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.

How I automated my home lighting with Lutron Caseta switches

I recently replaced all the light switches in my living room with Lutron Caseta smart switches. This allows me to create scenes (combinations of lights on or off) and control my lights via voice or an app.

Overall I’m very happy with the experience. Installing the Lutron switches was easy (same as normal switches), the Lutron app is great, and I can control everything via Alexa.

Why replace switches?

There are a lot of smart light bulbs out there. I decided to replace my switches instead for a few reasons:

  1. I have a lot of bulbs, so replacing the bulbs would have been more expensive
  2. Some of my bulbs don’t have a smart bulb equivalent. Replacing the switch means it works with any light type
  3. If you replace a bulb and not the switch, your switch will cut power to the bulb, breaking the system
  4. If I move I can take the switches with me and use them anywhere

Lutron Caseta P-PKG1W-WH - In-Wall Dimmer and Pico Remote Image

Why did I go with Lutron?

  1. They work in all the applications I need (dimmable, non dimmable, 3 way, halogen, cfl, led)
  2. They have great reviews. Everyone said they are very reliable
  3. The hub is compatible with Alexa and HomeKit. While HomeKit isn’t great today, I’m hoping it will be one day. I worry about Alexa listening to everything I say at home. When HomePod comes out, I might stop using Alexa

Here’s the basic setup:

  • Plug the hub into your router and set it up via the app
  • Replace the switches. If you can do basic electrical work, you can replace them yourself. The only hard part was stuffing the new switch and wires into the electrical box because there isn’t a lot of space
  • Add each switch in the app
  • Create scenes like “Movie” or “Cooking” and tell the app which lights you want on/off/dimmed, etc
  • Link your Lutron account with Alexa to control your lights via your Echo, and with HomeKit to control your lights via Siri

I can now control my lights in a bunch of different ways:

  1. Talk to Alexa or Siri
  2. Use the Lutron app or iOS widget (swipe right on your home screen for quick access)
  3. Create a geo-fence in HomeKit and have my lights automatically turn on when I get home
  4. Connect to IFTTT and Harmony to create even more sophisticated triggers and scenes
  5. Use Pico remotes to activate scenes or turn off all the lights. I have one at our front door and one on our coffee table

The biggest problem with all this home automation is that there are too many ways to do everything. Lutron, HomeKit, Alexa, and Harmony all want to be the control center, but each system has its faults. Here’s a diagram I drew up of the various systems I have and what can talk to what:

But don’t let this diagram scare you. The Lutron system is great. Configure everything in the Lutron app, and then control it via Alexa/Siri and you’re good to go.

Questions? Post in the comments or Tweet at me.

Hacking airline status: How I earned Delta Gold and United Gold status after flying just 12,500 miles

My wife and I just traveled around the world for a year. Before we started our trip I got Delta Gold status and United Gold status, and I did it without flying the 100,000 miles that would normally be required.

Having gold status on United and Delta didn’t just mean we got hooked up when flying on these two carriers; it meant we were also hooked up when flying on any of their 47 total partner airlines worldwide. Benefits included:

  • Lounge access on international flights
  • Free checked baggage
  • Free economy plus/comfort
  • Priority lines at check in, security, and boarding
  • Priority rebooking if a flight is delayed/cancelled
  • Free upgrades to business class

Here’s how I did it:

Step 1: Earn Delta Gold Medallion using credit cards and spending

  1. Apply for the Delta Reserve American Express card. You earn 10,000 Medallion Qualification Miles (MQMs) after your first purchase.
  2. Charge $60,000 on that card to earn 30,000 additional MQMs.
  3. Apply for the Delta Reserve Business American Express card. You earn 10,000 Medallion Qualification Miles (MQMs) after your first purchase.

In total you’ll earn 50,000 MQMs which gets you Delta Gold status for the year. There’s no flying needed.

Spending $60,000 (without being stupid) in a short time period isn’t easy. Here’s how we did it:

  1. We moved 100% of our spending to this card.
  2. We purchased gift cards for sites like Amazon, Apple, iTunes, and others. We knew we’d use these eventually.
  3. Instead of giving people cash/checks as gifts, we only gave gift cards.
  4. We prepaid a bunch of our taxes. This incurred a fee, but it was worth it (more on this later).
  5. What we didn’t do: buy anything we wouldn’t have otherwise bought.
air china upgrade

Free upgrade to business class on Air China, a United partner.

Step 2: Earn United Gold by doing a status match challenge

Once I had Delta Gold status, I applied for the United Airlines status match challenge. Through this challenge, you only need to fly 12,500 miles in 90 days to get Gold status for the year.

