My Credit Card Spending Strategy for 2012

Application Links:

• Starwood American Express
  
• American Express Premier Rewards Gold
  
• American Express Business Gold Rewards
  
• Chase Sapphire Preferred Visa
  

Lucky wrote up his credit card mileage earning plan for 2012, and he and I agree in parts and disagree in others. Like Lucky I have significant reimbursable expenses that I’m able to put on credit cards. So while credit card signup bonuses are the single most lucrative thing you can do to get miles and points quickly and at low cost, I’m also able to earn a lot of points by actually spending money on the cards themselves. There are so many cards, and so many ways to maximize, that thinking through a strategy makes a lot of sense.

Remember, I’ve laid out three different types of credit cards, and I think these categories make sense as a good way to think about the cards you apply for and keep.

• Cards you get just for the signup bonus. You want to put your minimum spending necessary on the card to get the bonus, and then stop. Don’t cancel the card right away, keep it until your first year is almost up and then you may be eligible for a fee waiver or a retention bonus that’s worth paying the fee. Or you’ll want to keep the card in order to horse trade for another one, it’s easier to give up credit in trade for a different card than it is to cancel first, then apply for a card and hope the card company will give you back the credit. Here’s my longer discussion of when to cancel your credit cards, and when to hang onto them.

• Cards that you get for the benefits, not for the points. You want to have these cards and hold onto them, not put actual spending on them. The $450 American Express Platinum card for awesome lounge access (Delta, American, US Airways – this last without even having to be flying the airline same-day – plus Priority Pass membership that gets you into Alaska Airlines lounges and plenty of international lounges). The Alaska Airlines Visa for the $99 companion certificate, since the companion is treated exactly the same as a paid fare, I like this for first class to Hawaii the best. And the United Explorer Visa because cardholders will continue to get last seat availability on standard (“double miles”) awards and elites with the card will be eligible for complimentary upgrades on domestic coach award bookings – plus the card comes with primary rental car collision coverage, while most cards offer only secondary.

• Cards that you get for spending. These are the cards where you get the most bang for your buck out of spending money on the cards.

Regular readers know that my general strategy is:

• American Express Premier Rewards Gold for airfare (triple Membership Rewards points), gas and groceries (double points). Like Lucky, I want to put $30,000 in spend on this card because that earns a 15,000 point bonus. I’ll quite realistically manage $30,000 in airfare spend, which amounts to 3.5 points per dollar with that bonus.

  And taking advantage of a 50% bonus such as to Delta or British Airways (last year there was effectively a 67% transfer bonus to Delta, so that’s actually a reasonable assumption) means earning 5.25 Delta miles per dollar spent on air. Delta miles aren’t as valuable to me as United or American miles, but at over 5 miles per dollar I’ll take them in a heartbeat. And they’re actually quite useful if you’re savvy about it. One other thing to note is that the American Express Business Gold Rewards card offers the same 15,000 point bonus as the personal card does, and for those of you who do advertising (Facebook and GoogleAds?) and shipping those are double points categories with the business card. (Update: commenter Richard says the card actually gives 25,000 points after $50,000 in spend, I have it myself and hope to find out.)

• Chase Sapphire Preferred Visa for all travel spend not covered by another card — I put airfare on the Amex Premier Rewards Gold, Starwood hotel spend on the Starwood American Express, and as I discuss below I may keep my Hilton American Express Surpass card and put Hilton spend on that. That leaves other hotel chain spend, I even put Hyatt spending on the Chase Sapphire Preferred card because I value two Chase Ultimate Rewards points more than 3 Hyatt points. And I certainly put all foreign currency spend on the card since there’s no foreign currency transaction fees. That means I put my non-U.S. Starwood and Hilton spend on this card as well. Other travel spend includes taxis and tolls even. I also put all spending with merchants who do not take American Express on this card. And all restaurant spend, since that gets double points as well (which I value more than the capped 5% cash from the Citi Forward card, incidentally).

  Plus of course Chase Sapphire Preferred earns a 7% bonus on all points earned, including the 50,000 point signup bonus after $3000 in spend within three months. And points transfer to United, Continental, British Airways, Korean Airlines, Hyatt, Marriott, Priority Club, Amtrak, and starting in a matter of days, Southwest. There’s a reason why this card is arguably the king of credit cards these days, why I’d bet most readers of this blog have one by now, and why any gathering of frequent flyers is like a throwdown of these blue heavy cards with no numbers on the front.

