Choosing the right credit card(s) starts with asking the right questions.
SPECIAL REPORT AT A GLANCE:
- Credit cards in a post-Starwood Amex world
- Careful about what you read on free sites
- Choosing cards based on earning opportunities
- The first questions to ask
- Rating points programs and pros and cons
- Bennett’s points diversification strategy
The speed that you can build your multi-airline points account—through credit card spending (not talking about hustling banks/sign-up bonuses here)—does not necessarily equal how happy you’ll be with that points program.
Our formula for the best credit card/points program (and this applies to anyone) is this:
The best card / points program = earning power Xs spending power
In other words, it’s what you can do with your points, too.
What good is it to have a zillion points and not be able to spend them where or when you want to?
Keep this in mind continually as you digest this special FCF report.
R.I.P Starwood Amex
As you know, Starwood Starpoints have been FCF’s favorite points currency. With that currency folded into Marriott points now, current points (meaning points already earned on old SPG credit cards) still have the same spending opportunities, but with decreased earning power given the new Marriott/SPG credit cards now at play. So the tools for power-upgraders have changed.
What Should I Do Now?
(Even airplanes need course correcting.)
Your credit card strategy also needs occasional course correcting. Is it time to change cards? It’s up to you to apply your situation to the information in the tables and questions that follow.
The good news is that the field comes down to these five credit card points programs: Amex Membership Rewards, Barclays, Chase Ultimate Rewards, Citi ThankYou, and Marriott/SPG.
About recommendation Kickbacks
You need to be aware of the context of what you read. For online credit card recommendations, banks pay out large kickbacks—up to $300 each—every time you sign up for a card on these travel sites. This leads these otherwise ‘free’ travel sites to get you excited about every card they can.
That’s good for them, but maybe not for you.
FCF doesn’t receive any kickbacks for anything.
Choosing a Credit Card 101
As much as we’d like to say, “You should use Card X,” we can’t. It’s not that simple because it comes back to how you will spend those hard-earned points. You. Not your neighbor. Not the lady sitting in seat 24G.
So, instead of thinking of the different credit cards and their “category bonuses”—which is where most people start, and too many end their thinking—we think now’s a good time to take a step back.
Think about how you will ultimately be spending the points, the best you can forecast, because spending can be more important than earning, ultimately, if you’re anything short of 100% flexible on everything.
Start by Asking the Right Questions
The blue jeans originator, Levi Strauss said, “An expert knows all the answers, if you ask the right questions.”
When thinking about what credit cards ought to be in your wallet, here are some of the questions that can help make you a point expert:
How locked-in am I to accumulating miles in a specific program?
Do I need points that are transferable to a specific airline mileage program? (e.g., I’m a Delta Fan and locked into SkyMiles. If so, the points programs you align with must transfer to SkyMiles; this would limit you to Amex Rewards and/or Marriott/SPG, for example.
How locked-in am I to flying on a specific airline and its partners?
Continuing with the Delta SkyMiles example, do I need points that are transferable to at least a partner of Delta? You do have a little more latitude in this case, in that you can align yourself with any Delta partner that offers Delta tickets through their program.
This means you can work with mileage programs like Air France, Korean, and Virgin Atlantic (all Delta partners), which open the door to all five credit card points programs: Amex Rewards, Barclays, Chase Ultimate Rewards, Citi ThankYou, and Marriott/SPG.
How many cards do I want to carry?
Chances are, you will end up with more than one card and that’s okay, because no single credit card and/or point program can give you everything.
But, do you really want to mentally manage 10+ cards—one for each type of spend/bonus category? I say, if I don’t earn another 60,000 miles per year or more, forget about it. My mindset rationale: I can buy that many miles for $1,000 or so, and I don’t want to be using up any more of the precious RAM in my brain for anything less.
Am I a truly flexible traveler?
When it comes to using points to save a small fortune on premium class travel, Fortune Favors the Flexible. Do I follow the opportunity—and go where and when the traveling is most (comfortably) inviting?
This matters more than anything.
The more inflexible you are, the more you’ll want a points program with more airline partners. More partners = more options.
Inflexible travel comes at a cost. The more locked in to an airline, date, class of service and/or destination, with fewer options = greater likelihood of disappointment.
Even often (if not always) not being able to use your points at all. Something to think about.
Do I follow the deal?
Again, seemingly similar to the question just above, only much different. Many FCFers follow the deal. Many don’t. While many fly infrequently, to a specific destination, on specific dates, many, on the other hand, say, I can fly to [fill in the black with an awesome place they’ve never been]—for just [fill in this blank with FCF’s amazingly cheap Sweet Redeem finds]—so I’ll take it!
Which means going with point programs offering several or more transfer partners—especially the ones with the best spending power. See table below for more on the most lucrative redemptions.
Am I a hard-core First Class flyer?
If so, you’ll want to align yourself with point programs that partner with top-tier airlines, meaning those that offer three classes of service. Pay careful attention to those opportunities in the spending power table below, or you might be very disappointed.
How many points might I earn annually?
Say you only earn 20,000 points every year, for example; if this case you can’t divide your earning into two or three credit card points programs. But if you’re earning hundreds of thousands of miles annually, then having points in multiple programs.
Need access to buying points?
Do I need to be able to buy points because I often fall short on having enough for all the lucrative award travel opportunities I want to take advantage of? Then Amex Rewards might be for you, as it allows you to buy up to 500,000 points annually. Second best: Citi ThankYou at 100,000.
These questions simply go back to our first rule: Start with the end in mind.
Why Appraising a Credit Card is Like Appraising a House
When you’re working out the value of a house, you increase the price if it has a new kitchen and bump it down if the bathroom needs to be remodeled. The same goes for the spending power of a credit card. They all have positive and negative attributes. This affects its overall rating as you’ll see in our table below.
The Simple What’s-the-card-for-me? Equation:
(Your) Best Credit Card
=
(Your Preferred) Spending Opportunities
Xs
(Your Preferred) Earning Opportunities
FCF’s Points Program Power Ratings
Perhaps the moment you’ve been waiting for—and now you’re now ready for: The balance of this special report will focus on how FCF rates—on a 5-star scale spending power and earning power—Amex Membership Rewards, Barclays, Chase Ultimate Rewards, Citi ThankYou, and Marriott/SPG.
That said, I ask you to not read the ratings until you’ve begun to ponder the answers to the questions above.
(For a deep dive on points-earning power, refer to our June report for a comparison on credit card points earning power, and our credit-card earnings calculator.)
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What does Bennett’s points portfolio look like?
I’m moving to a ‘spend blend’ of around 70% Amex Rewards Points / 30% Chase Points. Amex because its airline partnership count is 17 (while Chase is just 6 partners)—meaning more opportunities are available and thus better for my intermittent inflexibility—and preference for First Class travel.
If you earn very many miles based on spend, most of you will find some Chase category bonuses too lucrative to ignore, even though Chase is much lighter on redemption opportunities.
Final Thoughts For Today
Think of this report like a meeting with your financial advisor. Before they start talking (or narrowing down the) options, they’ll ask you about your risk tolerance and end game.
Chase will likely appeal more to the slightly younger, more aggressive, risk tolerant, while Amex is better suited to the more risk averse, perhaps mature spender who likes the surety of flying with particular carriers, in particular classes, even if at a slightly less return on spend.
That said, I am also extremely tempted to start earning Barclays points. Its Japan Airlines partner offers an amazing program, and I envision more partners being added.
In case you were wondering, and sad as it is to say, my Amex Starwood cards will no longer be used except for Marriott/Starwood hotel stays.
See you up front.