“What’s the best credit card to earn travel points?”
Conventional Wisdom tells us there’s no one simple answer to that question. It depends on your travel goals. Do you want to fly domestically or internationally? Are you hoping to be in a premium class? Is status important to you? Establishing what you value helps determine what type of loyalty points you should collect.
This can make things difficult for beginners and sometimes even more advanced players. Even when you’ve decided on your travel priorities, there are so many credit cards out there to choose from with so many value propositions, it can be difficult to separate the wheat from the chaff.
But we’ve arrived at a fascinating point in time. While we probably still can’t name 1 single credit card that will fulfill all your travel needs, I think we can start cutting down on all the noise and forget most of the cards out there in favor of just a few “must haves” for everyday use.
In fact, I can cull it down to five. The only 5 cards you’ll need.
Which 5 cards? How does this work and why? And what are the downsides? Let’s take a look.
The value proposition has changed. Drastically.
Airline miles are becoming more and more worthless. The Big 3 are going out of their way to destroy their loyalty programs. It’s an arrogant choice whose shortsightedness will become crystal clear as soon as we hit the next recession. And smaller carriers such as Southwest and JetBlue have revenue-based programs already, so they’re mostly irrelevant except for the occasional poorly thought out promotion.
Most hotels long ago effectively killed their loyalty programs. Hyatt still offers value but only if their footprint matches your travel habits, and it remains to be seen what Marriott does in the long-term to Starwood Preferred Guest. Meanwhile, Hilton’s devaluation a few years back resulted in their points becoming no better than a footnote in travel loyalty programs, unless you enjoy chasing valuations of less than half a cent per point.
But the banks. Oh, the banks…
The credit card battle amongst the banks has been escalating for years now, particularly between Chase and American Express. But the last few months has brought out the heavy artillery from these two heavyweights.
Also, the loyalty points earned in Chase Ultimate Rewards and Amex Membership Rewards are transferable to nearly every major airline and hotel. Which means if you happen to find an actual worthwhile award redemption under those declining airline and hotel programs, you’ll still be able to grab it by transferring only the points you need.
So if you’re investing, it’s long past time to dump airline and hotel miles. Bank points are the new stars.
Start with 2 cards from Chase.
Everyone already knows about the biggest credit card marketing sensation of the year (and maybe even the decade) — the Chase Sapphire Reserve card. It does it all. 100,000 point signup bonus! Transferable points! An easy $300 travel rebate! It’s metal! It’s shiny! It’ll clean your bathroom!
But the success of this card didn’t just come from marketing and most of the features above, while impressive, aren’t the real value of the card. It’s the 1.5 cents per point fixed value on direct travel redemptions. Meaning you can use the points to purchase any airfare (or hotel room, rental car, whatever) and get 1.5 cents for every point. That’s excellent.
But the real key is pairing it with a Chase Freedom Unlimited card. That no-fee card itself earns 1.5 points for every dollar spent. Unlimited. (Yes, it’s in the name.)
The beauty here is those points from the Freedom Unlimited pool together with the points from the Sapphire Reserve, making them all worth 1.5 cents each for travel redemptions. That means every dollar you spend on the Freedom Unlimited is worth 2.25 cents per point for travel. That’s (almost) as good as it gets.
And you don’t even need to carry the Sapphire Reserve with you. Use it to qualify for the bonus and burn the $300 travel credit, then throw it in your sock drawer to be pulled out only for the occasional car rental (to get the primary collision insurance). The Freedom Unlimited is the one that goes in your wallet.
Add 2 more from American Express.
This one is slightly more tricky because the primary card you’ll need is a business card. Specifically, the Business Platinum card. Only the business version has the new 50% rebate on points redemptions for premium cabin travel on any airline – the personal card doesn’t have it.
But don’t panic. There are lots of ways to get a business card. (Also, I’m not telling you to go apply for 18 business cards. Just this one.)
Like the Chase two-step, you’ll want to pair this one with an Amex Everyday or Everyday Preferred card. The Everyday has no annual fee so it will be the right choice for many, but if you can make the extra transactions and bonus categories worth it on the Preferred, then paying the extra $95 a year might be acceptable.
Why are we pairing an Everyday card with the Platinum? Because if you make 20 transactions a month on the Everyday, you’ll get an extra 20% added to your points (or 50% on the Everyday Preferred for 30 transactions a month). That means 1.2 or 1.5 points per dollar spent, just like the Freedom Unlimited. And yes, these points pool with the Business Platinum, so you’ll get 2 cents per point in value for all your points. That’s as much as 3 cents per dollar spent on the Everyday Preferred.
