It’s been almost a year since I’ve updated this advice, so I thought I’d start from scratch.
How to Decide on the Best Card
Let me say up front that there isn’t one card that is best for everyone (although I’ll suggest below that a card can come pretty close). The truth is that the best card for you depends on what your award goals are. After all, different airlines fly to different places and offer awards at different point levels. Want to go from the United States to Australia, for instance? United awards are generally less expensive. But if you happen to live in Mexico your options for redeeming United miles are pretty limited.
Another thing to consider is whether you pay your card off each month. Many of the mileage earning cards have high APRs. The United Visa is > 14%! The Lufthansa Visa is nearly 10%. There are many no fee cards with 0% interest on balance transfers but no miles. Of course if you aren’t going to pay the bill you could make charges on a mileage earning card and then transfer the balances to the 0% card.
Are you willing to pay an annual fee? Most airline cards come with an annual fee of some sort but they also usually come with signup bonuses worth more than the annual fee at least in the first year. The difference in earnings between no-fee cards and fee cards is usually enough to justify the fee.
Many airlines also offer no fee cards that only earn 1 mile for every 2 dollars. If you charge $2000 a month, you’ll earn an extra 12,000 miles a year with the version of the card that charges a fee. So the cheapest card isn’t always the best — it just depends on how much you use the card and how you value miles versus money.
One strategy for dealing with fees while obtaining card benefits is to sign up for a card that has an offer to waive the fee for the first year. You can always cancel the card at the end of the year (and choose another ‘free the first year’ offer) or keep it if the card is providing you the value you’re looking for.
Other benefits that some cards provide are mileage earning for balance transfers, annual retention bonuses, airline lounge access, airline companion tickets, upgrades, concierge service, and even (in the case of the Hawaiian Airlines Visa) airline drink coupons. You’ll need to decide how much each of these benefits is worth to you.
My Picks for Best Card
I find the best mileage earning card to be the Starwood American Express which is free the first year and $30 thereafter, comes with a signup bonus of 4,000 points with your first purchase and up to 6,000 more for hotel stays, and offers points which can be used for hotel nights or converted 1:1 into most airline programs.
The card isn’t a good option for earning United Airlines miles, though, because the points only transfer at a rate of 2:1. BankOne, which issues the United Visa, provided lots of money when the airline went into bankruptcy and doesn’t like the competition from this card).
That said, when you covert 20,000 points at a time into airline miles Starwood gives you 5,000 bonus miles — which means you’re really earning 1.25 miles per dollar on most every other carrier, better earning than any other card. The flexibility, though, is the best benefit. With, say, an American Airlines Mastercard you’re stuck with American Airlines miles. With the Starwood American Express you earn whatever miles you want and you don’t have to decide until you’re ready to use them.
My second favorite card is Diners Club. It offers the most extensive rewards program from miles to merchandise, they’ll even customize your reward to give you whatever you want if you have enough points.
The card offers primary rental car insurance – if you wreck your rental paid for with this card, odds on your own insurance doesn’t even need to know. Year after year the card is voted best in customer service and they give you two full billing cycles (up to 60 days) to pay.
The drawbacks are a $95 fee (more than offset by 12,000 frequent flyer miles with any airline you want as a signup bonus) and limited acceptance — airlines, hotels, and large merchants tend to accept the card but your local drycleaner probably does not. If their partnership with Mastercard proceeds as scheduled there won’t be any more problems with acceptance.
Assuming current benefits, this will be the card to have. As it stands now, it’s a road warriors card, well worth carrying for anyone that frequently rents cars. I fully analyze the card here.
The United Visa comes with a 20,000 mile signup bonus. The fee is $60. Once you get the card, you can upgrade to the “Gold Class” Visa for another 5,000 (and a percentage of an extra $25 fee depending on how many months until your card renews). That’s 25,000 miles for $85 or less. United also has a “free the first year” offer which awards 15,000 bonus miles at signup.
The Delta Platinum American Express costs $135 but comes with a 15,000 mile signup bonus and 10,000 bonus miles each year that you spend $25,000 on the card. Those 10,000 miles also count towards elite status with the airline. There is no fee the first year if you apply by May 30th for the Gold Delta Amex and you’ll get 10,000 bonus miles for signing up. The Delta cards give double miles for shopping at supermarkets, drug stores, gas stations, home improvement stores, the U.S. Postal Service, when you pay your cellular phone bill, and on Delta purchases.
Free Points-Earning Cards
The Amtrak Mastercard gives one Amtrak point per dollar spent. The value in this card is that points can be used for train travel or transferred one-to-one into United, Continental, and Midwest Airlines and one-to-two into Hilton. It’s a good way to earn United miles without paying the fee for the United card. Plus train tickets can be had inexpensively — a roundtrip from Washington, DC to New York on unreserved trains runs only 5,000 points, which is cheap considering most airline ticket awards start at 25,000 miles.
The Hilton Visa comes with 10,000 points as a signup bonus, Silver Elite status in the Hilton program, and earns two points per dollar spent. Hilton points aren’t quite as valuable as airline miles, so this isn’t as great as it sounds, but it’s reasonable for a free card — and Hilton points can be used for hotel stays or converted into airline miles with several different programs.
The Hilton American Express comes with 10,000 points as a signup bonus, Silver Elite status in the Hilton program, and earns 3 Hilton points per dollar spent – so it’s clearly a better card than the Hilton Visa.
My Personal Solution
I carry a Starwood American Express and a Diners Club card. Those get me the best rewards by far.
With Starwood I can stay at some of the top hotels in the world and my airline mileage earning is supersized, 25% better than airline cards themselves. Both Starwood and Diners Club offer conversion bonuses from time to time as well. Diners Club has recently offered 30% – 50% bonuses with United and British Airways. Starwood offered a phenomenal deal where 20,000 points converted to 50,000 British Airways miles.
There are a few places that won’t take either card and for that I need a Visa. However isn’t that much spending left for the Visa, so I want a no-fee card. I choose the Amtrak Mastercard because of all the free cards it provides the best flexibility — I earn train travel or miles on 3 airlines or 1 hotel chain, not to mention Amtrak’s merchandise and travel certificate options. The Amtrak Mastercard actually earns those miles just as fast as those other programs’ own Visa products that come with a fee.
One final piece of advice. Always print out a copy of the offer you’re applying for, in case your signup bonus doesn’t post or a fee is charged in spite of a no-fee offer.
Hope this helps. But if you have any specific questions, please ask away.