Earning Points Part 1: Sign-up Bonuses

The quickest and easiest way to earn points and miles is by opening credit cards that offer sign-up bonuses, usually anywhere from 25,000-100,000 points. Not all points are equal, so it is important to recognize the value of a point. For example, I value Chase Sapphire Points more than American Airlines miles.  You could open about 2-3 credit cards at the same time every 6 or so months (and this has been how we have earned most of our points up until last year when we stopped because we are building a house and need to wait until closing to open any new accounts).

Choose cards that earn transferable points

I understand that some people may only feel comfortable opening 1 at a time and that is fine, but your points won’t add up as fast. So if that’s the case, and both cards are offering a 50,000 sign up bonus, I would open the Chase Sapphire Preferred because instead of being limited to redeeming miles with American Airlines as you would be with the Citi AAdvantage card, you have the option to transfer to different airlines, so if one airline is not offering a reward flight on the dates you need, you can try another airline.  

A few tips:

  • If you are married, both spouses should open a new account. Some cards will give you a small bonus of about 5,000 for adding an authorized user, but assuming both spouses have good credit, both would be eligible for the sign up bonus, so you’re doubling your earning by each opening a card rather than one person being added as an authorized user
  • When you open a card, you will usually have to spend a certain amount (usually $1,000-$3,000) during the first three months. The points will be awarded after that.  Here are some ideas for meeting minimum spending requirements.
  • When are the points awarded? Depends but usually after your statement in which you meet the minimum spend closes.
  • There are many cards out there with no annual fee, but most of the cards that I keep and value the most do have a fee that I am able to justify by the benefits.
  • Some cards may waive the fee for the first year, but even if they do not, usually the sign up bonus points that are awarded are worth significantly more money than the annual fee if you know how to use them right.
    • Most airline credit cards have the benefit of checking your first bag for free. If you frequent one airline, it might be worth it to keep their card even if you do not intend to use it for spending because a roundtrip flight can cost 50$ in checked bags.
    • This along with other benefits often offsets the cost of the annual fee.
    • I have a Citi AAdvantage card that I never use, but I keep it open for the benefits since DFW is an AA hub and we fly them often. More about benefits will be discussed later.
  • After the first year, you may decide the annual fee is not worth paying. This is why it is important to keep a note or spreadsheet of all of your accounts, date opened, and annual fees.  As the anniversary approaches, you may choose to cancel a card, but before you cancel, make sure you do not lose your points! Read more on annual fees here An Example of How Annual Fees Can Be Offset
    • Generally if it is an Airline Card (Southwest for example), the points go directly to your loyalty account and if you are to close the card, you keep the points. With bank points such as Ultimate Rewards and Membership Rewards however, if you close the card, you lose the points. I know I talk about not transferring points until you’re sure your dates work, but if you’re really needing to close an account that awards UR or MR, you lose the points, so you will want to transfer them to the hotel or airline that you’re most likely to use before closing the account
    • With Amex MR, you could get a no annual fee card that earns MR before you cancel the account with a fee and then you will be able to keep your points until you need them without continuing to pay an annual fee on a card with a higher annual fee such as a gold or platinum card.
“Which credit card should I get?”

I wish I had a simple answer to this.  It is difficult for me to tell you which card is best to start with since I do not know your specific travel needs and goals.  I am willing to answer questions though! Contact me if you need guidance.  The best advice I can give to anyone starting out is to get the card that gives you the most flexibility with points, and that would be the Chase Sapphire Preferred and/or the American Express SPG card.  The highest sign-up bonus I can find for CSP is currently 50,000 points.  The highest for SPG is 25,000 (which is pretty standard. It was up to 35,000 last month but I had never seen it that high before that).  From there, you can determine what other cards suit you best based on your goals.  American Express cards that earn Membership Rewards are also great for starters.

“Don’t you run out of credit cards to sign up for?”

Another frequently asked question.  The answer is no. With the exception of American Express who only allows one bonus per lifetime per product (but there are so many different “products” that this has not yet shut down my ability to continue to earn points), most banks allow you to get the bonus more than once.

For example, I had a Southwest card a few years ago and I got a 50,000 bonus.  I earned the companion pass the year I opened it.  It’s good for the year you earn it, plus the next year.  More on that in the future. Anyway, as the anniversary approached I could not justify paying the annual fee because I was not using the card for my everyday spending and it did not provide enough benefits.  A little over 2 years from the date that I received the initial bonus, I opened the exact same card and earned the bonus again.  Chase (who issues the Southwest card) does not explicitly state this but word on the street is that you can get the bonus if it has been over 2 years since the last bonus was issued.  This is the case with most cards, and some you can get more often than every 2 years.

“Doesn’t opening so many credit card accounts ruin your credit?”

The short answer is no.  It does not hurt your credit as long as you are responsible and pay off your credit cards every month.  If you’re worried about opening credit cards, you can read getting Started.

Next will be Part 2: Everyday spending and category bonuses

 

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