My Credit Card Strategy for 2013

The credit cards I’m using the most:

• Chase Sapphire Preferred
  
• Chase Ink Plus
  
• American Express® Premier Rewards Gold Card
  
• Starwood Preferred Guest American Express
  

Signup bonuses remain the very best way to earn lots of miles quickly, and focusing your everyday spending (whether you have big reimbursable business expenses or not) will generate a steady stream of miles over the course of the year.

When business class trips to Asia can run as low as 90,000 miles, when you can fly to Africa or India in business for 120,000 miles, a couple of credit card signups can more or less get you there. If your travel partner does the same, two people can fly in a premium cabin most anywhere in the world for the trouble of a couple of credit cards and the cost of taxes and fees on an award ticket (and maybe a couple of credit card annual fees if the offers don’t include first year fee waivers).

It’s this generosity that leads me not to bother with the low value signup bonuses, if I’m not going to value the bonus at at least $400, then I’m moving on to the next card.

But you need to earn the right miles, and you want to earn the most miles that will do the most for you come redemption time.

That’s why it’s important to be strategic about your credit card choices, and I try to think as clearly as possible about the question.

First, I rank-order priorities for where you put credit card spending spending:

1. Meet minimum spend requirements for signup bonuses. The most valuable thing you can do with your spending it put it towards signup bonuses on new cards. That’s far more leveraged than earning a single mile (or even 2 or 3).
   
2. Meet spending requirements to earn benefits. If you’re trying to qualify for elite status and your card helps you do that, you’re willing to settle for lower value points in order to get there.
   
3. Earn the most from your spend. What card offers the most valuable points, and/or double or triple points for the kind of spend you’re doing.

Then I think about different kinds of credit cards as analytically distinct:

1. Those you get just for the signup bonus, but you don’t want to keep spending on them after you’ve earned the bonus
   
2. Those you get for the benefit of having the card, it’s not great for putting spend on
   
3. Those that are rewarding for your spend

You want to choose the program to earn in that best matches your reward goals. I especially value flexible points, both in cases where I don’t know exactly how I’m going to spend the points I earn, and because when it comes time to redeem I can have the option of more than one program to redeem through. Maybe US Airways will offer the space I need, maybe American will, if I can move points around at redemption time I haven’t locked myself in to needing availability through one program or the other.

With that in mind, my strategy is as follows:

• To continue to get 4-6 credit cards every 90 days, looking primarily for the best signup bonuses
  
• Focus my spending first to meet the requirements for those bonuses
  
• Then spending on cards that give me the best category bonuses for each type of spend
  
• To maximize the quintuple points earned on the Chase Ink Bold and Ink Plus not only by putting cable, internet, and cell phone bills on those cards but also continuing to buy gift cards at office supply stores and spend with those cards as much as possible. Each of Ink Bold and Ink Plus will let me earn up to 250,000 points a year this way.
  
• And putting the rest of my spending — those that don’t get bonused — on the Starwood American Express card or if it’s spending outside the U.S. or the merchant doesn’t take American Express, on the Chase Sapphire Preferred card

So the key cards for me in 2013 are:

These are the cards I’ll use most this coming year when I’m not just signing up to get the starter bonus.

• Chase Sapphire Preferred. This is still the reigning king of all credit cards, it is a Visa so more widely accepted than Amex products. It earns 2 points per dollar on all travel (airfare, hotel, rental car, even tolls and taxis) and for restaurant spending. It provides a 7% annual bonus on points earned, meaning bonus categories really earn 2.14 points per dollar.

  Those points transfer to several airlines including ones in all three alliances (United, British Airways, Korean Air, Southwest), to several hotel programs (Hyatt, Marriott, Ritz-Carlton, Priority Club) and to Amtrak. There are no foreign currency transaction fees so it’s great for use abroad.

  This is a real go-to in my wallet whenever I am not using spending to qualify for the bonus on a new credit card I’ve signed up for. The card comes with a generous 40,000 points after $3000 spend within 3 months. So it is one of the best bonuses and one of the best cards for spending. I put my non-air travel on this card, my restaurant spend on this card, and my purchases outside the U.S. on this card.

• Chase Ink Plus. This is a small business credit card, I like that because It’s a whole separate category of cards I can sign up for and earn bonuses. It has what is in my opinion the richest signup bonus in the market at 50,000 points after $5000 spend within 3 months.

  Just like Sapphire Preferred the points transfer to several airlines including ones in all three alliances (United, British Airways, Korean Air, Southwest), to several hotel programs (Hyatt, Marriott, Ritz-Carlton, Priority Club) and to Amtrak.

  The real differentiator here is that it earns 5 points per dollar on telecommunications (such as cell phone, and cable TV charges) and office supplies. I buy gift cards at office supply stores so that I can earn 5 points per dollar on all of my spend, and if I need to cash out a card’s balance I add the funds to Kiva (which I can do with no fee – since Paypal donates the credit card processing), make loans and do good in the world, and then transfer the funds back to my bank account once the loans are repaid. Ink Bold is essentially the same card as Ink Plus but is a charge card (required to pay in full each month) rather than a credit card (can revolve a balance, which you shouldn’t ever do).

• American Express® Premier Rewards Gold Card. This is the strongest Membership Rewards-earning card, offering 3 points per dollar on airfare and 2 points on gas and groceries. Signing up for the card comes with 25,000 bonus points after $2000 spend within 3 months. My recent extensive review of this card is here.

  It’s a no brainer for the first year since the annual fee is waived. After that it’s a pricey $175, but I keep the card because I put over $30,000 in airfare on it (for myself and for others of course). And $30,000 spend on the card in a year is worth 15,000 bonus points — points that are themselves worth more than the fee.

  I then use the points to transfer to airline miles either when there is a transfer bonus (as happens frequently) or for things like transfers to Singapore Airlines Krisflyer, the only realistic way to redeem miles for Singapore first class awards.

• Starwood Preferred Guest American Express. This was the very first card I recommended on this blog back in 2002, and is one I have been carrying for over a decade. Even after all these years it provides outstanding value since the points are great for hotel stays but also to transfer to airlines — with a huge variety of airline partners (more than Membership Rewards or Chase Ultimate Rewards) and with a built-in bonus where transferring points into 20,000 miles generates a year-round 5000 bonus miles.

  Effectively with most airlines then you earn 1.25 miles per dollar on all spending. I use this for unbonused spend at merchants that take American Express and that isn’t being used to earn bonuses on new card signups, and it comes with up to 25,000 points as a signup bonus..

Here’s some additional helpful advice:

• Strategies to help you meet minimum spend
  
• The effect of credit card signups on credit scores
  
• Managing good credit to fly and stay free all over the world
  
• When to cancel cards you’ve gotten just for the signup bonus

Finally, note that the strategies above are primarily for folks that are interested in maximizing the value of their miles by redeeming for premium cabin international trips — leveraging miles for aspirational travel you probably couldn’t afford if you were paying cash. If your goal is just to fly domestic coach, it’s usually a better idea to just get a good cash back card, my favorite is the Priceline Rewards™ Visa® Card.

Note that many of the cards on the list above do offer me referral credit if you use the links provided. As always I only offer the best offers I’m aware of. And I do very much appreciate it when you use these links, so thank you in advance and may you have a lucrative and rewarding mileage-earning and redeeming year in 2013!