• Starwood American Express for all spend that isn’t bonused by the two cards above. For ten years this has been my go to card. It still is. The Starwood American Express is a better card for earning US Airways and American miles than the co-branded cards of those two airlines, because of the year-round transfer bonuses built into the Starwood Preferred Guest program. Starwood has a large number of airline transfer partners, far larger than American Express Membership Rewards and Chase Ultimate Rewards. And there’s a long track record of reliability with this program, years ago I kept guessing that the airline transfer offers were too good and they’d have to cut back but other than with transfers to United and Continental (really something driven by Chase which issues the cards for those two airlines and doesn’t like an Amex that’s better for earning miles in those programs than their cards), it hasn’t happened.

  This one may no longer have a place at the front of Lucky’s wallet, but I’ll take 1 Starpoint over 1.07 Chase Ultimate Rewards points for all US-based non-bonused spend with merchants who accept American Express.

What I’m torn over. There are two cards I’m considering putting serious spend on not because of the value of the points I’ll earn, but because of the elite status it will help contribute to. But I’m a bit undecided about whether putting $40,000 on either of these cards gives up too much value for the benefits I’ll achieve.

• Citi Executive Mastercard. I actually hate this card. It has a $450 fee which is as much as the American Express Platinum card. It comes with American Airlines lounge access, but the Platinum card also comes with Delta and US Airways lounge access and a Priority Pass Select membership. Like the Amex Platinum, it has no foreign currency transaction fees. I get that benefit with my Chase Sapphire Preferred card as well, at a much lower price point. And instead of earning flexible points, I earn American miles only.

  Since I already have a Platinum Amex why am I considering this card? Because $40,000 in spend will get me 10,000 American Airlines elite qualifying miles. Which will help on my quest to re-qualify for Executive Platinum. I hate that I’m seriously contemplating this, but it’s cheaper than mileage running for 10,000 miles if I need to top off towards status, and it will save me all of the time such trips would entail.

• Hilton HHonors American Express Surpass Card. It comes with a $75 annual fee and the benefits over the free version of the card are 9 Hilton points per dollar spent with Hilton and Diamond status after $40,000 in spend. I’m not a huge Hilton guy but I am a Hilton Diamond member from this card. I’ve done it the past two years and truthfully am probably not getting enough out of my Diamond membership to justify it.

  Last year it did turn out to be worthwhile, since being a Diamond helped me get HHonors to rebuild a reservation by special request yielding me the two-bedroom ocean villa at the Conrad Koh Samui on an award stay. But there’s a pretty remote chance that lightning will so strike again, and even with lots of reimbursable expenses $40,000 is a lot of spend to give up — especially when I’m considering putting that exact amount on the Citi Executive Mastercard. I probably won’t manage both.

Since these are of limited use to most folks, I haven’t included links at the top of the blog post. I’d be interested in reader feedback on whether I should be making a play here.

What I’m not interested in. Lucky plans to put $30,000 in spend on the British Airways Visa. Now, if and when they bring back the 100,000 point signup bonus for the card I’ll be shouting it from the rooftops. But since they gutted their award chart I’d say that this is a card to get for the signup bonus only, not to put serious spending on. My case of course is that I burned all my miles before they became Avios, here’s the full index to that trip report, I am not stuck with a huge balance and struggling to leverage them. Apparently he’s got 400,000 to burn, so anoher $30,000 in spend will get him a companion ticket that will still mean spending hundreds of thousands of points for real long haul premium cabin redemptions in addition to extortionate fuel surcharges. But I get where he’s coming from. Me, the last thing I want to do is add to my Avios balance (currently sitting at 968). Sure, short haul awards can be a good value but that’s not something I’d want to invest $30,000 in spend to generate a companion ticket for. If I need some short haul awards, I’ll do better to spend on my American Express Premier Rewards Gold and transfer to British Airways during one of their many frequent transfer promotions.

Bottom-line advice: If you don’t have the sort of big bonusable airfare spend like I do (or grocery spend), then the best one-two punch for most readers is the Starwood American Express and the Chase Sapphire Preferred Visa.

A final note, links in this post will earn me a referral credit. You don’t have to use my links in signing up for things of course. But the links I provide are to the best-available offers that I know, and I certainly appreciate it as well.