Points, Miles & Life

Travel adventures on this earthly pilgrimage

Category: Basics

Getting Your First Credit Card

I’ve talked with many people over my years of travel hacking who are amazed at what my wife and I are able to do, yet are a bit skeptical about credit cards. There are even expressions of horror when I mention that my wife and I have 36 (!) open accounts between the two of us. But is getting your first credit card really all that scary?

Sure, credit cards have the potential to get you into trouble. But with even a small amount of financial discipline, they are far more of a tool than a liability.

Credit card basics

Before getting for your first credit card, I highly recommend that you first check your credit report and score. You can get your report for free at freecreditreport.com, or you can often sign up for a trial membership with Experian and pull both your report and your score for $1. Totally worth it.

There are 5 factors that go into your credit score. Make sure you understand these. It is good to have an idea about how likely you are to be approved for a given card. If you have too many negative factors influencing your score, you may need to work on repairing your credit before moving into travel hacking.

Identifying a good credit card

There are many cards on the market, some great, some not so much. If your credit isn’t good, you probably won’t qualify for (m)any of the best products.

If you have good credit and are interested in travel, I would definitely suggest a card with transferable points as your first travel credit card, and then maybe moving into an airline card later. However, this *completely* depends on your own personal preferences. It’s your credit. The best plan is to identify a specific trip or travel goal, and then obtain the cards that will help you meet that goal.

If you don’t have any idea where to start, though, I’ll always suggest my favorite travel card (SEE: 5 Reasons the Chase Sapphire Preferred is the Best Starter Travel Credit Card).

Getting your first credit card chase sapphire preferred

Applying for a credit card

Before you apply for a card, make sure that your credit score is in the range that will likely result in approval. You should also keep application restrictions in mind, such as Chase 5/24 or Citi’s 8/65 rule. If you have poor credit or simply no credit history at all, getting your first credit card is sometimes challenging. You may need to look for a secured card or one through your local bank with a low limit before shooting for travel rewards cards.

When you apply for a card, you will get one of 3 results: instant approval, application pending, or denial. If you are approved, congratulations. Now just wait for your card to show up and then start spending to meet your bonus criteria.

If you’re immediately denied, I would wait for the letter to come explaining why. You can potentially get this overturned, depending on the situation, but you’ll need to call the reconsideration line of the bank.

If your application goes to pending, it could be for a few reasons:

  • The bank needs to confirm some information with you
  • An actual person needs to review the application rather than a computer algorithm
  • You’re actually denied, and they’re not telling you so (in at least Chase’s case)
  • Or potentially other reasons

If your application is pending, I suggest following whatever the confirmation screen tells you. Sometimes it says to call in as soon as possible. At other times, the response will ask that you wait for a decision in the mail. Whatever the case, I would follow the advice before calling reconsideration.

Actually getting your first credit card

Assuming that you’re approved immediately, or that you are able to get successfully approved by calling reconsideration, actually getting your first credit card (in the physical sense) usually takes about a week. You’ll need to then activate the card, which typically means signing up for online access, something I highly recommend. I find it is much easier to manage your card online than it is over the phone.

Once your card is activated, it’s time to earn that bonus.

Earning the card bonus

You’ll now need to spend the amount required by your offer within the timeframe required by the bonus offer to earn the sign-up bonus. Most of the time this is 3 months or 90 days. Make sure that you track the required amount of spend and that you stay on track!

DO NOT miss out on the sign-up bonus! This is one of the reasons you got the card! Additionally, you may not be eligible for another bonus in the near future (or ever). I’ve sadly missed out on one Delta bonus, something I can never get again since it is an American Express card. :'(

Use your points!

If getting your first credit card lands you a great versatile card like the Chase Sapphire Preferred, you may quickly have enough points for a quick weekend away. But whether you burn your points immediately for a quick trip, or save them for a couple years for a fantastic round-the-world adventure, make sure you enjoy them. Sometimes the name of the game is maximizing their value. At other times it is simply taking the trip you want to take…for free!

Just don’t burn them on a toaster. There are plenty of resources out there for maximizing your points.

SEE5 Best Chase Ultimate Rewards Transfer Partners

SEE6 Best Amex Transfer Partners

My admonition

DO NOT, I repeat, DO NOT get yourself into debt trying to obtain free travel. It will no longer be free. While it may make sense to pay an annual fee on a card, it *never* makes sense to end up paying interest and/or late fees while trying to earn miles or points. The fees will completely negate the value of your points (and more).

Make sure you know the 5 Commandments of Travel Credit Cards (or any credit card).

Conclusion

My final disclaimer is that you should NOT sign up for a credit card simply because some guy on the internet told you to do so. Make sure the card is a product that will work for you, and that you will indeed get value out of it.

