Step 1: Credit Cards are your Friend!!
You know the saying, those who understand interest EARN it, those who don't PAY it. You must always pay your credit card bills in full and on time, otherwise this is NOT an efficient way to save money on travel.
APPLYING FOR A CARD:
A lot of people I know are very wary of applying for credit cards and scared thinking they will ruin their credit score. While it is true your credit score will take a dip when you apply for a card, please understand it is a very small dip and it is temporary (only about a month), then your score goes right back up. As long as you pay your card on time and in full, your score will remain high regardless of how many credit cards you close and open over the years. I promise! My score is around 800 and I have applied for somewhere around 5 credit cards in the last couple years, closed some too, and my score is still around 800. So relax! Also keep in mind that if you are married, you don't share a score. You each have your own, so you can technically experiment with credit card applications and leave your spouse's score untouched if you want. For stay at home mom's (like me) with no actual income, you just type in your husband's income on the application and put "other" as your employment. Credit card companies just need to know how much money you have access to, they are fine with you not being the one earning the income.
CLOSING CREDIT CARDS
Generally speaking you want to keep a card for at least a year, if you want to avoid paying the annual fee, you can cancel the card right before the fee posts or even right after the fee posts. You can usually call the credit card company within 30 days of the fee posting and request that the fee be removed and the card canceled. Another option if you don't want to close the card and want to keep the account for "history" sake is downgrading the credit card. Credit card companies like if you have a long history with them so if you haven't built up any history you might want to do so to help your credit score. An example of downgrading a credit card: Say I have the Delta Platinum Amex card which charges an annual fee of $250, if I decide I no longer want to pay that fee I could downgrade to the Delta Blue card which has no annual fee. I can then put that new card in a drawer (or the garbage if that makes you feel safer), I never need to use it and the account just stays open and builds history. Just understand that when you downgrade, you will not earn a "welcome bonus" on the card. Same thing if you upgrade to a different card - no bonus. So I would recommend NEVER upgrading, just apply for those "upgraded" cards so you can earn the bonus. Usually "downgraded" cards with no annual fee's don't have the most amazing bonuses so you aren't giving up that much.
SO WHAT CREDIT CARD SHOULD I GET???
This is a 2 part answer...........
First (surprising) answer.......... all of them! When you sign up for a new credit card it comes with a bonus, either a large chunk of change or a large chunk of miles. So if you applied for a new card once or even 2x a year imagine how many miles/points you could accrue! You don't need to treat your miles as though they are limited, because there is an endless supply! There are credit cards for every airline (Delta, American Airlines, Alaska, United, British Airways, etc.) and hotel chain (Marriott, Hilton, Hyatt, IHG, etc.), plus tons of credit cards for every bank (Amex, Chase, Bank of America, Capital One, etc.). Also keep in mind that if you are married, you EACH can apply for every one of those cards- so you have double the opportunity to bring in the miles. Now some of those cards don't really earn that many miles once you have gotten the bonus (1% miles or cash back stinks, do not use these low earning cards permanently), so I would recommend not using the card anymore after your bonus is earned. Just tuck it away in a safe spot and make a note on a calendar (or a spreadsheet, however you want to organize it all) so that you remember to either cancel the card or downgrade it at the one year mark.
If getting a new card (or two) every year sounds like a headache to you (because you will need to be organized to stay on top of it), then let's talk about the best credit card for you to get and keep in your wallet.
Second answer to what credit card should I get:
Well that really depends on where you spend the most money. In my case, that would be groceries and restaurants, so I have the Amex Gold card because it earns 4x points in those two categories. If you prefer cash back, the Amex Blue Cash Preferred earns 6% back on groceries up to $6000.
These two cards are currently the best cards out there for earning rate on grocery stores (so all of you that were upset that Smith's stopped taking Visa.......turns out you should be using an amex at Smith's anyway!). To learn more about the Amex Gold card see this post. To learn more about the Amex Blue Cash Preferred card see this post.
So the Amex Gold card is a favorite card of mine and I don't plan on ever canceling it, so it falls into my "permanent card" category. As much as I love earning 4x points, I will still set a "permanent" card aside for a month or two while earning a big bonus on a new "temporary" credit card. I typically don't transfer all my auto payments over to this new "temporary" card either, that would be a pain, just keep those on your favorite "permanent" card and see if you can earn the bonus without those. After the bonus is earned, I just go back to my favorite "permanent" card.
My 2 favorite and "Permanent" credit cards are the following:
Amex Gold Card - I use this for all food purchases since it earns 4x, it also earns 3x points on airline ticket purchases, everything else is only 1 point so I really don't use it on anything except food and airlines. This card has a $250 annual fee but gives you credits every month to use in restaurants. If you use the credits each month (like I do) then the card is free! My 80-year-old mother uses these credits on her Gold card each month, if she can figure it out, then so can you!
