#what credit card should i get
Miles Points 101 What Credit Card(s) Should You Get?
Before we start, here is a quick index of the How to Get Started series:
As a beginner, you might find that there are an overwhelming number of travel-related credit cards out there. In the past year or two, credit card sign-up bonuses have become so good that a general rule of thumb is NOT to apply for a card unless you get at least $500 (which generally means 50,000 miles/points). Some of the best offers last year all came with 75,000 or 100,000 sign-up bonuses. To help you answer the question What credit card(s) should you get? I am going to start by giving you a quick rundown on the three different types of miles points credit cards.
3 Types of Travel-related Credit Cards with Their Main Benefits
- Airline-specific Card s : 1 mile per $ spent + bonus for airfare on that airline, and/or other categories; waived checked bag fees + priority check-in/boarding + miscellaneous travel benefits.
- Hotel Chain-specific Cards: additional loyalty points per $ spent; complimentary or fast-tracked elite status; annual free night award upon card renewal.
- Credit Card Company-specific Convertible Points Cards: fee-free cards in this category generally do not allow you to transfer your points to airlines or hotel chains. The following is a simplified summary of the major players in this category:
- Chase Ultimate Rewards (UR): 1:1 transfer to United, Hyatt, and others (not as good a transfer value as the two listed here)
- American Express Membership Rewards (MR): generally 1:1 transfer to Delta, British Airways, and others; but often run 30-50% (or even higher) bonus promotions for point transfers
- Capital One Venture Rewards: generally fixed value (2 cents per dollar, in the form of credit for travel expenses)
- Citi Thank You Points: generally fixed value (1 cent per point, or 1.33 cent per point if you book airfare on the Thank You Travel website)
As you might remember from Part 2 of our How To Get Started series, a mile-earning or convertible-point-earning card usually gives you better redemption value than a cash-back or fixed-point card. We are going to discuss, in my opinion, what cards you might want to consider applying for. (For your convenience, if you click on the active card link, you will be taken to the card application page I found online. I do NOT earn any commission if you decide to apply through the links.)
If You Only Want to Apply for One New Card, Get the:
- Chase Sapphire Preferred ($95 annual fee, waived for the first year): 50,000 bonus points after spending $3,000 in the first 3 months; 2 points per dollar on travel dining. 1 point everything else; 7% annual point dividend (even on 50,000 sign-up bonus points, which would be 3,500 bonus points at the end of calendar year); no foreign transaction fee (a saving of about 3% for all your foreign spending). [Update: 4/13/12: the sign-up bonus has dropped to 40,000 points.]
- P.S. If you already have a Chase Freedom Card ($0 annual fee, but with 5x points in various categories ). you can now transfer the points you earn from the free Freedom card to your Sapphire Preferred card, which allows you to transfer points directly to your (or your family members ) frequent flyer or hotel programs.
- P.P.S. If you have both the Chase Freedom Card and a Chase checking account (if not, look out for local Chase branch promos and targeted mailers sent to your home), you will receive 10 points per transaction on the Freedom Card and 10% bonus on all base points earned on the Freedom Card. You would be surprised to see how fast these points could add up!
Alternatively (or Additionally), On the Same Day You Apply for the Chase Sapphire Preferred. Get the:
- Chase Ink Bold (small business card) ($95 annual fee, waived for the first year): 50,000 bonus points after spending $5,000 in the first 3 months; 5 points per dollar on office supplies, telecom, 2 points on gas, hotels, 1 point everything else; no foreign transaction fee; some other travel benefits.
- Similarly, by having the Ink Bold Card, the points you earn on your existing Chase Freedom Card are now transferable to your (or your family members ) frequent flyer or hotel programs.
If You Fly Southwest Exclusively, INSTEAD OF the Chase Sapphire Preferred, Consider Applying for:
- Chase Southwest Plus Card ($69 annual fee, NOT waived): 50,000 bonus points (valued at $833. as 1 point = 1.67 cents) after first purchase ; 3,000 annual renewal bonus points ($50 value);
- P.S. There used to be a Premier version with the same sign-up bonus, a $99 annual fee, and 6,000 annual renewal bonus ($100 value, so it covers the annual fee). That card would work best for people intending to keep the card after one year. However, at this time, there is no more working application link for that version.
If You Feel Adventurous, On the Same Day You Apply for the Southwest Personal Card, Consider Applying for:
- Chase Southwest Plus Business Card . exactly the same fee and bonus as the personal version;
- The biggest benefit of getting both the personal and business cards on the same day is to go for the Companion Pass. As of now, the 100,000 bonus points you earn from applying for both cards still count towards the 110,000 points required for earning the Companion Pass. The Companion Pass is valid for the current year and the following year. Your designated companion can fly for free (up to $10 in fees per round trip) whenever you fly (even if you are flying on a free award ticket using your points). You can change your companion up to 3 times after the initial designation.
I could go on and on with different card recommendations here, but won t do that. The Chase Sapphire Preferred card or the Southwest card, in my opinion, would be the best to get your started. One thing to keep in mind is that you cannot apply for both on the same day. Chase, however, does allow you to apply for one personal card and one business card on the same day. If you have not applied for a personal credit card for a while, you should get instantly approved for the personal card you choose to apply for. If it is your first time applying for a business card, expect a conversion with a business credit analyst about your business and other income.
If you don t get an instant online approval but believe you should have, call Chase immediately at 888-245-0625 for a personal card credit analyst or 800-453-9719 for a business card credit analyst. Be prepared to answer questions related to your income, debt, credit history, or anything else that might be in your credit report. My personal experiences with Chase and its credit analysts have been very positive. If you find someone you don t like dealing with, find an excuse to hang up and call back to talk to someone else. Calling immediately is also more effective than waiting until you get a denial letter in the mail.
For some of you more advanced readers, if you are interested in applying for a different card fitting your personal needs, please feel free to contact me or leave a comment below. I would love to point you to the right cards.
Once we are done with the How To Get Started series, I will write a follow-up credit card post discussing other best cards currently available. At some point in the near future, I plan to compile a list of the best available travel-related cards for your reference, too.
[Update 4/13/12: Some of the links in this post might have expired or not give you the best bonus, before you apply for any cards, make sure to check out MillionMileSecrets Credit Card Page for the latest and best offers.]