Intro to Credit Cards & Strategy

Now that you have a basic understanding of travel hacking, let’s talk about credit cards and what factors should go in to your decision-making process. Before applying for that first credit card, ask yourself:

  • Where do I want to go? If you are only interested in domestic trips and beach vacations, you should start with the Southwest card, Chase Sapphire and a good hotel card like Marriott or Hyatt
  • What airline hub do you live near? I live near DFW Airport which is an American Airlines hub, so it makes sense for my family to collect AA miles.
  • What are your trip goals? If you’re most concerned with offsetting flight costs, concentrate on cards that offer air miles. If you like to road trip (like we do) then you’ll be more interested in hotel credit cards and cards that earn you points on gas (3x points/$ Citi Premier) and dining.

Now let’s take a look at the categories of travel related credit cards:

  • Airline Credit Cards
  • Hotel Credit Cards
  • Fixed Value Credit Cards
  • General Travel Rewards Credit Cards

Airline specific credit cards: These cards offer miles that can be used on the specific airline you applied for. For example: You can earn American Airlines AAdvantage miles by signing up for the Citi AAdvantage Platinum MasterCard and use these miles to fly on American, or on a partner airline from the One World Alliance like British Airways, Japan Airlines or Qantas. These cards usually earn 2x miles/$1 when spending with specific airline and 1x mile/$1 on everything else.  The card come with benefits such as priority boarding, first checked bag free, etc.

Hotel credit cards: These cards offer points that can be used to book hotel rooms directly. Many cards offer increased points per $1 when spent at the specific hotel brand, elite status, free wifi, early/late checkout and some, like the Hyatt, Marriott and IHG offer a free night for every year you keep the credit card and pay the annual fee. Benefits vary per card but can include perks like no foreign transaction fees and travel and purchase coverage.

Fixed Value Point credit cards: These cards offer points that can be redeemed for travel at a fixed rate. The most recognizable fixed value card is the Capital One Venture card. You are essentially using these points like cash for travel related expenses. For example: the Barclaycard Arrivals MasterCard earns 40,000 miles after spending $3,000. This is equivalent to $400 which you can use towards travel related spend like airfare, hotel (including at third-party sites like Expedia and Priceline) and train tickets.

General travel reward cards: These are some of the most popular cards out there because of their flexibility. Points you earn from these cards can be transferred to various airline programs and hotel brands or you can book travel using points like cash on the specific program’s site. Programs include Chase Ultimate Rewards, Citi Thank You Rewards, American Express Membership Rewards and SPG Starpoints.

 

Strategy – which card(s) to apply for first:

As mentioned in my Getting Started post, Chase bank has some of the most restrictive rules when approving credit cards. They will only issue you a card bonus if you have applied for less than 5 cards in the past 24 months, this includes being listed as an authorized user on someone else’s card (remember the 5/24 rule). For this reason, you want the first five cards you apply for to be from Chase bank. The following Chase cards fall under the 5/24 rule:

  • Chase Sapphire Preferred
  • Chase Sapphire Reserve
  • Chase Freedom
  • Chase Southwest (both personal and business cards)
  • Chase United Explorer (personal and business)
  • Chase Marriott (personal card)
  • Chase Ink (Business Card)

Chase Sapphire Preferred

  • Earn 50,000 Ultimate Rewards after $4,000 spend in 3 months.
  • Earns 2x points on all travel and dining spend and 1x points on everything else.
  • $95 Annual fee waived the first year.
  • Perks include: Trip Cancellation/Interruption Insurance and Rental Car collision insurance.
  • Transfer points to several airlines and hotel programs, including United Airlines, British Airways, Southwest Airlines and Hyatt hotels or book directly through the Ultimate Rewards portal

Chase Sapphire Reserve

  • Earn 50,000 Ultimate Rewards after $4,000 spend in 3 months
  • Earns 3x points on travel/dining and 1x points on everything else
  • $450 Annual Fee not waived the first year, but this is offset by the $300 travel credit
  • This is considered a Premium credit card and most newbies will balk at the high annual fee. You get a reduced fee on Global Entry and access to Priority Pass Select. Like the Sapphire Preferred above you can transfer UR to several airlines and hotels.

Chase Freedom

  • Earn $150 bonus after spending $500 in first 3 months
  • Earn 5% cashback on up to $1,500 combined spend in bonus categories each quarter and 1% cashback on all other purchases. Past bonus categories include groceries, office supply and gas.
  • If you pair this card with your Chase Sapphire Preferred, you can transfer your points to Ultimate Rewards and redeem for travel on United, Southwest Airlines or hotels like Hyatt. If you can spend $1500/quarter on the bonus categories, this card is for you.

Southwest Rapid Rewards Premier Credit Card

  • Earn 50,000 points after spending $2,000 in the first 3 months
  • Earns 2x points per $1 on Southwest, 1x points per $1 on all other purchases
  • $99 annual fee
  • Perks: Points never expire, no blackout dates, no change fees. Apply for both Southwest Personal cards to earn miles towards the Companion Pass.

