CREDIT CARDS

When people hear that we have been able to travel all over the world on credit card miles and points, they want to know what they can do to get started.

The first question I ask them is: “do you have any credit card debt?”  If the answer is “yes”, I tell them that they are not ready for the miles and points game (travel hacking).  With credit card interest rates pushing over 20%, it is never wise to carry a balance.  Paying off all credit card debt is the first step towards financial freedom.  If you have credit card debt, signing up for new credit cards will only make your financial situation worse.  Miles and points can be extremely valuable, but not at the expense of paying finance charges.   

Before applying for any credit cards, my first recommendation is to always make sure you have a good credit score.  My favorite sites to check my credit score for free are: Credit Karma, Credit Sesame, and Quizzle. 

When applying for credit cards, I always recommend starting slow.  The more seasoned travel hackers will often apply for 4 or more cards in a single day, but newbies should only apply for 1 to 2 cards at a time.  You need to make sure you have enough money to pay off your entire monthly credit card bill.  Paying any interest fees will quickly decrease the value of the points and miles you have earned. 

Another question that I get asked all the time is: “what is the best credit card for ME?”

Well, there isn’t an easy answer for this because there isn't a best credit card for everyone.  There are pros and cons with every credit card.  Personally, I benefit from a mixture of different personal and business credit cards used for different purchasing situations.

Some credit cards offer cash back.  Other credit cards offer airline or hotel points.  Some credit cards offer 0% intro APR for 12 or more months.  Some credit cards have low rates, but don’t offer any rewards.  Most of the really premium credit cards have annual fees (they also have some of the best sign up bonuses).  

Personal credit cards
Here are my favorite personal credit cards:

Chase Sapphire Reserve
This card is the new kind of premium rewards credit cards.  This card earns 3x points on travel and dining purchases.  It has an unbeatable 100,000 a 50,000 point sign up bonus.  You get a $300 travel credit per calendar year with this card, credit is reimbursed automatically on any travel related purchase.  This card provides Priority Pass airport lounge access for the account holder and unlimited guests.  You get up to $100 credit every 4 years for Global Entry. This card is made of metal and looks very classy.  There are no foreign transaction fees with this card.  The Chase Sapphire Reserve has a $450 annual fee not waived the first year, but given all the benefits of this card, I happily pay the fee to keep it.


Note: with the sign up bonus down to only 50,000 points, signing up for this card is not as appealing as it used to.  It may still be worth it for many to keep the card long term for the benefits.  After the $300 travel credit, this card essentially has a $150 annual fee, only $55 more than the Chase Sapphire Preferred.  I'd say having the Priority Pass membership with unlimited guest access is well worth paying $55 more for this card's annual fee compared to the Chase Sapphire Preferred.


Chase Ultimate Rewards points are my favorite type of rewards currency.  They are extremely flexible and can be transferred to several travel partners (United Airlines, Southwest Airlines, Korean Airlines, British Airways, Singapore Airlines, Virgin Atlantic, Amtrak, Hyatt, Marriott, IHG, and Ritz Carlton) at a transfer rate of 1:1.  If you have multiple Chase Ultimate Rewards cards, you can easily transfer points between each of the accounts instantly and for free.  You can also transfer points between you and your spouse.  At the very least, you can convert each point into 1 cent cash back.  

Note: You can only transfer Ultimate Rewards points to travel partners with a premium (annual fee) Chase credit card.  You can apply for your Chase Sapphire Reserve here.

This card earns 2x points on travel and dining purchases.  It has a great 40,000 point sign up bonus.  The card is made of metal and looks very snazzy.  There are no foreign transaction fees with this card.  This card has a $95 annual fee, waived the first year.  Once the first year is up, you can downgrade this card into a normal no fee Chase Sapphire card.  This allows you to keep your points, however you will need premium Chase card to transfer them to travel partners, otherwise you can only redeem for cash back or gift cards. 

Chase Freedom
This no annual fee Chase card is unique because it earns 5x points in rotating categories every 3 months.  Some of these categories can be very lucrative, such as grocery stores, pharmacies, gas stations, or restaurants.  All other purchases earn 1 point.  I enjoy the Freedom card so much that I have two of them.  5x categories are capped at $1,500 spend (7,500 bonus points per quarter).   

Chase Freedom UnlimitedThis no annual fee Chase card earns a simple 1.5x points on every single purchase.  This is my go to card for normal purchases that don't fall into bonus categories with point multipliers.  This is the perfect Chase card to downgrade into.  
  
YES, I AM A BIG FAN OF CHASE CREDIT CARDS.  Their point system is the most flexible and easy to use.


AMEX Starwood Preferred Guest 
The AMEX SPG card is a favorite for many travelers due to the flexibility and value of the SPG Starpoint.  While you cannot transfer Starpoints points directly into cash (like the Chase Ultimate Rewards program), you can transfer Starpoints into free nights or flights without blackout dates.  

