I have a family member who contacted me the other day about which credit card(s) they should open. They have a large purchase coming up and wanted to maximize the rewards they could earn. In this instance, they have the cash on hand to already pay for the purchase, which is the best and really only responsible way people should use credit. They are trying to decide if they are better off paying in cash, opening the stores 0% financing card, or getting new reward cards.
First, we need to lay the ground work for ones goals and credit history.
An important aspect to always look at is ones near term goals, i.e. within the next 12-18 months or so. If one plans on purchasing a new home within the next year or so, it is better to continue to maintain your high credit scores and use that to your advantage come mortgage time. The difference of a couple points in your credit can make a big difference in whether you get a mortgage loan with the best rates or not.
If one already has high credit scores, opening a singular card or two 6+ months ahead of your big loan will not really make that much of a difference. If, however, a couple months before getting a mortgage, you open up 3 or 4 new credit cards, the banks “may” take issue with the big rush to acquire new credit.
Lastly, you need to have a good understanding of your credit while maintaining excellent scores (780+), and know that opening up a new card will deduct approximately 5 points from that total for each new card opened. If you pay your bills off each month, and are responsible with credit, then and only then would I recommend diving into the credit card rewards game.
Travel Goals
Besides knowing how the credit card process will impact you and your credit history, it is important to also understand and have a goal of how one plans to use the rewards they are aiming to earn. It is one thing to earn a pile of fictitious cash. However, if one does not have an understanding with how those rewards can be used, as well as an aspiration of how they would like to use them, the rewards may go unused.
There are two major issues with credit card rewards in the form of miles or points. The first is that the rewards end up not getting used, and then expire at the end of programs policy, typically 12-18 months of non-use. How disappointed would you be if you were sitting on enough miles to get you to Europe for your honeymoon, only to find out because you have not had any account activity, the miles expired?
The other big concern is the risk of devaluation within the program. 2013 has been a relentless year from reward programs in that they, sometimes without warning, raised the amount of miles or points required for a reward. Since miles and points are being “printed” rapidly, causing a big influx of available inventory to the customers, the airlines and hotel programs start to increase the amount of rewards required for a redemption. So you could earn X amount of miles and have this aspirational goal to visit Africa, and then all of a sudden need to acquire another large chunk of miles to make the trip happen.
Another aspect of your goal and reward travel is to understand how one wants to travel. Do you want to travel domestically or internationally? Do you “need” to travel in business or first class, which requires a TON more miles, or will domestic be acceptable? Almost everyone discussing the reward program space is a big champion for business or first class travel. However, it is important to understand that an international itinerary in business class may not meet everyone goals.
For example, as much as I would love to travel with my wife in the front of the plane, as a family, the difference between going somewhere and not means I also need tickets for our kids since we have no interest in traveling without them. Therefore, instead of redeeming 200,000+ miles for two business class tickets, I need to consider that those same miles can get us to our destination in domestic. While not the most luxurious, we elect to pick and choose what matters. The difference between domestic/business/first class also makes a big difference in the amount of miles required.
So one needs to make sure they have a goal in mind prior to diving into opening up new cards.
Now that the basics are out of the way, one can start to look at some of the best credit cards available and how they can be used towards your advantage.
Best Credit Card Offers
The following is a list of what I believe are some of the best credit cards available. One may decide some other cards are better or worse depending on their unique situation. The decision on which and how many cards you elect to open at once is up to you.
0% Interest Store Cards
Back in late 2006, early 2007 when I was shopping for one of the largest purchases I have ever made with the ability to use a credit card (my wife’s engagement ring), I was not completely wrapped up in the power of credit card rewards like I am today. I knew of airline and hotel reward programs and even belonged to all of them. However, the mega credit card bonuses we see today were not as prevalent. The normal was only 25,000 miles via an airline card.
At the time, one could still earn a respectable 2-3% interest by keeping the cash in the bank. Therefore, I was presented with the option to pay in cash or open up the store credit card and get 0% financing for 12 months. At the time I elected to make the extra couple bucks of interest and open up the card, as it made sense at the time.
However, in today’s market, where credit cards are willing to give one $400-1000 in reward perks, and the money in the bank does not make any interest, it becomes more valuable to go the credit route if you meet all of the risk and goal tolerances listed above.
