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I had a real hard time deciding if I should write this post. Misuse of credit cards can lead to financial ruin. But, in the right hands, credit cards can also generate value to the cardholder. As someone who has a good understanding of the credit card market, I’m frequently asked about credit card options. And it’s a pain in the buttocks to try to list a bunch of possible options for prospective card holders. So, I’m providing some options here.
The value of each card depends on your needs. The AAdvantage Aviator Red World Elite Mastercard (below) is a great card for those that plan to fly (especially internationally) within the next year and live near an American Airlines hub and are probably best for those that happen to find a flight that can be purchase with 50,000 or fewer points that would cost a lot of USD (often referred to as a redemption “sweet spot”). For those that have no plans to fly within the next year, this card sucks!
I’m providing some options here, but if you really want to take advantage of the credit card game, plan to allocate significant time to learning about various reward systems and card offerings. This game gets more lucrative as your spending increases. As your spending naturally increases (due to increased salary and/or increased family size), it will become easier to find value. But don’t let the tail wag the dog; don’t increase your spending to generate rewards. Furthermore, recognize that chasing travel rewards could inherently lead to increased spending. If you’re already flying to London next summer, then using a credit card to pay for the flight with points can offer significant savings. Alternatively, if you go to London just because you already have the points, then the extra costs (hotels, dining, experiences, etc.) will strain your budget. Be smart and responsible.
If you don’t have a full-time job, the most lucrative cards will likely reject your application. The same is true if you have a low credit score (in which case, I’m not sure I’d advise chasing rewards anyway—get your act together first!).
Almost every successful adult I know plays the credit card points game. Some are more aggressive than others. My wife and I apply for about 6 credit cards each year and use the points to take extravagant vacations. Do credit cards ultimately save us money? Probably not. But they enable us to cheaply take long vacations and frivolous short jaunts that would otherwise be prohibitively expensive. They help make our lives more interesting.
Disclaimer: I have included a referral links for one of these cards--the Chase Sapphire Preferred. If you apply for a card via the link below, I get a small kick back. Any revenues generated from these kickbacks will be used to cover my hosting fees and other costs (e.g. travel to schools and universities to spread information on the importance of financial literacy). I am not advertising cards in hopes of collecting money. I am simply providing you with a list of the cards that are best.
Easy Card for Free Flights (with Moderately High Spending Requirement)
Aviator Red World Elite Mastercard
Annual Fee: $0 for the first year, $99/year thereafter
Bonus: 50,000 points after paying the annual fee and spending $2,500 over the first three months.
Spending reward: 1 point for most purchases (not very good)
Best use: If you are going on a long trip, see how much the flight would cost (in AA points). If the 50,000 points are sufficient, use the card. Then cancel it. This is not a card that is good to keep, so make sure you have a reason to use the 50,000 points before applying.
Comments: A few years back, I sent my parents to Germany and back with two of these cards as a Christmas gift (my wife and I each got one). What a great redemption! This is a perfect card for someone that wants to dip their toes in the travel rewards water since the bonus is so easy to attain—just make one purchase and pay the annual fee. Have an exit strategy. Aside from the bonus, this card is nothing special.
Learn more: https://thepointsguy.com/credit-cards/reasons-to-get-citi-aadvantage-platinum/
Apply: https://www.aa.com/web/i18n/aadvantage-program/credit-cards/aadvantage-credit-cards.html
Great Card for General Travel (but High Spending Requirement)
Chase Sapphire Preferred:
Annual Fee: $95
Bonus: 75,000 points when you spend $5,000 over the first three months of card ownership. This is worth at least $750. The bonus on this card changes frequently but should be at least 60,000.
Spending reward: 3x (restaurants), 2x (travel), 1x (other)
Best use: There are lots of uses. The simplest is to book travel directly through Chase’s travel portal, which is administered by Expedia. Another great option is to transfer points to Hyatt’s rewards program, which offers quality rooms for as little as 2,500 points/night. This is my most common points redemption across all cards. For me, a frequent Hyatt user, the value of a Chase point is significant.
Comments: This is probably the single best travel-related card that doesn’t have an exorbitant annual fee. And it comes with lots of perks aside from points rewards. Furthermore, it offers a strong referral bonus. So, once you have this card, you can refer friends and family and generate 15,000 points for each successful referral.
Learn More: The Points Guy Article
Apply: Referral Link
Good for Travel and Lounge Access (But High Annual Fee & High Spending Requirement)
Capital One Venture X
Annual Fee: $395, but effectively $0 after the first year if you can use it properly. Cardholders earn 10,000 points (worth at least $100) each anniversary and receive an annual $300 travel credit.
Bonus: 75,000 points when you spend $4,000 over the first three months of card ownership. For most, this is worth at least $750.
Spending reward: 2x on most spending
Lounges: Cardholders gain access to Capital One’s network of airport lounges with free food/drink. So, if you fly a lot, this can be a valuable perk. In the past, cardholders can invite two guests free of charge to most lounges, but this perk has been taken away.
Best use: This is similar to the Chase Sapphire Preferred (CSP), but offers at least 2x on all spending and provides lounge access. This is best for frequent travelers, especially those often traveling alone.
Comments: Not everyone wants to apply for cards multiple times each year to pursue bonuses. For the frequent traveler that wants a great card with tremendous perks, this is a great card. But it’s not for everyone. If you don’t travel much, this is not a great choice.
Basic all-around card with a lower minimum-spend bonus
Bank of America Travel Rewards
Annual Fee: $0
Bonus: 25,000 points when you spend $1,000 over the first 90days of card ownership. This is worth at least $250.
Spending reward: 1.5x on all purchases
Best use: This is a card with a lower minimum spend that is also more likely to approve a college student. The points can be used for a variety of travel. So, this is a good card to get if you know you plan to travel, but havent nailed down any specifics.
Comments: Consider this a great "dip your toes in" kind of card. With no annual fee, this is an ideal card for someone that is interested in travel rewards but doesn't want to take on unnecessary costs.
Learn More: The Points Guy Article
Useful Resources
Hosted at reddit.com/r/churning, this flowchart shows general recommendations for the order one should apply for certain cards. This list is not customized to you (obviously), so I doubt anyone will follow the list in order. But this is a great resource to identify card offerings.
Credit card rewards systems can get quite complex. The folks at TPG do a good job of highlighting key information to make your life easier.
Co-hosted by my former college roommatee and 2007 GCSU graduate, Richard Kerr, Miles to Go is a lot of fun.
BofA Travel Rewards Student
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