Best strategies to get most out credit cards, rewards, balance transfer offers.

[BeamerBikes]

Opening a thread on folks best practices around handling credit cards.  

I'm re-evaluating my annual rewards card landscape.  I was loyal to United for years then switched to Southwest for their reward program fairness. Now I'm considering would it better to go the route of a single high priced annual fee like an AMEX Platinum versus carrying multiple travel cards - CapitalOne, Airline, Hotel cards.  

 

 

 

[BeamerBikes]

I suspect Balance Transfer offers are going to get even more expensive.  Gone are the 2% transfer fee days.   5% typical fee now. I suspect a nominal interest rate to return for shorter months too. I'd evaluate the balance transfer fee as part of the offer.  

I've had pretty good discipline on parking a balance on a transfer offer, and then making regular payments to pay it off by the end of the promotional period.  While also NEVER using that card for anything else since comingling balance transfer and new purchases is a recipe for $$$ in unclear interest rate structures. 

I'm finding I need to teach similar rules to my sister for financial literacy.  

[mike carey]

3 hours ago, BeamerBikes said:

Opening a thread on folks best practices around handling credit cards.  

I'm re-evaluating my annual rewards card landscape.  I was loyal to United for years then switched to Southwest for their reward program fairness. Now I'm considering would it better to go the route of a single high priced annual fee like an AMEX Platinum versus carrying multiple travel cards - CapitalOne, Airline, Hotel cards. 

Good topic, it falls across finance and travel so it'll be interesting to see if @Kevin Slater thinks this is the better place for it. Even though the payoff is travel, the decisions in getting there are financial.

Some initial thoughts, with disclosure that I have an American Express platinum ($AU1450) and a few other cards, and FF accounts with both main Australian airlines. My card collection could do with some decluttering too. In Australia I need other cards as there are lots of places where Amex isn't accepted, and you may find the same issue when you travel. All cards are far less lucrative here than in the US because card interchange fees are regulated and low so the companies have less they can pass back as benefits like miles.

I find the suite of benefits from the Platinum card to be good value. I just took my $450 travel credit, I can transfer the points to a range of domestic, regional and Middle Eastern airlines (plus Virgin Atlantic for some reason) [it is a completely different and far smaller list than the US card has] and if you fly at the pointy end of the plane Amex Travel has some substantially discounted 'Platinum Benefit' fares (and some in Economy too). The US benefits are different, but like ours some useful and some not. I can't comment on the relative value of the other transferable awards point ecosystems like CapitalOne.

It's probably premature to be thinking about how to spend your points before you've earned any but the time will come when you have to, so it's as well to be aware of what that might involve. As far as I know you can't transfer Amex points to Southwest so you'd have to pick another airline to use your points (unless you're happy with the one cent per point you can redeem them for on Amex Travel - I think that return is too low but I know some other disagree). You would also need a FF program to park any miles you earn from foreign travel. If you have to pay more in cash for your tickets on the other airline it hardly makes sense to move your paid travel away from Southwest. (A foreign FF program might be an option if it's for redemptions only - Air Canada, AF/KLM and Virgin Atlantic are among those discussed for this in the FF blogosphere.)

We don't have the range of hotel cards you do but from what I read some of them are inexpensive and have readily redeemed benefits worth more than the annual fee, but that's only worthwhile if you would otherwise use the service. I guess the bottom line is evaluate each card you have or think of acquiring on what it offers in isolation, or what it adds to your card landscape.

[ericwinters]

While this was just a temporary offer this year, my Nordstrom Visa card sent me an offer that any entertainment, restaurant, and grocery purchase will give me 10 points per dollar via rewards in Nordstrom notes.

I am a Nordstrom Queen so this was awesome for me. I've racked up nearly $500 to spend in this store. The promotion ran early October 3nds at the end of November, so it's perfect for all the holiday grocery shopping and restaurants spends. Then i get to buy gifts for my loved ones. 

Win win win!

[Beancounter]

I have a Chase Freedom card which earns 1.5% on all purchases (higher for dining, I think).  I charge everything possible but am very disciplined in paying off all charges at the end of the month thus avoiding interest charges.  On an annual basis that equates to $400 I can then use to either apply toward future purchases or have cash transferred to my savings account.   If one doesn’t totally pay off the month end balance then there would be no benefit to having a cash-back card. 