APPLYING FOR A CARD:
A lot of people I know are very wary of applying for credit cards and scared thinking they will ruin their credit score. While it is true your credit score will take a dip when you apply for a card, please understand it is a very small dip and it is temporary (only about a month), then your score goes right back up. As long as you pay your card on time and in full, your score will remain high regardless of how many credit cards you close and open over the years. I promise! My score is around 800 and I have applied for somewhere around 5 credit cards in the last couple years, closed some too, and my score is still around 800. So relax! Also keep in mind that if you are married, you don't share a score. You each have your own, so you can technically experiment with credit card applications and leave your spouse's score untouched if you want. For stay at home mom's (like me) with no actual income, you just type in your husband's income on the application and put "other" as your employment. Credit card companies just need to know how much money you have access to, they are fine with you not being the one earning the income.
CLOSING CREDIT CARDS
Generally speaking you want to keep a card for at least a year, if you want to avoid paying the annual fee, you can cancel the card right before the fee posts or even right after the fee posts. You can usually call the credit card company within 30 days of the fee posting and request that the fee be removed and the card canceled. Another option if you don't want to close the card and want to keep the account for "history" sake is downgrading the credit card. Credit card companies like if you have a long history with them so if you haven't built up any history you might want to do so to help your credit score. An example of downgrading a credit card: Say I have the Delta Platinum Amex card which charges an annual fee of $250, if I decide I no longer want to pay that fee I could downgrade to the Delta Blue card which has no annual fee. I can then put that new card in a drawer (or the garbage if that makes you feel safer), I never need to use it and the account just stays open and builds history. Just understand that when you downgrade, you will not earn a "welcome bonus" on the card. Same thing if you upgrade to a different card - no bonus. So I would recommend NEVER upgrading, just apply for those "upgraded" cards so you can earn the bonus. Usually "downgraded" cards with no annual fee's don't have the most amazing bonuses so you aren't giving up that much.
SO WHAT CREDIT CARD SHOULD I GET???
This is a 2 part answer...........
First (surprising) answer.......... all of them! When you sign up for a new credit card it comes with a bonus, either a large chunk of change or a large chunk of miles. So if you applied for a new card once or even 2x a year imagine how many miles/points you could accrue! You don't need to treat your miles as though they are limited, because there is an endless supply! There are credit cards for every airline (Delta, American Airlines, Alaska, United, British Airways, etc.) and hotel chain (Marriott, Hilton, Hyatt, IHG, etc.), plus tons of credit cards for every bank (Amex, Chase, Bank of America, Capital One, etc.). Also keep in mind that if you are married, you EACH can apply for every one of those cards- so you have double the opportunity to bring in the miles. Now some of those cards don't really earn that many miles once you have gotten the bonus (1% miles or cash back stinks, do not use these low earning cards permanently), so I would recommend not using the card anymore after your bonus is earned. Just tuck it away in a safe spot and make a note on a calendar (or a spreadsheet, however you want to organize it all) so that you remember to either cancel the card or downgrade it at the one year mark.
If getting a new card (or two) every year sounds like a headache to you (because you will need to be organized to stay on top of it), then let's talk about the best credit card for you to get and keep in your wallet.
Second answer to what credit card should I get:
Well that really depends on where you spend the most money. In my case, that would be groceries and restaurants, so I have the Amex Gold card because it earns 4x points in those two categories. If you prefer cash back, the Amex Blue Cash Preferred earns 6% back on groceries up to $6000.
These two cards are currently the best cards out there for earning rate on grocery stores (so all of you that were upset that Smith's stopped taking Visa.......turns out you should be using an amex at Smith's anyway!). To learn more about the Amex Gold card see this post. To learn more about the Amex Blue Cash Preferred card see this post.
So the Amex Gold card is a favorite card of mine and I don't plan on ever canceling it, so it falls into my "permanent card" category. As much as I love earning 4x points, I will still set a "permanent" card aside for a month or two while earning a big bonus on a new "temporary" credit card. I typically don't transfer all my auto payments over to this new "temporary" card either, that would be a pain, just keep those on your favorite "permanent" card and see if you can earn the bonus without those. After the bonus is earned, I just go back to my favorite "permanent" card.
My 2 favorite and "Permanent" credit cards are the following:
Amex Gold Card - I use this for all food purchases since it earns 4x, it also earns 3x points on airline ticket purchases, everything else is only 1 point so I really don't use it on anything except food and airlines. This card has a $250 annual fee but gives you credits every month to use in restaurants. If you use the credits each month (like I do) then the card is free! My 80-year-old mother uses these credits on her Gold card each month, if she can figure it out, then so can you!