Using lucrative credit card offers to obtain amazing travel is fantastic. Getting your first credit card can easily get your addicted to the miles and points hobby. Just be responsible, and remember that this hobby is a marathon. Try not to treat it like a sprint.

3 Great Starter Travel Credit Cards

There are tons of credit card options out there, and most provide good value. However, there are a select few that make for a great starter card. If you are brand new to the travel hacking game and are not sure where to begin, I suggest you start with one of these three great starter travel credit cards:

  1. Chase Sapphire Preferred – This is still the bread-and-butter travel credit card for many people. This Chase card earns flexible points that can be used for travel purchase, redeemed for cash back, or transferred to several different hotel and airline loyalty programs. The standard offer for the card is 50,000 points after spending $4,000 in the first 3 months of card membership. The Chase Sapphire Preferred card does have annual fee of $95 (waived the first year). The value of this card is found in Chase’s quality transfer partners, plus it earns 2x points on travel and dining.
  2. American Express Everyday Card – While the bonus of this card isn’t especially high (typically 10,000-15,000 Membership rewards points), this card is good starter card. It is one of the few cards that earns transferable points that does not have an annual fee. Membership Rewards can be transferred to several airline loyalty programs and a few hotel programs. While I don’t find the transfer partners as lucrative as Chase’s partners, there are still a few that offer great value. The EveryDay card earns a place here since it is a great way to ease into the world of transferable points, plus it can earn up to 2.4x at grocery stores.
  3. CapitalOne Venture – CapitalOne doesn’t get a lot of love from the travel hacking world since most of their products generally aren’t all that great. However, their Venture card is actually a decent product. While you can get a card with equal earning potential that comes without an annual fee (hint – Citi DoubleCash), the Venture card comes with a sign-up bonus worth $400, and the annual fee is waived the first year (then $59). Plus, the rewards can be used for any purchase that codes as travel, so there is a lot of flexibility. This is a great starter card, but not one that I would keep in my wallet for more than a year or two.

Which is the best?

Of these, my pick for the “best card” is the Chase Sapphire Preferred. If are willing to take some time to learn the the basics of a few hotel and airline loyalty programs, it will provide the best value of the three. The card also offers additional perks such as trip cancellation insurance, primary car rental insurance, and no foreign transaction fees (i.e. no extra fees when you use your card outside the U.S. in another country’s local currency).

If your interested in a first card to start earning rewards, consider one of these three great starter travel credit cards. If either the Chase Sapphire Preferred or Amex Everyday look like the one for you, leave a comment and I’ll send you a referral email!

4 Beginner Travel Hacking Tips

If you are new to the travel hacking game, especially on how to use credit cards to earn oodles of miles and points, you may struggle to digest the huge amount of information available. There is so much on the internet that it may seem overwhelming. But don’t let that hinder you from getting started.

You may have lots of questions: how can I obtain free flights to [insert place]? What credit card is the best one to start with? How do I redeem the points and miles I earn? Should I be worried if a card charges an annual fee?

There are answers to all those questions, but they may be different for each person. For some, paying an annual fee simply won’t do. For others, it may be totally justified if the rewards are worth it.

You will need specific answers, but make sure you have some guiding principles in place. Here are my four beginner travel hacking tips for those just starting the miles and points game:

  1. Have a plan – Don’t apply for credit cards until you have a plan. It doesn’t need to be a fully developed plan, but you should have a goal in mind. It could be something like “travel to Hawaii in 2018 with my family of 4”. Having a specific trip or goal in mind allows you to focus your efforts on attaining that goal. Admittedly, I have sometimes applied for a credit card without considering how I will be able to use the points, but this isn’t the ideal strategy, and I certainly didn’t operate that way when I started out. I had a very specific goal in mind. Identify a goal, find a couple credit cards that will help you achieve that goal, and pull the trigger. Then, once you have the cards, learn the ins-and-outs of those specific programs.4 Beginner Travel Hacking Tips
  2. Start slow – Don’t rush into the travel hacking game. If you told me you got 27 credit cards your first year, I would probably raise an eyebrow. Maybe two. It has taken me years to be comfortable applying for a large number of cards, to understand the ins-and-outs of various loyalty programs, and to be able to earn and redeem hundreds of thousands of miles and points each year. Don’t rush. Learn the ropes first with a couple cards (that you’ve identified in your plan) before continuing down the travel hacking path. You’ll get better over time, trust me.
  3. Understand your financial situation and abilities – The travel hacking game isn’t for everyone. There is a lot to learn and understand. If you need simplicity, you may want to use a single good cash back card for a while before venturing further. Also, cards with annual fees aren’t for everyone. Personally, I keep several cards that charge an annual fee, but that is because the value they provide my wife and I is much greater than what we pay for them. But not everyone will see things the same way. Also, if managing your finances is generally a struggle and you do not have a budgeting system in place, credit cards may simply not be the thing for you.
  4. Do your research – Don’t apply for a credit card just because some blogger on the internet says it is the best card of the year. Some are paid commission to offer certain cards, and they’ll often sing their praises on a weekly basis. The card may or may not be something that is actually provides you value. I will recommend certain cards at times, and even then, do your own research to see if it is something that is a fit for your plan. There is also a ton to learn when it comes to redeeming points and miles. Make sure you research various programs. Also, the award travel world tends to change, so research is still imperative even once you have a basic handle on things.