United Airlines Credit Card
I am a big fan of United because our family was able to acquire a ton of miles in the past via credit cards (back when they were awarded after first purchase), and then use them to take all of us to Hawaii. It is only 40,000 miles for a domestic Hawaii ticket on United, and one should be able to easily get 50,000+ miles out of a new card. It was also pretty easy to redeem the miles via United’s website, although it takes some patience and flexibility in schedule.
United’s standard offer is only for 30,000 miles. However, to get access to the best deal, you need already have an United MileagePlus reward account (free), and have at least 1 mile in your account. Then, log into your account. As I discussed in April, I see a 50,000 mile offer as of today after logging into my account.
I also wrote about the better 50,000 mile offer + $50 credit in the same article. After you are already signed into your MileagePlus account, visit the 50k mile + $50 credit offer link.
Spend on both cards is $1,000 in 3 months. Annual fee is waived the first year.
Unfortunately, the offers are targeted and there is no way to guarantee the offer page will populate the same for everyone.
The good news is that Chase has one good going for them; they will honor a better offer if it comes along within 90 days of applying. Therefore, no matter which offer you apply for and get approved, you can send a secure message to Chase telling them about the better offer, and more times that not, they will honor the better offer.
This card is offered by Chase.
Resources:
United Airlines 55,000 Mileage Plus Miles + $50 Statement Credit
How We Are Going to Hawaii and Disney for $30
US Airways Credit Card
For the past year I have been perhaps Barclays and the US Airways credit card strongest proponent. They treat me well as a customer, and I have no problem promoting them as one of the best cards I think that is out there in terms of miles awarded.
I really like this card because you get miles after your first purchase (as little as $1). Then, a couple months later they target you for 15,000 miles after spending $750 in 3 consecutive months. Mrs. InACents and I are working on this right now.
The best offer I am aware of is here: Barclays US Airways Dividend Miles
Grant it, you only receive 35,000 miles initially (again after first purchase), but you will more than likely be targeted down the line with the extra 15,000 offer, making it a 50,000 card (plus mile earned from spend). Not many credit cards are offering this many miles for this low of spend.
First year annual fee is waived, and every year you renew, you will get 10,000 bonus miles.
Pair the miles with another great aspect of the card is that it has been known to be churnable, meaning you can close it and open a new one in the future to get the bonus again. With the Chase offer listed, you can only get it once. While I have read reports of Barclays tightening up on new cards, I had no problem getting my second US Airways credit card a couple months ago, while still having my original card open from May 2012.
I even elected to pay the annual fee on my older card and keep the card for another year because of the annual 10,000 mile bonus I receive from my original terms. I did not want to close the card and lose my ability to earn that again in the future. However, there is one hurdle that stands between me and my continuing bonus in the future.
US Airways is in the process of merging with American Airlines. That means, from all current accounts of the merging process, that anything US Airways will be going away. Which ultimately means I may not get to keep the card and continue to earn my 10,000 mile bonus each year.
The card is offered by Barclays.
Resources:
Taking a Bath in US Airways Dividend Miles
35,000 US Airways Dividend Miles to Show Our Kids the World
More Modifications for US Airways Premier World MasterCard®
Barclay’s US Airways Premier World MasterCard
Southwest Airlines Credit Cards
Perhaps one of the best domestic credit card offerings for a couple is the Southwest Airlines credit card. In recent years, one of the best deals associated with the Southwest Rapid Rewards program is the ability to earn a companion pass. Simply earn 110,000 miles within a calendar year, and earn a free companion pass for your partner for not only the current year, but also the following year.
My sister recently switched jobs and is traveling a lot for work with reimbursable expenses. She opened up both a personal and business version of the Southwest credit cards. As a result she earned 50,000 miles after spending $2,000 on each. Therefore, after both cards, she earned a whopping 104,000 miles. She also earned plenty of miles for her travels, topping 110,000 before May. As a result, for the remainder of 2013 and all of 2014, her husband will be able to travel with her for $10 in fees on each flight. Simply incredible!
Back in March I wrote about the current best offers for the Southwest cards, and they are still alive as of this post. The annual fees are not waived the first year, but if you can make it to the companion pass status, they are highly worth the cost.
The cards are offered by Chase.
Resources:
AirTran Wendy’s Cup Deal is Back
Non-Affiliated Credit Cards
One sector of the credit card market that is trying to make a stand is the non-affiliate reward. In other words, the above listed cards are all associated with a specific airline, and once the rewards are earned, they are pretty much stuck with that program (without being very expensive to get them out and into another program). I have long been a supporter of these types of cards, specifically because I am a long time card holder of both the Discover More and Discover Miles products.
