I Feel Sad When Someone Pays With the “Wrong” Card
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Keith: While in line in the supermarket last week, I witnessed a young man (late 20s) purchase a pint of ice cream and pay with a co-branded airline credit card earning him 1 mile per $1. His friend followed up by making a separate purchase with a debit card earning zero rewards. 😮
As a miles & points obsessive, I often get heart palpitations when I see folks pay with a card that’s not earning the most (or any) rewards. Haven’t they been reading our daily newsletter with tips & tricks for turning credit card rewards into discounted or free vacations?
I understand most folks prefer simplicity. There’s no need to carry around a dozen cards like me to get Big Travel with Small Money. But making small shifts in your purchase habits to make the most of credit card rewards can have a HUGE return!
There’s No “Right” or “Wrong” in the Miles & Points Hobby
Everyone has different financial and travel goals. So there’s no one size fits all credit card rewards earning strategy. Some folks are completely satisfied earning cash back, while others prefer to squeeze the value out of every point by booking luxury award travel.
That said, I’m often approached by friends and family who think miles & points sound too good to be true. They tell me that accumulating enough rewards for a free hotel night or flight must take years. Even though most skeptical folks would love to save money on travel, they generally just keep a cash back card that earns 1.5% back on purchases.
The truth is that anyone eligible for rewards credit cards can follow the same miles & points earning strategy that’s allowed my wife and I to take unforgettable trips to destinations like Bali and New Zealand.
The first step is to take advantage of lucrative card offers with valuable sign-up bonuses. After that, the key is to pay for purchases with a card that earns you the most rewards.
Using a card that earns bonus miles or points for purchases can have a meaningful impact on how quickly you accumulate rewards!
Run the Numbers to See How You Could Be Missing Out on Value!
Let’s say you use a credit card for $10,000 worth of purchases per year. If you use a 1.5% cash back card, you’ll earn $150 worth of rewards.
But let’s say you put that same spending on a card that earns flexible rewards points, like the Chase Sapphire Preferred® Card. With this card, you earn:
- 2X Chase Ultimate Rewards points per $1 on travel and dining
- 1X Chase Ultimate Rewards point per $1 on all other purchases
Let’s say your $10,000 in annual spending is made up of:
- $3,000 in dining purchases
- $2,000 in travel purchases
- $5,000 in non-bonus spending
If you put all of this spending on the Chase Sapphire Preferred, you’ll earn 15,000 Chase Ultimate Rewards points ($5,000 in travel & dining X 2 points per $1 + $5,000 X 1 point per $1). These flexible points are worth:
- $150 in cash back or
- ~$188 in airfare, hotels, or car rentals by booking through Chase’s travel portal (with no blackout dates!) or
- Potentially even more value by transferring points directly to airline and hotel partners, like Hyatt, Southwest or United Airlines
Chase Sapphire Preferred cardholders could transfer 15,000 Chase Ultimate Rewards points directly to Hyatt to book a free night at a Category 4 hotel, like the Park Hyatt Washington, DC. Room rates at this hotel are ~$400+ per night if you pay cash. See how shifting your spending to a different card can get you a lot more value?
The example above is the most common one I use to show folks the power of accumulating bonus points on ordinary purchases. And how it can translate into valuable travel redemptions!
When I chat with friends and family about travel credit cards, they love the idea of earning valuable rewards to save money on travel. That said, most continue to use a debit or straightforward cash back card for all purchases.
Not everyone needs a dozen credit cards and spreadsheet tracker to monitor their miles & points balances. But I typically encourage anyone new to the hobby to find a card that fits their spending habits and helps achieve their travel goals.
Most folks don’t realize they’re essentially leaving money on the table by not making the most of credit card bonus spending categories. For example, earning 2X or 3X points for purchases you’re already making can boost your rewards balance more quickly!
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