App-O-Rama refers to a strategy of completing multiple credit account applications in a relatively short period of time. The term, as set out in the Wall Street Journal, refers to a frenzy of applications, and most frequently refers to applications for financial products, such as loans, credit card

Credit card

A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...

s, and bank deposit account

Deposit account

A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the...

s. However, it can also include insurance applications, brokerage applications, etc.

App-o-Rama is also commonly known as AppORama, Application-O-Rama, App-a-Rama, "AOR" for short, and other nicknames in the United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

.

Since many of these financial products require a credit inquiry and evaluate one's credit worthiness

Credit risk

Credit risk is an investor's risk of loss arising from a borrower who does not make payments as promised. Such an event is called a default. Other terms for credit risk are default risk and counterparty risk....

 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.

Reasons for an App-O-Rama

There are many reasons one might perform an App-O-Rama:

• To obtain many balance transfer
  Balance transfer
  A balance transfer is the transfer of the balance in an account to another account, often held at another institution.-Types of balance transfers:...
  
   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
  Stoozing
  Stoozing is a slang term used to describe the act of borrowing money at an interest rate of 0%, a rate typically offered by credit card companies as an incentive for new customers. The money is then placed in a high interest bank account to make a profit from the interest earned. The borrower then...
  
  , and was first made popular in the UK.
• To obtain as many signup bonus rewards as possible.
• To establish or build credit history
  Credit history
  Credit history or credit report is, in many countries, a record of an individual's or company's past borrowing and repaying, including information about late payments and bankruptcy...
  
  .

Consequences of an App-O-Rama

• Temporary drop in credit score
  Credit score
  A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person...
  
   due to new inquiries (and higher balances).
• Possible denials of additional new cards from same issuer or even having existing cards closed.

Additional information

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

Money Economics

Money Economics is a free online publication and forum dedicated to personal and consumer finance. It was founded in the late 2006.-Website Content:Money Economics focuses on 8 main financial categories in their articles and forum discussion...

published an article on August 2, 2007, analyzing the maximum actual profit one can obtain from this interest rate arbitrage. It concluded that people may come out making less than what they might expect or others might suggest.

Stoozing

Stoozing

Stoozing is a slang term used to describe the act of borrowing money at an interest rate of 0%, a rate typically offered by credit card companies as an incentive for new customers. The money is then placed in a high interest bank account to make a profit from the interest earned. The borrower then...

, a term coined outside the United States for investing credit card funds in a high yield account, and requires the card holder to regularly make payments and pay off the complete balance prior to the expiration of the balance transfer offer. Failure to comply with the terms of the credit card agreement can lead to the default rate being imposed, reducing or eliminating profits made from the endeavor.

Those attempting an App-o-Rama must consider several important factors. Since most applications require credit checks, those who have good credit have the best chance of getting approved for the accounts they apply for. Many people who undertake an App-O-Rama prefer to check their credit score

Credit score

A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person...

 before applying to ensure the scores are high enough to provide the best chance of approval for all products applied for.

Current developments

Due to the financial crisis of 2007-2009, the App-o-rama has become more difficult as issuers have tightened credit and restricted approvals to only the most creditworthy customers. Issuers have reduced the number of active cards from a single bank given to an issuer. Inactive lines are being eliminated, zero percent balance transfer offers are shortened, and credit limits have been reduced.