoiding rejection by the financial institutions or to build up a credit score quickly.
It refers to a frenzy of applications, and most frequently refers to applications for financial products, such as loans,
credit card
A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...
s, and bank
deposit accounts. However, it can also include insurance applications, brokerage account applications.
Since many of these financial products require a credit inquiry and evaluate one's
credit worthiness at that point in time, the object is to perform all applications at the same time, preferably when one's credit profile is in top condition. Since 2008, App-o-Rama has become more difficult as issuers tightened credit and restricted approvals after the
financial crisis of 2007-2009 to only the most creditworthy customers. Issuers have reduced the number of active cards from a single bank given to a consumer. Inactive lines are being eliminated, zero percent balance transfer offers are shortened, and credit limits have been reduced.
History
In the early 2000s the term gained popularity in the FatWallet.com Finance Forum. There are several offline and online books, papers and illustrations of this term and how the strategy is implemented. ''The Wall Street Journal'' summed up the application frenzy up in one article.
[
''Money Economics'' published an article on August 2, 2007,][ from ''Money Economics''] analyzing the maximum actual profit one can obtain from this interest rate arbitrage. It concluded that the strategy was less successful than suggested.
Since most applications require credit checks, those who have good credit have a higher chance of being successful.
Advantages and Consequences
Advantages
* To obtain many balance transfer
A balance transfer is the transfer of (part of) the balance (either of money or credit) in an account to another account, often held at another institution. It is most commonly used when describing a credit card balance transfer.
How it works ...
offers, to move higher rate debts to a lower rate; or to use 0% funds to invest in money market account or high interest savings. This practice is often known as stoozing
Credit card interest is a way in which credit card issuers generate revenue. A card issuer is a bank or credit union that gives a consumer (the cardholder) a card or account number that can be used with various payees to make payments and borrow m ...
, and was first made popular in the UK.
* To obtain as many signup bonus rewards as possible.
* To establish or build credit history
:''This article deals with the general concept of the term credit history. For detailed information about the same topic in the United States, see Credit score in the United States.''
A credit history is a record of a borrower's responsible repay ...
.
Consequences
* Temporary drop in credit score due to new inquiries and new accounts.
* Possible denials of additional new cards from same issuer or even having existing cards closed.
References
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Personal finance
Credit