[Kevin Slater]

Fidelity offers a Visa with 2% cash back on everything.  I do not, however, use it.

Kevin Slater

[handiacefailure]

Citi offers a 2 percent cash back card, but be careful.   I do a lot of credit card spend for work and they shut down my account with no notice and I forfeited over $1K in rewards.   They probably didn't like not making any money off me since I paid in full every month, if you go this route make sure to cash out the rewards as soon as the statement closes.

If you use Delta a lot their reserve card can be great if you do a lot of spending since you can get the MQD waiver and MQM boosts and lounge access to Delta clubs and AmEx centurion clubs when flying delta.

Since I do a lot of business spending I have a lot of different cards.

I have the AmEx platinum that I have mainly for the benefits and don't put much spend on it unless I have a good offer on their site (AmEx offers a lot of good offers on their site, like spend $200 at Hilton get $50 back) and a $20 a month streaming credit, $50 off at Saks every six months, Marriott Gold status, and $200 a year in Uber credits and a free walmart plus membership and clear membership fees reimbursed and a $150 a year airline credit.

All my spending at the beginning of the year goes on my Delta cards until I have enough in for the MQM boosts and then it goes in a drawer.

After that, unless I have a credit card that gives bonus points all my day to day spend goes on my Chase freedom unlimited that is 1.5% and I trasnfer those points to my chase sapphire reserve and if I use the points for payyourself back for restaurants or travel I get a 50% bonus netting me a 2.5% return.   I have the chase freedom as well that has 5% quarterly categories and I use it for those categories and transfer it to my CSR netting me a 7.5% return, but unfortunately it's only $1,500 of spend each quarter in those categories.

The chase freedom and unlimited have no annual fee.   The Chase Sapphire reserve is something like a $450 fee but you get a $300 travel credit netting it down to $150 and you get 3 points per $ on travel and dining and the travel category is very generous and includes parking, ubers, public transit and tolls.   And you get a 50% bonus if you use the points on the chase travel portal netting 4.5% on bonus categories.   The past two years they have had something called paid yourself back where you can use points to get dining purchases credited at a rate of 1.5 cents per point and also the annual fee, so this is a great card for travellers and high spenders.   You also get global entry reimbursement and great rental car protection and a premium priority pass membership and travel insurance (that benefit has more than paid the annual fee when I've had a flight cancel).

I have the Hilton credit card and while it has a $450 annual fee it more than pays for itself.   You get a free night every year (I used it in September in paris where the nightly rate was over $600 so paid for it right there for the annual fee), diamond status (which is great overseas since you get lounge access), a $200 airline credit and a $250 resort reimbursement that can be used against the room rate.   Only use this card for Hyatt purchases.

I have the Hyatt credit card I use only for Hyatt purchases and even though I have globalist status with Hyatt the free night a year more than pays the annual fee, same with the Marriott card.

I also have the Wyndham card and I believe it's $75 or $90 a year and you don't get a free night but get enough Wyndham points instead that pays for a room in a lot of cities and they points can be transferred to Caesars.   Only reason I have this card is that it comes with Wyndham diamond status and I rarely use Wyndhams outside of WEHO Ramada but Caesars has a status match with Wyndham and the Diamond status at Caesars if you go to vegas even one time a year pays for this annual fee since you get a $100 a year dining credit and if you stay with Caesars properties, it will waive the resort fee.

I also have a discover card but have had it since 85 when the card first came out when I was in college and when reward cards were very rare and used it a lot when I was younger just for the 1% back.   I still have the card and just use it when they have a 5% bonus category (this quarter it is apple pay).

 

[+ Vegas_Millennial]

1. I won't pay an annual fee for any credit card.  (Annual Costco membership is to get cheaper gas, not for the credit card).

2.  I only use rewards that are redeemable for cash back.  This way I'm free to spend my cash how I see fit, instead of only using one airline or one hotel chain.

3.  I keep a minimum one credit card of each network (MasterCard, Visa, AmericanExpress, Discover) so that I have options in case of emergency and a merchant does not accept all networks.

