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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 referral links for two cards (Chase Sapphire Preferred and Capital One Venture X). If you select these, 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. Two of these cards offer referral bonuses. I would be stupid not to include the links for those, right?
Easiest Card for Free Flights (Low Monthly Spending)
Aviator Red World Elite Mastercard
Annual Fee: $99
Bonus: 50,000 points after paying the annual fee and making one purchase
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 (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.
Apply: AAdvantage® Aviator® Red World Elite Mastercard® | Barclays US (barclaycardus.com)
Best Cards for General Travel (Moderate to High Monthly Spending)
Chase Sapphire Preferred:
Annual Fee: $95
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. 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 the best 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: Chase Sapphire Preferred credit card review: Full details - The Points Guy
Apply: Chase Sapphire Card Collection | Chase.com (referyourchasecard.com)
Good for Travel and Lounge Access (High Monthly Spending)
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. Cardholders can invite two guests free of charge to most lounges.
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. Cardholders can add up to four authorized users on the card, who will receive the same lounge benefits as the original cardholder.
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 card has it all. Think of the stereotypical businessperson with a spouse and three young-adult kids. They can get the card for themselves, add their spouse and kids as authorized users, and now everyone in the family can take advantage of free lounge access (with two free guests each!). And the businessperson receives 2% back on all spending, which is quite good. But it’s not for everyone. If you don’t travel much, this is not a great choice.
Good for Renters who want flexible redemption options
Bilt Mastercard
Annual Fee: $0
Bonus: None currently available
Spending Reward: 1x on rent and other spending, 2x on travel, 3x on dining. To unlock these benefits, the cardholder must make at least 5 transactions each month. On the first of each month (“rent day”), spending rewards are doubled.
Best Use: Bilt has its own Expedia-managed travel portal, for which each point is worth 1.25 cents. Users can also transfer points to travel partners, including Hyatt, which I find to be a valuable method for unlocking cheap hotel stays. Uniquely, Bilt also allows users to spend points on the downpayment on a home, where each point is worth an impressive 1.5 cents.
Comments: This is the only card listed here that I have not owned. With no minimum spend bonus, it’s not quite lucrative to justify inclusion in my card collection. But it may be perfect for you, especially if you are a renter. With no annual fee and a strong points program, this is a great first card for a young person looking to start their credit score while earning valuable travel rewards.
Learn More: Bilt Credit Card Review: Charge Rent and Earn Rewards - NerdWallet
Apply: The Bilt Mastercard® - Pay rent and earn points with no transaction fee (biltrewards.com)
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.
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