Reader Questions about Rewards Credit Cards

Here are some recent questions from readers.

As y’all are aware, the single most lucrative thing you can do to earn miles and points is to pay attention to your credit card earning. First, there are big bonuses for signup. Second, several cards offer really good bonuses for specific kinds of spending. And third, day to day expenses really do add up quite nicely.

More miles are earned from credit card spend than from actually flying (the last time I saw the data this was true excluding elite bonuses, route bonuses, etc. although it’s possible that now it would be true even including those).

If you have any questions about rewards credit cards, please just fire away.

What’s the best non-airline/hotel loyalty program credit card?

In general I like flexible points the best. Not bank points like Capital One or Bank of America’s, those are usually not worth much (at best a penny a point towards paid travel), but points that can be transferred into another mileage currency. That way you have the specific points you need when it’s time to redeem for the award you want.

The very best would be:

• Chase Sapphire Preferred is going to be number one. I outlined why this card is the King of credit cards back in November.
  • Double points on all travel and dining spend.
    
  • Points transfer to United/Continental, British Airways, Korean Airlines, Hyatt, Priority Club, Southwest, Marriott, Amtrak
    
  • 7% annual bonus on all points earned (including on the 40,000 point signup bonus earned after $3000 in spend)
    
  • No fee the first year
    
  • No foreign currency transaction fees, I use this card instead of my Starwood and Hilton American Express cards when staying at SPG and Hilton HHonors properties overseas even.
    
  • It’s the best-looking card I know, no embossed numbers on the front and it’s heavier than a standard card and gets looks.

  Seriously, if you don’t have this card already, it’s probably the one card you should have in your wallet, my advice is to get it.

• American Express Premier Rewards Gold is going to be number two on my list.
  
  • Triple points on airfare (for me, this is huge)
    
  • Double points on gas and groceries
    
  • Points transfer to tons of programs, the most useful in my opinion are Air Canada’s Aeroplan, Delta Skymiles (frequent transfer bonuses, sometimes over 50%), British Airways Avios (they’ve had frequent 40% and 50% transfer bonuses), Air France KLM Flying Blue (25% bonus currently), All Nippon, Singapore Airlines Krisflyer (which is introducing new saver awards for first and business class long haul flights).

Now, it’s possible that in asking the question about non-airline/hotel loyalty cards you’re thinking about a cash back card. If you must have one of those, the Fidelity Investment Rewards American Express earns 2% cash deposited into a Fidelity investment account and is probably the best all-around cash back card.

Is it better to cancel immediately after earning the signup bonus or wait the year out?

Back in November I wrote a fairly detailed explanation of what cards to cancel and when.

Bottom-line is that you don’t want to cancel no annual fee cards, unless and until you need to in order to get approved for another card. I really hate to ever cancel a Chase credit card in particular, I’ll hang onto whatever credit they’ve given me until I get rejected for a new credit card that I want the signup bonus on. Then I’ll call Chase’s reconsideration line at 888-245-0625 and offer to trade credit from a card I no longer want in order to get the new card.

But certainly many folks won’t be in a position of signing up for several cards, they might get a single credit card bonus and want to cancel before the annual fee hits. Don’t’ cancel in the first six months, it’s rare enough as to almost be an urban legend but there are scarce reports of bonuses being taken away from folks cancelling their cards right away.

Instead, wait until maybe 10 months into the card. Then call to cancel and you may be offered a bonus to keep the card, a bonus that’s worth the annual fee. The last time I cancelled an American Airlines Mastercard from Citibank I was first offered an $85 statement credit (equivalent to the annual fee) for putting 5 charges on the card. I did the spending, I got the statement credit (free $85!) and then I called up to cancel the card anyway.

You don’t need to be in a hurry to cancel the card, even if a fee shows up on your statement you can still ring up the credit card company to cancel.

Plus by holding onto the card you might get an unexpected bonus. I signed up for a US Airways Mastercard for the 40,000 miles after first purchase back in December (I wrote about my recent credit card churn here). Since then I’ve received an offer that if I put $1500 on the card for 3 consecutive months I’ll earn another 15,000 mile bonus. And I also want to keep the card almost to the end of its year because activity on the card should count for the 2012 Grand Slam (multi-partner) promotion, which most imagine will return. It’s a regular offering from US Airways with bonus miles for lots of transactions with their partners, and spending on their co-branded credit card generally counts as a partner for this promotion. Since I can get that spending in before the annual fee is due, it’s worth keeping the card for that purpose.

Tips on the best way to keep track of what cards to cancel and when?

Here’s how one of my readers does it:

With the exception of the cards I’m working at any given time, I keep them semi-organized in a small zip lock (actually it’s a quart-sized bag). I use a black sharpie and write right on the cards “2x gas” “50k w/ 10k spend” “cancel 1/2012″ etc. I can only imagine what waiters and clerks think, but who cares? When I cancel a card, I write a cancel sign on the front of the card with the date cancelled.

Me, not so much. I just keep the cards in a stack in a drawer, and I flip through them every so often. I could certainly improve the process either with an Excel spreadsheet or just setting up an Outlook auto reminder to cancel a given card by a certain date.

How soon after applying for a mortgage is it ok to start churning credit cards again?

I always tell folks to hold off on applying for new lines of credit in the year or two leading up to a mortgage. You don’t need perfect credit for a mortgage. If you have a 760 FICO score you’ll generally get the exact same rates as if you had an 800+ score. But consumer-initiated inquiries on your credit report will ding your score a few points apiece usually, and that effect will age off your report completely after a couple of years. This is an amazing game, and there are some really amazing offers out there, but messing with your credit before getting a mortgage is not something that you’ll be better off for most of the time.

That said, the only thing that gives me pause is a mortgage, and I’ve been playing the credit card churning game for years, I still had stellar scores when I went for my mortgage.

But how long to wait after applying for a mortgage? You wait until closing. Because you don’t want to do anything that could jeopardize things if your score needs to get pulled again. But once the mortgage has closed, churn away baby!

(Note that some of the cards mentioned in this post will provide me with referral credit if you use my links. You’re not obligated to use my links of course, but I certainly appreciate it if you do.)