The average person today has many choices when it comes to credit cards. Gone are the days when only the upper-middle class or higher enjoyed carrying plastic with the prestige of earning rewards for their loyalty. Gone are the days when an average Joe had to pay annual fees for the convenience and pay even more for a reward program. Today, we are faced with many choices, some may argue we have too many choices. Being that this is a travel related site, I want to use this post to discuss the choices available for travellers today.
First, frequent flier miles are lame. They are good in theory but bad in practice. For example, for 25,000 miles, all you can get is a flight less than $200. If you want to fly from LAX to Florida, those tickets generally cost 37,500 miles minimum. Most of the time, you can only use airline miles when you are travelling off-season or if you book a few months in advance. In other words, miles are restrictive and you need a lot of miles to be able to get a free ticket.
Second, not all airlines fly everywhere for a good price. So you have to be enrolled in multiple mileage programs to take full advantage. United, Continental, Delta and American are the big 4 carriers in the US. You can either get a credit card that is specific to an airline like Citi AAdvantage which gives you a mile for every $ spent, or get a generic one that give you a mile on any program for every $ spent like the Discover Miles Card. Regardless, you’d have to spend at least $20,000 to get 25,000 miles which would get you a ticket from LAX to SFO or Seattle and that too, only on unpopular flights at odd hours, in off-season unless you book 2 months or so in advance. So spend is $20,000 – reward is less than $200 with some restrictions. 1% ROI.
I like the convenience of credit cards and I love getting something for what I spend. Having said that, my goal is always to get the most value out of what I charge on credit cards. I have realized over the years that miles programs are the wrong choice for credit cards. Consider the alternatives.
If you own a Hilton Honors American Express, you can get 3 points for every dollar spent, 5 points for every dollar spent on eligible purchases at supermarkets, drugstores, gas stations, dining establishments, the U.S. Postal Service, wireless phone bills and your Hilton hotel purchase. So spending $10,000 will get you 35,000 points, which will get you a free night at a 4 star hotel in the Hilton network. The advantage here is that there are usually no blackouts and its easier to book a free night at a hotel than it is to get a free flight. So spend is $10,000 and reward is less than $200 without much restriction. 2% ROI.
If you own a regular card that has a reward program that might work even better. For instance, American Express has a card with Costco (for Costco members only) called TrueEarnings Card, which gives you 3% rebate on gas and restaurants, 2% rebate on travel, and 1% on everything else. In this case, you get an instant rebate on your credit card statement and the ROI is anywhere from 1% to 3% and you don’t wait for the reward until you hit a certain spend – it comes to you automatically every month.
If you are going to be travelling a lot, I recommend getting a hotel card like Amex Hilton. With something like the Hilton card, you earn 5 points for groceries, medicine, gas, restaurants and your wireless bill. So every month, even if you don’t travel, you earn a lot. Now, when you travel, if you book your stay online at Hilton.com, you get 500 points just coz you booked online using the Hilton Amex card. Then you earn 5 points for every dollar spent on your Hilton stay that you charge to your Hilton amex. You also earn 10 points per dollar just for staying at a Hilton hotel regardless of the credit card. And you get 500 miles on an airline of your choice as part of their double-dip program when you stay at a Hilton hotel (regardless of credit card). So a stay of two nights at $200 per night in a Hilton or Doubletree or any of their hotels will get you:
- 500 bonus for booking on Hilton.com with your card
- 500 miles on any airline
- 4000 points for staying at the Hilton
- 2000 for paying for your stay with your card
Finally, they also upgrade you automatically to a Silver VIP status if you have a Hilton Honors credit card. Silver VIP means you get 10% additional points for each stay at a Hilton hotel. Also there is NO ANNUAL FEE with Hilton’s Amex card, while most airline cards have a $25-100 fee depending on the card.
If you still want an airline miles only card, I recommend one of the following:
- Getting the card that matches the airline you fly most. So Citi AAdvantage if you fly mostly American or Chase OnePass if you fly Continental most (an so on). This will have annual fees and 1 mile for every $.
- Discover Miles – you get 2 miles per dollar on travel and restaurant expenses and 1 mile per $ for everything else. Of course Discover is not the most popular but this card has no annual fee.
- Capital One No Hassle Visa – Earn 1.25 miles per $. No annual fee. Fly on any airline.
For more information on the best travel rewards credit card for you, please visit FrequentFlier.com