4.  I keep my oldest account open, to keep my credit history length as long as possible to keep my credit score above 800.

5.  I pay with cash whenever possible.  I like privacy of not being tracked (I also never give my phone number or use any retail applications on a mobile device).  I'd rather forgo the discounts and rewards in order to protect my privacy and avoid unwanted texts and emails.  The exceptions are travel (air, cruises, hotels, Uber/Lyft), where I use a Costco Visa which gives 3% cash back, travel protection, no foreign transaction fees, and rental car insurance.  I usually receive $1k each year in cash based on my travel spending alone.

 

Dave Ramsey says no one becomes a millionaire from credit card rewards.  He advocates cash (or debit) only.

Last year I cut back using credit cards for everyday purchases, using cash instead, and was pleasantly shocked by how much it reduced my spending each month.  It psychologically forces me to re-evaluate the need/price of an item if I have to hand over physical cash instead of tapping or swiping a card.  THAT is the best reward strategy, not spending as much money in the first place

[Bucky]

16 hours ago, handiacefailure said:

Citi offers a 2 percent cash back card, but be careful. 

If you use Delta a lot their reserve card can be great if you do a lot of spending

Since I do a lot of business spending I have a lot of different cards.

I have the AmEx platinum that I have mainly for the benefits and don't put much spend on it

All my spending at the beginning of the year goes on my Delta cards.  

I have the chase freedom as well that has 5% quarterly categories

The chase freedom and unlimited have no annual fee.   The Chase Sapphire reserve is something like a $450 fee but you get a $300 travel credit

I have the Hilton credit card and while it has a $450 annual fee it more than pays for itself

I have the Hyatt credit card I use only for Hyatt purchases

I also have the Wyndham card

I also have a discover card but have had it since 85 when the card first came out

 

Wow.  This post made me dizzy and it made me laugh and it partly made me jealous of all his spending, but also thankful I don't have to keep up with all those cards and all those inevitable travel nightmares. 

[handiacefailure]

15 hours ago, Vegas_nw1982 said:

1. I won't pay an annual fee for any credit card.  (Annual Costco membership is to get cheaper gas, not for the credit card).

2.  I only use rewards that are redeemable for cash back.  This way I'm free to spend my cash how I see fit, instead of only using one airline or one hotel chain.

3.  I keep a minimum one credit card of each network (MasterCard, Visa, AmericanExpress, Discover) so that I have options in case of emergency and a merchant does not accept all networks.

4.  I keep my oldest account open, to keep my credit history length as long as possible to keep my credit score above 800.

5.  I pay with cash whenever possible.  I like privacy of not being tracked (I also never give my phone number or use any retail applications on a mobile device).  I'd rather forgo the discounts and rewards in order to protect my privacy and avoid unwanted texts and emails.  The exceptions are travel (air, cruises, hotels, Uber/Lyft), where I use a Costco Visa which gives 3% cash back, travel protection, no foreign transaction fees, and rental car insurance.  I usually receive $1k each year in cash based on my travel spending alone.

 

Dave Ramsey says no one becomes a millionaire from credit card rewards.  He advocates cash (or debit) only.

Last year I cut back using credit cards for everyday purchases, using cash instead, and was pleasantly shocked by how much it reduced my spending each month.  It psychologically forces me to re-evaluate the need/price of an item if I have to hand over physical cash instead of tapping or swiping a card.  THAT is the best reward strategy, not spending as much money in the first place

If you are doing that much travel that you get $1K back (my calculations are showing that is about $35k) a year, I'd look at getting a Chase Sapphire or American Express platinum even though it has an annual fee.   I know you are getting car rental insurance through your costco card, but from what I'm told, the CSR insurance is better and you get a $300 travel credit and the travel category is very generous (it includes uber and parking and public transit).  If you fly the free lounge access is great.