The Discover Miles card earns me back “miles,” but not in the tradition sense with a specific airline. Instead, the miles I earn can be applied towards any travel purchases I put on the card, therefore, meaning there are no restrictions or blackout dates to contend with. Instead, I just need to find a travel that meets our goals, and purchase it using the card. The only stipulation is that you must redeem the “miles” in 10,000 point increments which equals $100 credit.
I also elected last year to open both a personal and business version of the US Bank FlexPerks card program. After various promotions and spend, we earned over 43,500 points in the program. The best part about this fixed reward program is that the points are each valued at $0.02 each, making our points valued at $800 towards travel.
The new player to the non-affiliated award space is the Barclays Arrival card. There are two current version of the card as highlighted below.
40,000 bonus miles after $3,000 in purchases within ninety (90) days (affiliate link); $89 annual fee waived the first year.
20,000 bonus miles after $1,000 in purchases within ninety (90) days (affiliate link); no annual fee.
The great aspect of the Arrival card is its ability to earn 2 points per dollar spent on the annual fee version of the card. Then, when you redeem points towards a travel credit on your bill, one will receive a 10% discount. This means you are earning 2.2% back on your travel purchases, and all without having to deal with restrictions and blackout dates trying to redeem miles.
Resources:
The Best Barclaycard Arrival World Mastercard Offers
Barclaycard Arrival World MasterCard
My First App-o-Rama of New Credit Cards (FlexPerks, Hilton, and US Airways)
20,000 US Bank FlexPerks Travel Visa Card Branch Offer
Chase Ultimate Rewards/American Express Membership Rewards
You ask any number of people within the credit card blogging world and they are going to recommend some of the Chase or American Express products that offer “universal” points that can be redeemed from everything from gift cards to being able to directly transfer them to select airline and hotel partners. The credit card products serve a great niche in that the biggest thing they have going for them is the transferability to other programs.
If you are short a couple miles in the XYZ program, you simply move a couple of the points over to the associated account.
Personally, I have been less than impressed with the products and never elected to open them for ourselves. The American Express Membership Rewards program does not have that much appeal to our family because we really do not have any current goals to travel internationally, which the transfer is geared more towards. The current list of partners includes:
Airlines
Delta
Aeromexico
Air Canada Aeroplan
Alitalia
All Nippon Airlines
Asia Miles
British Airways
EL AL Israel Airlines
Flying Blue Air France/KLM
Frontier
Hawaiian Airlines
Iberia
JetBlue
Singapore Airlines
Virgin America
Virgin Atlantic
Hotels
Best Western
Choice Privledges
Hilton
Jumeirah
Starwood Preferred Guest (SPG)
Really there is nothing too appealing there to warrant opening up one of their cards, which often times have a substantially larger initial spend. It is nothing personal, it is just not a program that meets our families travel goals.
Chase offers a boatload of cards that all earn their proprietary Ultimate Reward points. Again, the distinct advantage is being able to move them over to other reward programs, where you can then leverage the most value out of the program.
Ultimate Rewards can currently be transferred to the following partners:
British Airways Executive Club
Korean Air SKYPASS
Southwest Airlines Rapid Rewards®
United MileagePlus®
Virgin Atlantic Flying Club
Amtrak Guest Rewards®
Hyatt Gold Passport®
Marriott Rewards®
Rewards Priority Club® Rewards
The Ritz-Carlton Rewards®
While the Chase products look a little more appealing with their transferability options, I have personally never acquired any of them because Southwest and United would be the only ones I might be interested in moving points into. In addition, Chase’s minimum spend versus rewards earned has honestly never been that appealing.
Personally, I think there are much better options, most listed above, than dealing with the Ultimate Rewards and/or Membership Reward programs.
Purchase Recommendations
Once someone elects which cards that they want to open to maximize their earning potential, the biggest recommendation that I have is to see if the vendor will allow you to break up the transaction into smaller pieces to maximize credit card benefits earned. If they will allow you to put $1,000 on one card, and maybe the remaining balance on another card, one could easily be on their way to earning some great travel perks.
Are there any other cards that stand out better than those listed?
Save Money, Travel More!
Source: InACents
The only card in this article that pays us a commission is the Barclays Arrival card referenced. All other offers are the best public offers that we are aware of at the time of publishing.