Lessons boil down to what should be familiar to most readers of this blog:
- Many credit cards offer big bonuses for signing up that can be used for free or inexpensive trips. I blogged last week the Best Current Credit Card Signup Bonuses.
- Flexible points which transfer into the currencies of several airlines — like Chase Ultimate Rewards, American Express Membership Rewards, and Starwood Preferred Guest points — can be the most valuable. Then you don’t have to know what award you want up from (for choosing the right program for you) and can move the points where you’ll be most likely to secure the award space when it comes time to redeem. Not included in the piece is my frustration with the slow points-to-miles transfer time with Starwood – though they have the most airline transfer partners, the speed issue can be a challenge when it’s time to book.
- Hotel credit cards are often worth keeping beyond the first year for the annual free night that many of them offer (Starwood American Express does not offer this), since the annual fee on the card is often much less expensive than the value of that night (if you’ll use it).
- For spending that isn’t being used to qualify for a signup bonus, cash back cards are often the best (especially true if you’re interested in coach travel). You can get a strong reward — 2% through the Fidelity American Express or Priceline Visa — and use it towards travel if you wish, without being constrained by capacity controls/having to search out award space. (Of course miles can be useful here too for topping off an account towards an award.)
- This game is not for you if you do not pay off your credit cards in full each month. You should care, then, more about interest rates than about mileage rewards — paying higher rates these cards often bring won’t be worthwhile. And there are 0% balance transfer cards you can use to bring down your borrowing cost.
My other basic principle, not in the piece but that I repeat often, is that there are three types of cards: those you get just for the signup bonus (and don’t want to put additional spend on once you earn the bonus, or probably even keep past the first year), those you get for the benefits (worth having perhaps for lounge access or hotel status but not a card you want to spend money on because the points aren’t as valuable), and those you actually want to use for ongoing spend (such as Chase Sapphire Preferred or the Starwood American Express).