The thing I don't like about the Costco card is that you only get your reward check once a year where with most other cards it's when the statement closes

 

[CJK]

16 hours ago, Vegas_nw1982 said:

5.  I pay with cash whenever possible.  I like privacy of not being tracked (I also never give my phone number or use any retail applications on a mobile device).  I'd rather forgo the discounts and rewards in order to protect my privacy and avoid unwanted texts and emails.  The exceptions are travel (air, cruises, hotels, Uber/Lyft), where I use a Costco Visa which gives 3% cash back, travel protection, no foreign transaction fees, and rental car insurance.  I usually receive $1k each year in cash based on my travel spending alone.

 

Let me suggest adding certain large purchases to your list. Credit cards offer some protections you do not get with cash. Two personal experiences:

I once ordered custom made furniture, putting half down with the order with the remainder due on delivery. The delivery date was Dec 1. By Dec 15 I had heard nothing, so I called the store. A recording stated, "This number has been disconnected." A quick drive to the store showed an empty space in a strip mall. The shopkeeper next door said the company went out of business. I called Capital One from the sidewalk. By the time I got home and pulled up the account the charge had been reversed. A couple days later the store owner called and cursed me out for getting the charge reversed. I told him if he could deliver the furniture within the next couple days, I would pay cash. Of course, he didn't. He did fight the reversal but C1 stood by the reversal. A cash deposit would have been gone or I would have had to fight for pennies in the bankruptcy.

At about the same time - I had just purchased a house - I purchased dinnerware: seven-piece service for twelve. Once everything was washed it went into my brand-new kitchen cabinet. Turns out the cabinet was not attached correctly. It fell. The dishes were all broken. One call to Capital One and they put me in touch with their insurance carrier who reimbursed me for the replacement dishes. Had cash been used for the purchase the replacements would have been on me. 

Edited November 26, 2022 by CJK

[BuffaloKyle]

I use the Wells Fargo active cash card for 2% back on everything. They also have tons of special offers on their website where you can get bonus cash back at a ton of places. I also received $200 cash back after spending $1,000 in the first 3 months. They just came out with a new card though, the Autograph that sounds even better. That one will give you $300 back after spending $1,500 in the first 3 months. Would love to hear from someone if they have that one. 

https://creditcards.wellsfargo.com/cards/autograph-visa-credit-card/?product_code=CC&subproduct_code=AU&sub_channel=SEM&FPID=0129E0I6P10000&vendor_code=B&gclid=0aaf60ef3d9c19dcb442036d6206a8cc&gclsrc=3p.ds&&placement_id=71700000097748712_43700073065541965&msclkid=0aaf60ef3d9c19dcb442036d6206a8cc

Edited November 26, 2022 by BuffaloKyle

[handiacefailure]

5 hours ago, BuffaloKyle said:

I use the Wells Fargo active cash card for 2% back on everything. They also have tons of special offers on their website where you can get bonus cash back at a ton of places. I also received $200 cash back after spending $1,000 in the first 3 months. They just came out with a new card though, the Autograph that sounds even better. That one will give you $300 back after spendi the first 3 months. Would love to hear from someone if they have that one. 

https://creditcards.wellsfargo.com/cards/autograph-visa-credit-card/?product_code=CC&subproduct_code=AU&sub_channel=SEM&FPID=0129E0I6P10000&vendor_code=B&gclid=0aaf60ef3d9c19dcb442036d6206a8cc&gclsrc=3p.ds&&placement_id=71700000097748712_43700073065541965&msclkid=0aaf60ef3d9c19dcb442036d6206a8cc

That is a better deal than the citi double with all the bonus categories.   Has a lot of nice benefits for a no fee card

[+ Pensant]

I alternate between Amex Platinum for all of the benefits described above, and my old Visa Signature card when overseas, where Amex is rarely accepted. I also have a Discover and a Chase Sapphire with substantial credit limits which I use sparingly. Every year my bank reimburses the annual Amex membership fee. My one gripe about Amex air travel is that they use an overseas call center, with all of the maddening interactions that implies. Count on a long wait if any issues arise that require a human interaction. 