Capital One VentureX. I use this card for "everything else" since it earns 2x points on everything. There are also occasionally places that only take a Visa so this fits that category as well. I put all my household bills on this card too. This card also earns 10x points on any hotels, car rentals, or airline purchases done through the Capital One portal so that's awesome! The annual fee is $400, but Capital One will credit you back $300 after you spend $300 on this card booking something through their travel portal. So it's just a way to get you to use some money in their portal - no biggie. They also give you 10k points each anniversary (which is worth at least $100). So this card is basically free if you use the credits and keep it year after year (which I do!).
Chase cards could also be combined with the Amex Gold for some good earning opportunities, it's just a little more complicated because you need 3 different chase cards to make this profitable. First you need a Chase Sapphire preferred. Once you've earned that bonus, you don't actually need to use the card on a regular basis, just own the card for the benefits.
Chase Freedom Unlimited- This is a good "everything else" card. It earns 1.5 miles on everything, and you can transfer those points to a Chase Sapphire Preferred or Reserve card which then multiplies those points to actually be worth either 1.875 or 2.25 points respectively. This Chase points strategy is explained in more detail here. This card has no annual fee.
Chase Freedom- This card offers 5% cash back (or 5x points) on rotating categories. Every 3 months they change the category. So one quarter I can earn 5x points on gas, one quarter it's 5x points on Costco. So I only use that card for the specific place it is earning 5x points, I don't use it anywhere else. This card has no annual fee.
No surprise - I actually own and take advantage of all 5 cards listed above. Start slow, over time you will become more familiar with each credit card, the points, rules, and strategies. Then you can add more.
BEFORE YOU START APPLYING FOR SOME NEW CARDS-
Make sure you space out your applications, you generally have to spend on the new card something like $1000 or more and it has to be done within 1 or 3 months in order to earn the bonus. So you'll want to spread your applications out (say you applied for 2 cards at the same time, you have then doubled the amount you have to spend on them in a short amount of time, that can be difficult! Take it one at a time so you can work on earning one bonus at a time).
-Also check to see if you can refer your spouse (or visa versa) to a credit card. Referrals are a great way for you and your spouse to rack up even more points. Generally you have to have the card to refer your spouse to the same brand of card (Delta cards can only refer to other Delta Cards, Hilton to Hilton, etc) . Just because you and your spouse both have a delta platinum card, that doesn't mean that both of you applied for that card. More than likely your husband applied for the card and then added you as an authorized user so that you would have your own card, but your card is still under his name and his account. So you would still be eligible to apply for that card (and he could refer you!).
I'd appreciate you using my referral codes if you aren't able to use one from your spouse! Click here for those referrals, these generally will get you a better bonus than if you just look for the card online without a referral.
Ready for STEP 2?
Chase cards could also be combined with the Amex Gold for some good earning opportunities, it's just a little more complicated because you need 3 different chase cards to make this profitable. First you need a Chase Sapphire preferred. Once you've earned that bonus, you don't actually need to use the card on a regular basis, just own the card for the benefits.
Chase Freedom Unlimited- This is a good "everything else" card. It earns 1.5 miles on everything, and you can transfer those points to a Chase Sapphire Preferred or Reserve card which then multiplies those points to actually be worth either 1.875 or 2.25 points respectively. This Chase points strategy is explained in more detail here. This card has no annual fee.
Chase Freedom- This card offers 5% cash back (or 5x points) on rotating categories. Every 3 months they change the category. So one quarter I can earn 5x points on gas, one quarter it's 5x points on Costco. So I only use that card for the specific place it is earning 5x points, I don't use it anywhere else. This card has no annual fee.
No surprise - I actually own and take advantage of all 5 cards listed above. Start slow, over time you will become more familiar with each credit card, the points, rules, and strategies. Then you can add more.
BEFORE YOU START APPLYING FOR SOME NEW CARDS-
Make sure you space out your applications, you generally have to spend on the new card something like $1000 or more and it has to be done within 1 or 3 months in order to earn the bonus. So you'll want to spread your applications out (say you applied for 2 cards at the same time, you have then doubled the amount you have to spend on them in a short amount of time, that can be difficult! Take it one at a time so you can work on earning one bonus at a time).
-Also check to see if you can refer your spouse (or visa versa) to a credit card. Referrals are a great way for you and your spouse to rack up even more points. Generally you have to have the card to refer your spouse to the same brand of card (Delta cards can only refer to other Delta Cards, Hilton to Hilton, etc) . Just because you and your spouse both have a delta platinum card, that doesn't mean that both of you applied for that card. More than likely your husband applied for the card and then added you as an authorized user so that you would have your own card, but your card is still under his name and his account. So you would still be eligible to apply for that card (and he could refer you!).
I'd appreciate you using my referral codes if you aren't able to use one from your spouse! Click here for those referrals, these generally will get you a better bonus than if you just look for the card online without a referral.
Ready for STEP 2?
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