Now we are gonna cover, how to choose a credit card and some of the things that I consider when choosing a new credit card, I have them ranked in order of importance to me.
What are you travel goals?
The first, being my travel goals and plans, second is the card bonus and spending requirements, the third are bank rules and restrictions that need to be taken into account, fourth is travel partners or transfer partners. So, if there’s another airline or hotel that you can transfer your points to or elsewhere that they can be used that adds value. Five is the travel benefits that come with a card. Six includes the non-travel card benefits and then seven, which I was on the fence of whether or not I should include this or not, the annual fee, usually the card pays for itself so I don’t really consider the annual fee, I don’t give it that much weight when I’m making a decision, but if you need some sort of a tiebreaker, that could be something that you use.
Travel goals and plans
Where do you want to go? Do the airlines that fly there or whatever the destination is offer credit card bonuses. How about the hotels? Do the hotels have a credit card bonus that you’d be eligible for? If the answer is no to either of the above,
then you might need to consider a bank card rather than a co-branded airline or hotel specific card. Also, what is your timeline you want to have an idea of where or when you’re planning to take your trip? Is it going to be in the next few months or is it going to be more than a year away? If it’s a year away, one thing to consider is that airlines and hotels are constantly devaluing their points. So, it’s something to take into account. If you’re going to be doing more of a long term horizon sort of travel planning, if it’s in the next few months, you might want to check availability for award, for award tickets, for both hotel and airlines just to make sure that your flight or your hotel is even available.
Credit card bonus and the spending requirements.
What I always consider in this category is, is this credit card bonus going to be available later this year, or is it a limited time promotion? So, what credit card issuers or banks have been doing is they temporarily increase a bonus or a special offer and then it’s only available for like one or two months. Sometimes they’re targeted promotions, which you may be able to have matched if you weren’t targeted for that specific promotion. For example if somebody got sent a letter in the mail saying “hey, you have a hundred thousand point bonus if you sign up for this credit card and meet the spending requirements.” But that was intended for that specific person. Not for you. Some banks may be lenient and and match that for you others may not. Another thing to consider is can you have a friend or family member refer you? When somebody refers you oftentimes, they get a bonus for referring you to that credit card and you yourself can refer friends and family and you will get a bonus. That’s one thing to consider. I always convert the valued dollar value of the bonus. So if you remember from the previous chapter, that I use a 1-mile or point is equal to one cent valuation. That’s just a very basic way to do calculation here. I always calculated it into a dollar amount to see what the true value is because some points are worth more than others and you want to be cognizant of that when you’re making this decision. So one of the most important thing is ,how much money do you need to spend to meet the bonus requirements? And is it realistic? If you are thinking about churning credit cards, which means opening and closing credit cards just to get the bonus on a regular basis, maybe three or four times a year. You’re gonna have a lot of money to spend and if you don’t regularly spend that much money, how are you gonna meet that spend?
So those are some of the most important things that I thought you should consider when you’re considering a new credit card with regards to the card bonus and spending requirements.
Bank rules and restrictions
So, each bank has their own rules with regard to credit cards,bonuses and you know people who might be abusing the system some may not, some may. So Chase, for example, they have a 5/24 rule, this means that if you have had five applications, five credit card applications or accounts open within the last 24 months, you will probably be denied for credit at Chase Bank.
There are exceptions of course the rule, and there are reports of people getting certain cards that might not be included in this rule, but it’s something that you may want to familiarize yourself with if you have opened multiple cards within the last two years. American Express and is known to have a five credit card limit one thing to consider one thing to take note of here is that not all of their cards are considered credit cards so some cards are considered charge cards which are a little bit different. So that’s one thing you should also consider if you have more than five or if you have four or five AMEX credit cards.Citibank, has in the fine print, which you may or may not read, I’m sure a lot of people don’t read it. Sometimes I don’t really read it myself. If you have open several city cards before, you may want to make sure that you are reading that fine print there to ensure that you don’t open the card and then you don’t get the bonus.
