The ultimate guide to credit cards! Which cards to have and how to get the best travel rewards

I love hacking credit cards and airline points. A bunch of friends have been asking me for my recommendations so I wrote up this post.

The credit card game has changed. A couple years ago, if you were getting a 2% return on your purchases you were doing quite well! Now it’s possible to get a 4.5% return with very little effort, and 10% or more with some work. I’ll show you how.

Summary

  1. The best cards to hold are the Citi Prestige MasterCard, the American Express Platinum, and the Amazon Prime Visa.
  2. Get the best return on your points by transferring them to airline frequent flier programs and using to book flights directly with the airlines.
  3. Most premium credit cards give you a sign up bonus that more than makes up for the annual fee. So it costs nothing to try a new card for a year.
  4. If you apply for an American Express Platinum card, please use my referral link.

The basics

  1. When you use most credit cards, you accumulate points in the rewards program with that bank. Every bank has its own program. Basic cards give you 1 point per dollar spent, other cards give you 2, 3, or even more points for each dollar. Goal: use the credit card that gives you the most points for each dollar you spend.
  2. Once you’ve accumulated points, you can use those points for various types of rewards or purchases. This could be cash back, a gift card, or free travel. Different rewards have different exchange rates. Goal: use your points for the rewards that have the best exchange rate.

The best credit cards to have

1. The Citi Prestige MasterCard and the Chase Sapphire Reserve will earn you the most points on everyday purchases. They also offer the best travel insurance and other perks.

Citi Prestige MasterCard

  • $450 annual fee, but you get $250 reimbursed on travel expenses. So the fee is actually only $200
  • When you book 4 nights at any hotel, you get the 4th night free. You can use this perk as many times as you want! On our trip around the world, we did this about 40 times, saving us over $8000.
  • 3 points for every dollar spent on travel, 2 points on dining and entertainment
  • Transfer points to many airline partners
  • Great travel benefits like worldwide rental car insurance, emergency evacuation insurance, and more
  • Two year added warranty on all purchases
  • Priority Pass Select, so you can get into airport lounges for free
  • Free Global Entry
  • No foreign transaction fees
  • 75,000 points when you sign up with this link

Chase Sapphire Reserve

  • $450 annual fee, but you get $300 reimbursed on travel expenses. So the fee is actually only $150
  • 3 points for every dollar spent on travel and dining
  • Transfer points to many airline partners including United
  • Great travel benefits like worldwide rental car insurance, emergency evacuation insurance, and more
  • Priority Pass Select, so you can get into airport lounges for free
  • Free Global Entry
  • No foreign transaction fees
  • 50,000 points when you sign up

There’s a lot of overlap between these two cards so you probably only need one. Chase points are slightly better. But if you use the 4th night free perk with Citi, that’s definitely the way to go. Travel and product insurance with the Citi card is slightly better.

2. Get the American Express Platinum for status on a bunch of hotel programs, free upgrades, and access to the best lounges. You will travel like a king.

American Express Platinum

  • $550 annual fee, but you get $200 reimbursed on one airline, and $200 reimbursed from Uber. So the fee is really only $150
  • 5 points for every dollar spent on airlines
  • The most airline partners to transfer points to
  • Access to a bunch of lounges including the Centurion lounge (the one in SFO is amazing)
  • Gold status on Starwood, Marriott, Hilton, Hertz, Avis, and other programs. This gets you upgrades, free breakfast at hotels, and more
  • The Amex Fine Hotels program gets you a bunch of perks (upgrades, late checkout, free breakfast, free spa) when you book a hotel through Amex
  • Free Boingo internet
  • Free Global Entry
  • No foreign transaction fees
  • 60,000 points when you sign up

This card isn’t about making purchases and getting points (other than the 5x for airlines). This card is about upgrades, perks, and traveling in style. It’s also the coolest card (way heavier than even the Chase Reserve!)

3. If you shop at Amazon, the Amazon Prime Visa is a no brainer.

Amazon Prime Rewards Visa

  • No annual fee
  • 5% back on Amazon purchases

Since Amazon purchases only get you 1 point per dollar with other cards, use this card instead. I don’t use it for anything else. I don’t even carry it.

Which card to use:

The goal is to optimize your return. Here’s how I decide:

  1. If it’s an Amazon purchase, use the Amazon Visa (you get 5% back)
  2. If I’m buying flights, use the Amex Platinum (you get 5 points per $1)
  3. If I’m booking 4 nights at a hotel, use the Citi card (you get the 4th night free)
  4. For all other travel and dining purchases, use the Chase or Citi card (you get 2 or 3 points per $1)
  5. For everything else, use the Amex platinum (you get 1 point per $1)

Redeeming points

Essentially there are 3 ways to use your points:

  1. Trade in your points for gift cards. For example, most credit card programs will give you a $100 gift card to Amazon for 10,000 points. Each point = 1 cent.
  2. Use your points to book travel directly through your credit card’s travel portal. Redemption rates vary, but with Chase, each point = 1.5 cents. So you can buy a $750 plane ticket for 50,000 points.
  3. Transfer your points to an airline frequent flier program and book directly with the airline. This is how you get the best return on your points. I recently booked a $750 domestic economy ticket (last minute) for 25,000 points. Therefore each point = 3 cents. I’ve seen redemption rates of 4 or even 5 cents per point when booking international business class travel on Singapore, Emirates, Etihad, Air France, and other airlines.

When you earn 3 points per dollar on your purchases, and redeem those points for 3 or 4 cents in value each, you can see an overall return of 9-12%!

All this takes a bit of effort, of course, but I save thousands of dollars per year so I think it’s worth it. More important than the money, all the upgrades and lounges make flying and traveling super fun. I don’t dread going to the airport, I show up early.


Appendix/FAQ

1. The annual fees are insane! Are they really worth it?
Remember that with these premium cards you get several hundreds of dollars back each year on travel benefits. You should mentally deduct that from the annual fee. The fee ends up being $150-200 per card, not $450.

2. Everyone is going nuts over the Chase Sapphire Reserve. Why isn’t that your top pick?
It’s a great card for sure. The reason it blew up is last year Chase was offering a 100,000 point sign up bonus. Now the bonus is only 50,000. The Chase and Citi cards are pretty similar, but I think Citi has a slight edge.

3. How do you transfer points to airline frequent flier miles?
You log in to your credit card’s site (ie membershiprewards.com), put in your frequent flier number, and enter a number of points to transfer. Usually it happens instantly.

Here’s a handy chart showing where you can transfer points:

Pasted Graphic

4. I don’t travel or eat out. What should I do?
This post probably isn’t relevant to you. Get a basic free card that gives you cash back, like the Amazon Visa. The Costco credit card is great too.

5. I love my Starwood Preferred Guest Amex card. You didn’t mention it.
It’s a great card. It was my go-to a couple years ago. But it doesn’t give you many benefits other than more Starwood points on stays. So I don’t find it to be worth the annual fee. The Amex Platinum gives you instant Starwood/Marriott Gold, so it’s the card to have if you stay at those hotels a lot.

6. What about debit cards?
Debit cards are the worst. Not only do they not give you the same perks and benefits as credit cards, they are not safe to use. They don’t have the same level of fraud protection as a credit card. I literally don’t feel safe having one.

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