Conclusion

These four beginner travel hacking tips will help you stay on track as you get into this game. Lots of people do crazy stuff with their points, and it’s easy to think either (a) it’s too difficult for me or (b) it’s too good to be true. I’m here to tell you that with a little planning, research, and practice, you can be doing amazing things with your own points and miles.

As a recap: have a plan, start slow, understand your situation, and do your research. You won’t go wrong.

If you live locally and are interested in a starter course in “travel hacking”, I’ll likely be offering one on a Monday evening in March or April. Details should be released this week!

A Brief Intro to Earning Miles and Points from Credit Cards

Disclaimer: I do not work for a bank, nor am I “qualified” in any way to give real credit advice. I speak from my own experiences.

Used responsibly, credit cards provide the biggest opportunity for collecting miles and points to travel places for free. I can easily speak to that. Since getting my first travel rewards card, my wife and I have burned through over 120,000 Amtrak points, 120,000 airline miles and over 150,000 hotel points. The total net “value” (going cash rate of redemption travel minus fees) we have gotten from our points and miles so far is somewhere in the neighborhood of $6,000 USD. Currently, we have accumulated over 250,000 airline miles, 200,000 hotel points, and 50,000 Chase Ultimate Rewards points (transferable to multiple travel programs) between the two of us. All while maintaining an excellent credit score.

There are two things I want to mention before going further. First, if you think you’ll have issues controlling your spending with a credit card, don’t get one. Collecting points and miles is not worth it if you are spending yourself into a financial hole. Second, always consider the impact to your credit that will result from applying for new cards. A poor credit score is also not worth any miles or points you may gain. You can check out my post ‘The 5 Factors That Influence Your Credit Score‘ if you’d like.

Points/miles are typically earned two ways: card sign-up bonuses and card spending. The sign-up bonuses are the initial hook, and they nearly always comes with stipluations of spend X dollars in Y time to get Z points. As an example, consider this United credit card issued by Chase that offers 30,000 miles after spending $1,000 in the first three months. It has an annual fee, but this is waived the first year.

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Using your card for purchases also yields points or miles, and in most systems this is at least one per dollar. Banks profit from you using their credit cards since they get a cut of every purchase you make through a fee that a merchant pays, so getting you to use their credit cards for your everyday spending is in their interest. They also profit from the interest that accrues on your purchases when you use the card, but, please, don’t let that happen. It will quickly offset the value of any points you accrue.

What you want to do is make the system work to your advantage. You want the card to pay you rewards that substantially offset any fees you may pay. For example, I have a Starwood Preferred Guest American Express card that lets me accrue points in the SPG program. I love it. I use it a lot. But it costs me $95 per year (first year was free). However, I spend enough on the card to more than cover the cost of keeping it, and this justifies it in my opinion.

Another example is the IHG Mastercard, while has a $49 annual fee, but it provides an annual free night at any IHG property. This is well worth keeping because the cash rate for a night is nearly always more than $49, and can be upward of $500 for top locations! These are the only fees I pay on these cards, and I can therfore come out net positive in the end. Otherwise there would be no point in playing this free travel game.

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You should also have a plan. If you are going to apply for a card, try to have a good reason. For example, United is the only airline that flies out of the small ariport in my area, so their miles are by far the most valuable to me, and I applied for their card before many others. Try to have either a specific purpose for the miles or points, or at least identify some possible options.

When going after lots of cards, I typically identify some as “keepers” and others as “churners”. By churners I mean it is a card that I apply for, spend enough on it to get the sign-up bonus, and then keep it for about 11 months before cancelling so that I don’t get hit with the annual fee. I then wait to reapply for the card a year or two later, if I can get the sign up bonus again. This may not be most people’s definition of churning, but it is mine. I then pick up a “keeper” card now and then, which typically has no annual fee, or an annual fee that is overwhelmingly outweighed by the benefits, like the IHG Mastercard above. I do this mostly to maintain a healthy credit score.

There is so much more earning free travel with credit cards. I’ll be taking an deeper look at several moving forward.