Southwest Rapid Rewards Plus Credit Card

  • Earn 40,000 points after spending $2,000 in the first 3 months
  • Earns 2x points per $1 on Southwest, 1x points per $1 on all other purchases
  • Perks: points never expire, no blackout dates, no change fees

Southwest Rapid Rewards Premier Business card

  • Earn 60,000 points after spending $3,000 in the first 3 months
  • Earns 2x points on Southwest, 1x points on everything else
  • $99 annual fee not waived first year

The Southwest Airlines Companion Pass (CP)  The CP allows you to bring a companion on any Southwest flight for just the cost of their taxes and fees. The pass can be used on both paid and award flights.  How to earn the CP: Earn 110,000 Rapid Rewards points in a calendar year. You can earn 110,000 RR points by applying for both cards at the same time or within a couple of months of each other.  Please note: All Chase Southwest Cards fall under the 5/24 rule.

United Explorer

  • Earn 40,000 miles after $2,000 spend in the first three months (I’ve seen the sign-up bonus higher and would not apply until you see the 50k-70k offer)
  • Earn 2x miles on United and 1x miles on everything else
  • Annual fee $95, not waived first year
  • Tip: With United’s Excursionist perk you can visit multiple cities  for the price of one award ticket! You can transfer UR points to United for more miles or book with United airline partners like Lufthansa.

Marriott (personal card)

  • Earn 80,000 points after $3,000 spend in first 3 months
  • Earn 5x points at Marriott and 1x points on everything else
  • Annual fee $85 not waived first year
  • Tip: This is a great sign up bonus. The bonus is enough for 3 nights at a lower tier Marriott and up to 2 nights at a top tier Marriott. This card also earns a free night (Cat 1-5) every year with paid annual fee.

Chase Ink (Business Card)

  • 80,000 Ultimate Rewards after $5,000 minimum spend in 3 months
  • 3x points on travel, dining, office supply, cable and internet and 1x points on everything else
  • $95 annual fee not waived the first year
  • Most people don’t think they qualify for a business card if they aren’t business owners. If you resell items on the internet, own a rental home, write a blog, etc. that is considered a business. Use your social security number as the EIN, list yourself as sole proprietor and put $0 (or your true income) down as income. Be honest! You may need to answer questions with a rep about your business. Maximize earning by buying gift cards at office supply store for 5x points per dollar to use for general spend.

A note on strategy:

Only you can decide what cards will work best for your travel goals and budget. How fast you earn points is completely up to you and your ability to meet the minimum spend. We apply for 1-2 cards every 90-120 days, sooner if we’re earning for a specific goal. Go slow. You may read about people who applied for 25+ credit cards in one year. Please don’t do that! Especially if you’re a newbie. It’s so easy to get in over your head. To earn more points, my husband and I both apply for cards (this is called two-player mode). Some like to stagger their applications to meet the minimum spend, I like to get our cards at the same time.

Because airlines open up award seats 330 days out, I recommend earning air miles first so you can book early for a big trip. You can always earn hotel points throughout the year. Earning points is a lot easier than burning points. Especially for families. If your expectation is to travel to Hawaii or Disney over the holidays, prepare to book your flight almost a year in advance. Being flexible with your dates will give you better use of your points.

When to cancel the card?

The decision to continue paying the annual fee on a credit card will be an individual one. A few of the cards that we have kept past the first year are:

  • Chase Sapphire – In addition to earning 2x points on travel and gas, I use this card for all car rentals for the primary insurance and we book our flights on this card for the trip interruption/cancellation benefit.
  • Hyatt – The Hyatt card comes with a free annual night (Cat 1-4) after paying the $95 annual fee. This year my husband and I spent 2 nights at the Hyatt Regency Tokyo with our free nights. Rooms are over $300/night. That’s quite a deal!
  • Marriott – The Marriott card also comes with a free annual night (Cat 1-5) after paying the annual fee. Although you won’t find a Cat 5 Marriott in the center of London, we have found great use of these on our road trips in larger cities.
  • SPG – In addition to using Starwood points at both SPG and Marriott hotels, they also allow you to transfer points to over 30 airlines with a bonus (when you transfer 20,000 you get an additional 5,000 miles). We’re also keeping this card because you can use Starwood points to stay at the Swan or Dolphin on Disney property!
  • IHG – The IHG card comes with a free annual night that can be used at any IHG property after paying the $49 annual fee. That means you can stay at luxurious Intercontinental hotels around the world for $49/night. This is the main reason we apply for the same cards at the same time is so we can earn those free annual nights at the same time. Cha ching!

Need some help deciding where to start? Email me at Familyof6travels@gmail.com

**Ready to apply? Please use our referral links for the Chase Sapphire and the Chase Marriott – we’ll both earn points! Thank you for your support.

 

 

 

Next post: How to earn miles

 

 

 

 


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