And then for Bank of America, they seem to have the the most lenient, I guess approach with regard to mitigating a credit card churning. They don’t have any specific rules or language I don’t think that I’ve heard of at least as of today. But I have read reports that certain people If they seem to be abusing the system or they have opened and closed too many cards. They may receive a lower tier version of that card which oftentimes would carry a much smaller bonus. So rather than getting a twenty five thousand point bonus for opening your credit card, you know for for the the gold card or whatever. You may be approved for their lower tier cards. Say the silver card, which only carries a five thousand point point bonus So just some things to think about with regard to banks, their rules and restrictions.
Credit card point Transfer Partners
Another thing that I always consider is the ability to transfer points. Not all cards or award programs will allow you to do this, so you want to make sure that you understand each award program. Whether it’s a mileage program if it’s a point program for a hotel or if it’s a a bank sponsored point program. You want to understand where you can use your points and how you can use those points because if you can’t transfer anywhere, that really limits the ability for you to use those points. An example could be the United Mileage Plus program, they don’t allow you to transfer miles, but you can book with any Star Alliance partner using United miles, so they have a very large network you’re not restricted to just using them with United Air and that adds a lot of value. So,an alternative example to this could be, Southwest Air, so, Southwest Air you cannot transfer miles out, and they don’t have a network. So you’re kind of stuck using your southwest points with Southwest air. So it’s another thing that I always consider.
Credit card Travel benefits
The next most important thing to me when I’m considering opening a new card are the travel benefits. Obviously, I’m collecting miles and points to travel. It’s nice to have certain benefits when you open a new card some of the most popular ones include lounge access so the priority. Priority Pass Program is one of the most common. American Express also has their own lounge program which is only available at certain airports.
Some credit cards give you the elite status with a hotel or with the rental car agency, some credit cards will give you a fourth night free at any hotel that you book. Other cards may give you a point rebate. So say for example you use 100,000 points to book an award ticket to Europe, you’ll get 10 that or 10% back at the end of the year as a rebate. Some credit cards more of the premium cards give you a travel stipend which is like $250 credit on airfare per year, so the annual fee might be a little bit high but to compensate they give you a stipend so you get like $250 back whenever you book an airfare ticket.
Some cards include travel insurance to trip delay, baggage delay, car rental insurance, this is very nice to have, it’s not necessary but definitely nice to have especially if you don’t buy your own travel insurance on the side. So, I highly, if you travel a lot, I’d recommend you get travel insurance, I actually myself use an annual plan and I had to use it and it’s definitely been beneficial for me to have it when I had to use it. And then, for me this was a one-time the next thing the TSA PreCheck Global Entry reimbursement. This is a one-time fee and I believe it’s one per per card so if you have like a spouse that you want to get pre-checked for or global entry reimbursement for you could open up a second or you could add an authorized user to your account and I believe they would still be able to get that reimbursement for those two programs. Concierge services, It’s basically like your personal assistant who helps you get hotel or restaurant reservations or they can also help with tickets or do it, send flowers and things like that. So just like any other hotel concierge might do for you those services are available for certain cards. And then I guess, going back to the previous point I mentioned with TSA PreCheck and Global Entry, these are programs that help you get through security much quicker. So I’m sure you’ve seen at the airport that they have special lines for TSA PreCheck or a Global Entry and it’s just a way for you to get through security much quicker especially if you travel quite a bit, it can definitely be a time saver.
General Card Card Benefits
I broke this out separately from the travel benefits that are associated with credit cards. Certain cards have purchase protections, so for example, say you bought a I guess a ceramic plate, dinnerware set and for whatever reason, you’ve only had it for a few days, but then you accidentally dropped the plate on the ground and it shattered.
That purchase would be protected by the credit card. You’d have to submit a claim andif it’s approved and it meets their requirements, you could get your your money back as a check or a statement credit depending on how they do it and you can go out and buy a new set to replace it.
Price protection is just a program that certain credit cards offer, for you and your purchases say you bought a TV for $100 today and then in a couple months it goes on sale for $80. The credit card will send you the difference for that price change. So, that’s price protection.