Lucky for us, we already had trips to Cabo and Buffalo lined up on United. It wasn’t quite enough so I booked the cheapest roundtrip ticket to the east coast I could find. Once I hit 12,500 miles on United, I had Gold status for 2016!

Screen Shot 2017-04-27 at 2.53.30 PM

Mileage run! My flight to Boston landed early, and I was able to jump on an even earlier flight back to San Francisco. I was in Boston for less than an hour.

What was the total cost?

  1. The annual fee on two Delta Amex credit cards: $900
  2. Roundtrip ticket to Boston on United: $300
  3. Credit card fee (2%) for online tax payments: $600

Total cost was $1800 to get status on both airlines, so it wasn’t cheap. But I also earned about 80,000 bonus Delta miles, which are worth $1600-$2000. Taking that into account, I broke even.

sing lounge

The Singapore Airlines lounge was incredible. Unlimited high end champagne! We were able to get into a partner lounge for almost every single flight we took (60 flights total).

Was it worth it?

Absolutely! I did all this at the end of 2015, so I had gold status for all of 2016 through February 1, 2017, almost our entire trip. Instead of dreading going to the airport, we looked forward to getting through the checkin process quickly and hitting the lounge for some wine.

Flying can be difficult and stressful. But having gold status can help make things go smoothly. You can’t do this every year, but if you have a year when you’ll be flying a ton it’s totally worth it.

Renting a car? How to make sure you aren’t paying too much for insurance

When you rent a car and get to the rental counter, one of two things happen:

  1. You assume you’re insured, by your home policy or by your credit card, and you don’t buy additional coverage.
  2. You don’t know if you’re covered or not, the rental counter says you aren’t, and you buy coverage on the spot for way too much money.

This is not ok! Rental car companies design their websites and policies to be cryptic and misleading so they can scare you and rip you off! Your home policy or credit card may cover you but there are lots of caveats to be aware of.

We’ve rented a lot of cars in the past year. Here’s what we’ve learned:

bmw

Our rental car in Tasmania

  1. If you own a car and have a car insurance policy in the United States, it probably will extend to cars rented in the United States or Canada. However, your home policy won’t extend abroad. If you think your policy does, call your insurer and see it in writing.
  2. If you don’t own a car and you have a non-car-owner policy (like me), then your auto policy will give you liability insurance when renting a car in the United States and Canada, but not collision.
  3. Credit cards offering car insurance give you collision insurance only, not liability. This is a huge gap in coverage!
  4. Many credit cards only offer secondary insurance (kicks in after other coverage is exhausted), and exclude many countries from coverage. Read the fine print before you depend on this coverage.
    • Premium credit cards like Chase Sapphire and Citi Prestige offer free primary collision insurance worldwide with no exclusions. Surprisingly, even American Express has restrictions so I don’t use them for car rentals.
  5. Car rental websites don’t make it clear what insurance is included because they want to upsell you on extra coverage later. Don’t fall for it. Understand what is and isn’t included in the base price.
  6. In many European countries, Australia, and New Zealand, there are strict laws about what car insurance is required to drive. Therefore, we’ve found that most rentals include liability insurance. In many countries, it’s called “third party insurance”.
  7. Collision insurance is almost never included in the base price for a rental car, but if you select the option at the time of renting online you can add it for just a few dollars per day. The key here is to buy it online, not at the counter.
  8. People who work at rental counters are clueless. They have very little training in insurance, so you should never plan on asking them questions or making decisions at the counter.
  9. Collision insurance (covers your car) is also known as a Loss Damage Waiver. There’s a deductible and you’re covered beyond that amount. Often when you walk into a rental office and ask “does my rate include insurance?” the employee will say “no” because technically an LDW isn’t insurance. But they serve the same purpose so don’t be fooled.
  10. You should always print your car rental invoice/receipt and take it with you to the rental counter. Make sure the rental agreement you sign in person matches your invoice. There should be no ambiguity.
  11. We’ve found that autoeurope.com and sixt.com generally do a good job of detailing what insurance is included when you are renting online. We use hertz.com a lot too but you have to really dig into the fine print to understand insurance.

Bottom line:

Dealing with car insurance sucks. But if you do a little research and planning up front you can save a ton of money. Once you do this a couple times, it becomes pretty easy to find the fine print you’re looking for.

I don’t own a car, but I have a non-car-owner auto policy that gives me liability coverage when renting in the Unites States. That doesn’t include collision so I pay for the rental with my Chase Sapphire Reserve card to get that coverage.