[Beancounter]

On 11/26/2022 at 12:52 PM, BuffaloKyle said:

I use the Wells Fargo active cash card for 2% back on everything. They also have tons of special offers on their website where you can get bonus cash back at a ton of places. I also received $200 cash back after spending $1,000 in the first 3 months. They just came out with a new card though, the Autograph that sounds even better. That one will give you $300 back after spending $1,500 in the first 3 months. Would love to hear from someone if they have that one. 

https://creditcards.wellsfargo.com/cards/autograph-visa-credit-card/?product_code=CC&subproduct_code=AU&sub_channel=SEM&FPID=0129E0I6P10000&vendor_code=B&gclid=0aaf60ef3d9c19dcb442036d6206a8cc&gclsrc=3p.ds&&placement_id=71700000097748712_43700073065541965&msclkid=0aaf60ef3d9c19dcb442036d6206a8cc

I opened a Chase checking account several years ago because of their $200 incentive.  Sure enough they gave me $200.  Imagine my surprise in January when I got a 1099 - Misc tax form letting me know the $200 was considered taxable income.  I’m sure credit card offers with similar types of incentives would have been treated similarly.  

[Jim_n_NYC]

Since we travel enough that we can use miles for booking airfare and hotels using points, I always transfer to the airline that I want to use and book that way.  Our points of choice atm is Chase URs though we also use Amex points. 

We were discussing with friends that we stayed with over Thanksgiving about using credit card points and they said that because they have the top tier Chase card (the Reserve) they get 1.5 cents per point when they book through Chase.  I told them that last year we flew to Madrid by transferring Chase points to Iberia and got about 9.0 cents per point...a much better value.

While we could (and have) earn points/miles on a specific airline or hotel, I think it's much better to earn a transferable currency (like Chase URs or Citi Thank you points) and then transfer them to the best airline that will get you where you need to go.

As a comparison, I transferred 140,000 Chase pts to Air France and booked 2 one-way business class tickets home from Paris next September.  I checked using Chase UR points directly (through their travel portal) and it would have cost 308,000 points plus another $3700.

Edited November 29, 2022 by Jim_n_NYC

[BuffaloKyle]

20 hours ago, Beancounter said:

I opened a Chase checking account several years ago because of their $200 incentive.  Sure enough they gave me $200.  Imagine my surprise in January when I got a 1099 - Misc tax form letting me know the $200 was considered taxable income.  I’m sure credit card offers with similar types of incentives would have been treated similarly.  

They must treat the $200 as interest basically going into your checking account. You also benefit from getting to earn interest from that $200. 

[Jim_n_NYC]

22 hours ago, Beancounter said:

I opened a Chase checking account several years ago because of their $200 incentive.  Sure enough they gave me $200.  Imagine my surprise in January when I got a 1099 - Misc tax form letting me know the $200 was considered taxable income.  I’m sure credit card offers with similar types of incentives would have been treated similarly.  

I think with a $$ incentive, it is treated as interest but with points and miles it is different.  I've read that if the value of the award or bonus is over $600 then they have to issue a 1099, but I've received many CC sign-up bonuses that I would swear were worth more than that but have never received one.  It all depends on the individual bank's policy.

[CJK]

On 11/27/2022 at 2:06 PM, Beancounter said:

I opened a Chase checking account several years ago because of their $200 incentive.  Sure enough they gave me $200.  Imagine my surprise in January when I got a 1099 - Misc tax form letting me know the $200 was considered taxable income.  I’m sure credit card offers with similar types of incentives would have been treated similarly.  

This was litigated at the time. The rule, a result of the Chase litigation, is if the points or cash are given as a rebate of money spent it cannot be taxed. If the points or cash is given as an incentive for one to get or keep the card/account, it can be taxed.

The gray area is when an employee gets hotel or airline points for money an employer paid. When I traveled for work - about 200 flights and hotel nights per year - I could do three international trips per year, with friends, business class flights and separate hotel rooms, with points earned by spending my employer's money. The deal was I would cover the airfare and fights while my travel companions would cover meals. It is amazing how many points Delta and Marriott reward top tier travelers. You get base points which are doubled or more and additional points for just showing up and more if you use the company's branded Visa or Amex plus frequent promos giving buckets of points if you stay or fly so many flights or nights in a specified time period. One year we figured my redemptions were worth $40k. At present this is not taxed.