Again, use the Business Platinum until you’ve made the bonus requirement and spent the travel fee credit, then take it out of your wallet. Only the Everyday card needs to go out into the world with you.
Finish things off with a 2% cash back card.
Finally, for those times when you just want to get cash back, pick up a simple 2% cash back card. I’d probably recommend the Citi Double Cash card for simplicity, but there are a few other options. Regardless, make sure it’s a no fee card.
Now, what do we have in our wallet?
- A Chase Freedom Unlimited that earns 2.25 cents per dollar spent when redeeming for travel. You can also transfer these points to United and Hyatt, among others.
- An Amex Everyday that earns 2.4 cents per dollar spent (or 3.0 for the Preferred) when redeeming for premium cabin flights (or economy flights on your selected airline). You can also transfer these points to Delta and SPG, among others (though the latter is not recommended due to the poor transfer ratio).
- A cash back card that earns 2 cents per dollar spent.
That’s it. You’ve maximized your credit card earnings while walking around with just 3 cards.
You’ve got high value travel points that are also transferable to an enormous number of airlines and hotels, plus the ability to earn straight cash back. And when you buy tickets directly with the points, you’ll earn miles and elite status (though you have to be careful of bulk tickets). So there’s really nothing more you need.
What are the downsides?
There are a couple tradeoffs. The obvious one is the large annual fees on the Sapphire Reserve ($450) and the Business Platinum ($450). However, these fees are partially offset by the travel credits on these cards, and entirely offset for the first year. Yes, travel credits are not cash, but if you’re bothering to focus your credit card earnings on travel in the first place, then I think it’s safe to assume you’re buying at least $500 in airline tickets yearly.
You’ll also note that under this system, you don’t get any bonus categories (except for a very few with the Everyday cards). This is a feature, not a bug. Bonus categories are great, but they’re complicated and usually come on cards with annual fees, so I’ve left them out. But if you have a specific bonus category that you can’t live without, you could add that card to your wallet as well. (One that comes to mind is a Chase Ink card with 5x points at office supply stores, but that’s just me.)
For the Amex cards, the 2 cents per point valuation comes in the form of a 50% rebate, so you’ll need double the number of required points in your account in order to make redemptions with half the points returned afterwards. That’s a bit annoying, but not a huge downside. And if you’re over 5/24 with Chase, you could have trouble getting a Sapphire Reserve, though you can conceivably forgo the bonus and product change one of your other Ultimate Rewards cards instead.
Finally, the one airline that’s conspicuously absent from the transfer list above is American. This is unavoidable since American is not a transfer partner of any bank. So if you really want American miles, you’ll have to get an American credit card (or transfer them from SPG). I wouldn’t recommend doing either. American award space has been atrocious over the last year, so you’re not doing yourself any favors with a stash of American miles.
The Devil’s Advocate is reworking his own card portfolio.
This 5 card scheme isn’t going to be right for everyone. Even after deducting the travel fee credits on the Sapphire Reserve and Business Platinum, you’ll still pay $400 a year combined. There are many other benefits that come with these cards that may justify that cost to you, but the real justification is if you have a healthy amount of everyday spend on your credit cards, in which case the increased earnings will offset the fees.
But I’ve been going over my own everyday cards, and I’m quite certain some changes are coming to my own personal wallet very soon. (Let’s just say Citibank chose an extremely inopportune time to devalue the Citi Prestige.)
If you’ve been following my column recently, you’ve likely noticed this “bank points are the new king” theme over the last few months. And with good reason. Not every bank program is great, mind you. For example, I see no reason to carry a Barclaycard Arrival+ or a Bank of America TravelRewards card, though it certainly may still be worth applying for those cards from time to time.
But it also seems clear the banks have even more to come. Potentially much more. So take a look at your own wallet soon, because it might just be time to clean house.Devil’s Advocate is a bi-weekly series that deliberately argues a contrarian view on travel and loyalty programs. Sometimes the Devil’s Advocate truly believes in the counterargument. Other times he takes the opposing position just to see if the original argument holds water. But his main objective is to engage in friendly debate with the miles and points community to determine if today’s conventional wisdom is valid. You can suggest future topics by following him on Twitter @dvlsadvcate or sending an e-mail to firstname.lastname@example.org.
Recent Posts by the Devil’s Advocate:
- Could the New Amex Platinum 50% Rebate Mean the End of Miles?
- The New Arrival+ Signup Bonus is Decent, But It’s Not a Keeper Card
- Are Bank Rewards Programs Killing Frequent Flyer Miles?
Find the entire collection of Devil’s Advocate posts here.