Return protection if you’re not familiar with it is a program that allows you to get a refund for something that you wanted to return but it’s past the return period. So, say I went and bought a phone today and the return period was seven days. For whatever reason I don’t like the phone and then a month later from today I decide that I wanted to return it but it’s past the return period I could submit a claim to the credit card for return protection and get my money back that way.
Extended warranty, I have not used before but I believe that some people have just reading reports, it seems like it comes in handy if you need to have something replaced that’s out of warranty. So if you get like a I don’t know washing machine I don’t know if this is covered by the extended warranty terms, but let’s just for the sake of illustration use a washing machine say the standard warranty is one year. The machine breaks down after two years. It’s out of the original manufacturer warranty but because you use your credit card to buy it, it would qualify for the extended warranty claim and you could potentially get reimbursed for that on that way.
Other perks from getting a credit card, include, you know preferred seating or special access to social events. Like, I don’t know dinner parties or festivals,
And then the last thing that I wanted to highlight is roadside assistance. So this is more of a premium card like the AMEX Platinum Card or City Prestige card, both of which offer roadside assistance, so if you have triple-a and you get one of those cards. You really don’t need both and so you can cancel your triple-a membership and that’ll save you, I don’t know fifty or hundred dollars a year. So, just a few things to consider.
Credit card Annual Fee
The last thing that I wanted to go over is they annual fee, often times for cards it’s waived for the first year depending on the bank and the promotion obviously. And I don’t really consider this to I don’t give this too much weight when I’m trying to decide on credit cards to open but I know some people might consider this or might give it a little bit more weight as well as the interest rate which I don’t consider because I pay my balances in full.
So those are I guess two other things that may sway your decision.
And then just a few closing thoughts before we wrap up, some of the other things to keep in mind here you now understand all the benefits that come with the cards that you apply to
I know, you know, there’s a lot of information out there. So you want to make sure that you know what you’re getting into and so, that you can maximize the benefit of the credit card.
And if you’re married or co-habitating, and can meet the spend, you could double your bonus by opening two separate accounts. You could even refer each other. That way you get a referral bonus and then your partner whoever, they will get their bonus oftentimes the bonus, if you the referral bonus for your friend, whoever it is that you get that you’re referring is the same as what’s available to the public.So, say you refer your friend to the MX Platinum Card, you’ll get they will get a hundred thousand bonus points upon you know, meeting the requirements. There’s also a public offer for hundred thousand bonus points, but by referring your friend you get ten thousand bonus points for the referral. So, two wins there. If you can’t meet the spend requirement in time, you can always ask for an extension. I’ve done that before, depending on who you talk to, they may be able to extend that for you by a month or I don’t know a week or two if you have a valid reason,so it never hurts to ask.
One of the other things that I’ve also done is, I’ve been approved for a card and then for whatever reason some other promotion comes out which is slightly better, you can always email or call customer service and ask them to match that offer. Another thing to keep in mind is if you’re not approved immediately, for your credit card, you can call it reconsideration line.
So,rather than wait a week or two to get that letter in the mail saying that they didn’t open your credit card account you can be proactive and call the the reconsideration line. Sometimes, there’s a valid reason for them denying you credit, sometimes they just want additional information. So it never hurts to call the reconsideration line.
Other considerations for your travel credit card
Also, if you have been doing this for a while and you’re at that stage where you’re applying for multiple cards in the same day by multiple banks, some banks may, consolidate your credit pull into one report rather than multiple credit poles so that’s always nice to have if you’re doing that.
And then, another thing to consider is some banks are more strict on your accounts than others. So, US Bank Capital One, for example especially if you have no banking relationship, so you may want to tread lightly there especially if you’re opening and closing multiple accounts. Those might be banks that you want to apply to first, as opposed to last after you have applied to three or four cards in one day.
All right, and that about wraps up this chapter, in the next chapter we will go into ways that you can meet your credit card spend.