Earning Points
There are multiple ways to reap the benefits of what credit cards have to offer, but the most lucrative way to do this is through points. They provide the best Spend / Value ratio. This being said, there are several recommendations to be followed to ensure you receive the maximum value.
This page covers:
Single card mentality
Banks offer flexibility
Build points
Make a plan
Be patient
Travel loyalty cards
Summary
Single card mentality:
To best take advantage of cards earning points, we need to divorce ourselves of the single card mentality. We may have grown up with the idea that one card is simple to manage, and if we use that one card for all of our purchases, all of our points will go to the same place, enabling better use of points.
Credit cards are designed to entice potential customers to use them by matching their lifestyle. Some cards may provide extra points for dining out, for example, while another offers extra points for groceries, another for fitness classes, another for gasoline, another for travel, etc. Unless the cards come with annual fees, there is no reason not to maximize points by using several of them. Curating a targeted collection of cards enables us to build points faster by taking advantage of the way the banks have structured them.
Banks offer flexibility:
We encourage credit cards from the major banks (Capital One, Amex, Chase, etc.) where the points accumulate with the bank accounts, because they provide flexibility in using your points. Each of them have paired with multiple airline and hotel travel partners. As an example, American Express currently has 18 different airline travel partners. Capital One has 17. This means that when traveling, you have options, and when you have options, you can usually get better deals.
Points can be redeemed through the travel service of the bank itself, but the most efficient use of points is usually through discount fares offered by the airlines. With bank cards, points can be transferred to the airline offering the best deal See Transferring Points
Build Points:
The quickest way to build points is through sign-up bonuses. Banks create these bonuses to attract us to open accounts with them, and subsequently use their cards.
Sign-up bonuses are always associated with a minimum spend. This spend is the cardholder’s commitment to use the card enough to qualify for the bonus.
As an example, a bank may offer a sign-up bonus of 100,000 points, which is awarded after the cardholder spends $6,000 in the first 3 months of activating the card. If the spend commitment is not met, the bonus is not awarded.
The return on opening a new card account is excellent. Using the above example, by meeting the spend commitment the cardholder will have earned at least 106,000 points while spending only $6,000. That is the 100,000 sign up bonus plus 6,000 additional points associated with the spend. If there are any point multipliers associated with the card, the cardholder would likely have earned more with the $6,000 spend. Earning, at a minimum 106,000 points with a $6,000 spend means the cardholder earned 17.67 points per dollar spent. This rate of return is far higher than even the best ongoing multiplier bonus offered by any credit card.
After sign-up bonuses, the best way to earn points is through multipliers offered through the banks. Many offer 2x points – 5x points, even as much as 10x points in particular categories. Curating and using your cards to get the best multiplier for each transaction will help your points grow quickly.
Make a plan
Max Your Plastic can help you determine which cards are best for you based on your lifestyle.
Once you know what the right cards for you are, it can be tempting to get them all right away. The different banks, however, place different unwritten rules on the number of accounts that can be opened, and the frequency of opening them. Exceeding these can result in rejected card applications. Max Your Plastic is familiar with these rules and can help you navigate them.
Be patient
When shopping for new cards, it is recommended to be patient and have flexibility. On their websites, banks present new card sign up bonuses to the general public. This means they are available to everyone. They also provide special, targeted offers with anywhere from an 8% to more than a 100% bonus increase. These offers can come via email, snail mail, or targeted online advertising.
So, when you’re ready for a new card, be patient and wait for a better offer. Max Your Plastic can guide you regarding what special offers might be available and when, so you can receive the best offer possible.
Travel loyalty cards
There are a number of cards with attractive sign-up bonuses which are associated with a particular airline or hotel chain. These travel loyalty cards are good in that they reward loyalty and usually provide status with that chain or airline. Status enables priority boarding, free checked bags, early check-in and late check-out, etc. If you have loyalty to one, travel frequently on one airline and/or if your local airport is a hub for it, it may make sense to have such a card in your portfolio. The downsides are:
the points you earn are usually not transferable and can only be used with that airline or hotel chain
these cards almost always have an annual fee. The cost of carrying multiple such cards can add up.
Max Your Plastic recommends no more than one or two of these cards, instead focusing on bank cards for greater flexibility.
Summary:
With the right analysis, plan, and patience, you can quickly begin to accumulate the points you need to realize your travel dreams! Card offers change and new cards are introduced regularly, so curating your cards over time will help you continuously align with the offers that best meet your needs.
Max Your Plastic can help you not only establish the most efficient plan for your needs, but also monitor for special offers and changes in the credit card landscape to guide you in curating your cards to grow points as quickly as possible.