[Beancounter]

10 hours ago, CJK said:

This was litigated at the time. The rule, a result of the Chase litigation, is if the points or cash are given as a rebate of money spent it cannot be taxed. If the points or cash is given as an incentive for one to get or keep the card/account, it can be taxed.

The gray area is when an employee gets hotel or airline points for money an employer paid. When I traveled for work - about 200 flights and hotel nights per year - I could do three international trips per year, with friends, business class flights and separate hotel rooms, with points earned by spending my employer's money. The deal was I would cover the airfare and fights while my travel companions would cover meals. It is amazing how many points Delta and Marriott reward top tier travelers. You get base points which are doubled or more and additional points for just showing up and more if you use the company's branded Visa or Amex plus frequent promos giving buckets of points if you stay or fly so many flights or nights in a specified time period. One year we figured my redemptions were worth $40k. At present this is not taxed.

I wasn’t aware it was litigated.  It didn’t bother me to pay taxes on the amount. Just surprised me.  

[CJK]

34 minutes ago, Beancounter said:

I wasn’t aware it was litigated.  It didn’t bother me to pay taxes on the amount. Just surprised me.  

At the time, I was active on the frequent flyer boards where the court case was followed closely and discussed ad nauseum.  

The IRS issued a memorandum stating they would not tax points earned from employer spend, at least for the time being nor without advance notice. The bottom line is the IRS did not want to deal with all the paperwork for relatively small amounts nor did the hotels/airlines/cc cos want to issue all the paperwork.

While my points translated into major purchases, most participants in loyalty programs might get a few dollars here and there or one free ticket or hotel night every year. 

I remember being at the check-in counter at the Marriott Champs de Elysee. The woman checking in next to me was using points to stay one night and paying for a second. She explained to me how long someone has to save points to earn a night at the hotel, which is in Marriott's top redemption category. Neither the clerk checking me in nor I had the heart to tell her I was redeeming points for three rooms, five nights each nor that it was my third time staying there for five nights in the previous years, two rooms each of the other times.  

I do not miss the constant work travel but I miss the points. 

Edited November 30, 2022 by CJK

[mike carey]

1 hour ago, CJK said:

I remember being at the check-in counter at the Marriott Champs de Elysee. The woman checking in next to me was using points to stay one night and paying for a second. She explained to me how long someone has to save points to earn a night at the hotel, which is in Marriott's top redemption category. Neither the clerk checking me in nor I had the heart to tell her I was redeeming points for three rooms, five nights each nor that it was my third time staying there for five nights in the previous years, two rooms each of the other times. 

And it would have been cruel to do so. Not everyone is playing in The Great Game, and she was no doubt thrilled to have been able to chalk up that one night. Some of us can strategise about how to earn and spend vast hoards of points (or not so vast) but not everyone is so blasé as we can be about a reward flight or night's accommodation.

[KeepItReal]

On 11/29/2022 at 11:27 PM, mike carey said:

And it would have been cruel to do so. Not everyone is playing in The Great Game, and she was no doubt thrilled to have been able to chalk up that one night. Some of us can strategise about how to earn and spend vast hoards of points (or not so vast) but not everyone is so blasé as we can be about a reward flight or night's accommodation.

My strategy is a little different. My  favorite credit card is "Daddy"... 😉

[Guest]

On 11/23/2022 at 10:12 PM, BeamerBikes said:

I suspect Balance Transfer offers are going to get even more expensive.  Gone are the 2% transfer fee days.   5% typical fee now. I suspect a nominal interest rate to return for shorter months too. I'd evaluate the balance transfer fee as part of the offer.  

You’re absolutely right.  The driver for low transfer fees is high liquidity and low rates.  Rates are higher, but liquidity is gone from the system and getting worse.  I suspect transfers as a marketing tool will go on the shelf for a while

[Jim_n_NYC]

16 minutes ago, arnemgreeves said:

Don't get them. credit cards are a hassle. It's best perhaps to buy things on installments (like Klarna or store-specific plans), or save for it. Credit cards allow reckless spending and aren't good imho. 

Credit cards only allow 'reckless spending' for people who have no self-discipline.  I haven't carried a balance on a credit card in over 30 years but have gotten thousands of $$ benefits from them.

Edited December 1, 2022 by Jim_n_NYC