Starpoints transfer to over 1,100 hotels & resorts in nearly 100 countries including: St. RegisThe Luxury CollectionW HotelsLe MeridienWestinSheratonAloftElement, and Four Points by Sheraton.  You can redeem Starpoints for flights on over 350 airlines with SPG Flights without blackout dates.  You can also transfer Starpoints to more than 30 airline frequent flyer programs, usually 1 Starpoint = 1 airline mile.  When you transfer 20,000 Starpoints to a frequent flyer program, you get a bonus free 5,000 airline miles.  See list of airline partners here.  You can apply for a card here.  

This card has a $95 annual fee, waived the first year.


Citibank ThankYou Premier
You can earn 50,000 ThankYou point bonus when you spend $3,000 in the first 3 months of card membership.  50,000 ThankYou points are worth about $500 in gift cards and cash, or $625 in airfare.

The ThankYou Premier card easily earns bonus points with 3x points on travel (including gas) and 2x points on dining out and entertainment.  This card has no foreign transaction fees.  This card has a $95 annual fee, which is waived the first year. 

ThankYou points transfer 1:1 to the following airlines: Cathay Pacific, Asia Miles, Malaysia, Qantas, Qatar, Garuda Indonesia, Flying Blue (Air France and KLM), EVA Air, Singapore, Thai Airways, Etihad, and Virgin Atlantic.  ThankYou points transfer 1 point to 1.5 Hilton HHonors point.  

Business credit cards

Business credit cards can be a great addition to your wallet.  Some business credit cards offer benefits and rewards that personal credit cards simply do not offer.

Business credit cards allow you to keep personal and business expenses separate.  Business credit cards don’t have an impact on your personal credit rating (as long as you don’t default on your credit).  This means that business cards don’t show up in your personal credit report, so carrying a large balance (which you should never do) or reporting a large balance on your statement date does not affect your credit utilization.   I have found that Chase, American Express, and Citibank business credit cards don’t report my activity to the credit reporting agencies.  

A common misconception about applying for business cards is that you need to have an established business or LLC in order to get approved for business credit cards.  If you already own a business, then you can apply with your business name and business tax identification number.  However, if you don't have an established business or LLC, you can still apply and get approved for a business credit card.  

If you sell things online (ebay, craigslist, etc), you can still be considered the sole proprietor of your own business, under your own name.  There is no need to use a “legal name of business” if you apply as a sole proprietor.  There is also no need for a business tax identification number as you can use your own social security number

You can apply for a business credit card even if you are thinking of opening a business and would like to separate your personal expenses from your future business expenses. 

When applying for a business card, the credit inquiry will show up on your report and lower your credit score by a few points (like other hard inquiries).  After a few months, your credit score should return to normal.

The important thing about applying for business credit cards is NOT TO LIE on your application.  Don’t make up a business name that you aren’t going to use.  Don’t lie and over inflate your annual business revenue. Most credit card companies WANT to approve you for a business card.  This means that even if you are a sole proprietor and you are making only limited amount of annual business revenue, you can still get approved for a business credit card.

Lastly, business cards may have less consumer protection compared with personal credit cards, so read the fine print on what kind of coverage your business credit card offers. 

Here are my favorite business credit cards:



With the Chase Ink Bold and Plus now discontinued, the only premium business credit card that earns Ultimate Rewards points is the Chase Ink Preferred.  This card earns 3x points on first $150,000 spent in combined purchases on travel, shipping purchases, internet, cable and phone services, and on advertising purchases made with social media sites and search engines.  This card has no foreign transaction fees and points can be transferred to all Chase travel partners.  This card has a $95 annual fee.  Currently, you can earn 80,000 bonus Ultimate Rewards points after spending $5,000 within the first 3 months.


This is a great business card that I use very regularly.  The Chase Ink Cash card earns Chase Ultimate Rewards points that combine with the points earned on my other Chase cards.  This card earns 5x points on the first $25,000 spent a year at office supply stores, cellular phone, landline, internet, and cable TV services.  This card earns 2x points on the first $25,000 spent a year at gas stations and restaurants.  This card earns 1x points on all other purchases.  This is a great business card to downgrade to if you don’t want to pay the annual fee of premium Chase business cards. Currently, you can earn 30,000 bonus Ultimate Rewards points after spending $3,000 within the first 3 months.

So, what is the best credit card for you?

The best credit card for you is the one that offers YOU the most benefits. I hear about people blindly applying for credit cards just to score thousands of airline miles and hotel points.  Then they find out that the airline miles they earned don’t fly out of their nearest airport, or they can’t find a place to visit that takes their hotel loyalty points. 

Applying for too many credit cards at once can ruin your credit, especially if your credit report has a thin file (short history of credit).

Applying for too many credit cards may result in you not being able to meet the spending requirements necessary to achieve credit card sign-up bonuses.  

Let’s say you need to spend $3000 on a card to qualify for a sign-up bonus.  If the same spending requirement applies to 3 cards and you apply for all of them, you will need to spend $3,000 x 3 = $9,000 within 3 months to achieve all 3 bonuses.  


Can you achieve this with regular spending?  Will you be tempted to accelerate your spending by buying things you can’t afford just to earn the sign-up bonus you don’t really need?

These are the cards that work well for us.  I can’t tell you what the best credit card for your situation is, but these are my favorite credit cards.  You can always contact me anytime for more personalized advice.


NOTE: This post will be updated regularly as credit card offers are always changing.
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