When I rent a car abroad, I always get full insurance from the rental company. I only book on websites that make it very clear what insurance is included. And it’s usually not much more money as long as I do this at time of booking.

Using the rental company for collision insurance (vs my credit card) is also more convenient. If I get into an accident: I can simply pay the rental company the deductible and walk away. If I use my credit card for insurance, I’ll have to pay the rental car company the cost of the damages and get reimbursed later.

If you have other thoughts, tips, feedback please post it in the comments.

Screen Shot 2017-04-16 at 6.02.51 PM

autoeurope.com searches across many rental car companies like Hertz and Sixt. It does a great job of clearly showing you what insurance is or isn’t included so I always start here.

2

Sixt.com sends you an PDF confirmation that makes it clear what insurance you have on your rental. Take this with you to the counter. Once the counter agent claimed we had no insurance purchased. Luckily we had proof!

Screen Shot 2017-04-16 at 6.42.11 PM

Hertz is pretty sleazy. You can’t tell what insurance is or isn’t included by looking at this confirmation page, even in the Terms and Conditions fine print.

Screen Shot 2017-04-16 at 6.42.58 PM

Once you open the 22 page rental agreement on Hertz.com, you can see that all rentals in Europe include third party insurance, and most include collision insurance. Most people won’t know this and they will be sold additional coverage at the counter.

 

Appendix

Definition of Collision Insurance, also known as a Loss Damage Waiver

“Collision” insurance covers your car, the one that you rented. There’s no stated upper bound, because the upper limit is the full value of that car (say, $10,000 for a Corolla). Collision insurance has a deductible, the amount you would need to pay in the case of an accident. It’s usually in the hundreds or low thousands of dollars.

Collision insurance might also be called a “loss damage waiver.” It means the car rental company is waiving their right to collect money from you above a certain amount. It’s the same thing, but different legal lingo.

Definition of Liability Insurance, also known as Third Party Insurance

Liability insurance, or third party coverage, insures other cars and people in the case of an accident. Liability insurance has no deductible, but it does have an upper limit which is usually in the hundreds of thousands or millions of dollars.

This insurance is *more* important than collision because of the risk: your Corolla rental may only be worth $10,000, but if you hit a Ferrari and the driver is injured, you could be sued for millions!

This is probably getting into the “super paranoid” territory, but I only rent cars from large, international rental chains. That’s because insurance is only valuable if the company insuring you is able and willing to pay a claim. If they don’t, you’re on your own. Example: I believe Hertz will pay my claim if I have an issue, but a mom and pop rental shop in Greece might not be able to pay a $1M claim.

How eDreams gets the lowest prices on flights, and why you should never use them

Kate and I are planning a trip to South America in November. We’ve been booking domestic flights this week.

One flight we needed was a one way from Lima to Santiago. On Kayak it was $950 from all websites other than edreams.com, where it was $550. Big difference. We booked the flight.

I looked up reviews for eDreams and they are awful. I’ve never seen a service get such bad reviews. A common complaint was that people didn’t have a reservation they thought they had. Sometimes it was because eDreams never booked it, and sometimes because eDreams cancelled it after booking.

A couple hours after booking my flight I received the confirmation. I took the confirmation number and looked it up directly on the airline’s website. What I found is that eDreams had booked a roundtrip ticket even though I had requested a one way flight.

I looked up the roundtrip ticket on Kayak and sure enough it was cheap: $500, even less than the one way route.

So eDreams hack is to book these roundtrip tickets and then cancel some legs later. I think that’s illegal.

Now that I’ve read the reviews and I know how they are hacking the system, I’d stay away from edreams.com at all costs.

If you don’t do research on your purchases, you will be taken advantage of

The shower handle in my second bathroom was broken. I couldn’t adjust the temperature so I was taking really hot showers. I called a plumber. The guy looked at it for 10 seconds (literally) and quoted me $450 for the repair. He wouldn’t tell me what part was needed or any details on the repair. He wanted me to trust him.

I called a second plumber. He actually spent some time and disassembled the unit. He talked a better talk and quoted me $350. Still no details on what was broken.

He was slow to get the part he claimed I needed, so I looked up the details of the unit I had and found the installation instructions. I spent 1 hour and I fixed it myself. I didn’t buy any new parts. Nothing was broken, it was just assembled incorrectly.

I’m sure 99% of people would have paid the money.

Lesson: do research and be a savvy consumer. Whether it’s a big purchase like a house or car, or something small like a home repair, know exactly what you’re paying for and fight back if you’re not getting the answers you want.

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