Is it possible to develop a credit card points reward strategy and still use credit cards in a responsible manner? We know that many financial experts argue that credit cards are bad… if not evil.
But, are credit cards the cause of poor financial decisions? Can we truly blame irresponsible behavior on an item?
Just so that I’m completely up front and honest with you, I don’t have the same extreme viewpoint as other financial advisors.
I believe that if you are the type of person who can exhibit self-control and discipline, then you can handle a credit card. However, if you don’t have control and can’t control your spending, then you shouldn’t have a credit card. Plain and simple.
Elite Credit Cards
Many credit card companies are offering “elite” travel credit cards. Many of these credit cards get you rewards points for travel, access to airport lounges, annual travel credits, elite status for car rentals, and elite status for hotels.
Unfortunately, many of these elite credit cards come at with a large annual cost. The American Express Platinum Card costs $550 a year. The Chase Sapphire Reserve costs $450 a year (referral). So, is it worth paying for these costs for the benefits you receive?
It could potentially be worth it if you are in the military and you can handle credit cards responsibly. If you are in the military, the Military Lending Act waives annual fees. If you aren’t in the military, you need to weigh the pros and cons to see if it is the right decision for you.
Develop a Credit Card Points Reward Strategy: The Two Cards I Own and Use
My goal with these two credit cards is to save around $1,250 on an annual vacation. For this initial vacation, my plan is to save $2,500 with the initial point bonuses. As my wife and I continue to find ways to save and make more money, using these rewards and being on the same page about money helps us stay motivated about living a financially responsible life. Interested in learning more about the credit cards I use?
American Express Platinum Card
Annual Fee: $550 ($0 for Military Members)
- $200 Airline Travel Credit
- $200 Uber Rides Credit
- $100 TSA Pre-Check Credit
- $550 Complimentary Benefits with Fine Hotels and Resorts
- Access to thousands of airport lounges including American Express Centurion Lounges, Delta Sky Club, and Priority Pass Select lounges
- Starwood Preferred Guest Gold Status (Marriott)
- Hilton Honors Gold Status
Chase Sapphire Reserve Card (Referral)
Annual Fee: $450 ($0 for Military Members)
- $300 Airline Travel Credit
- Access to airport lounges
- $100 TSA Pre-Check Credit
- Gold/Elite Car Rental Status
- Access to the Luxury Hotel and Resort Collection
Develop a Credit Card Points Reward Strategy
You have to find credit cards that reward what you value most. For my wife and I, we love to travel. So it only made sense for us to accumulate reward travel points. You need to limit yourself to one goal or you won’t be able to accumulate enough points to make a significant difference.
Membership Reward Bonuses
For most elite travel cards, the credit card company will offer a large initial bonus of reward points if you meet the initial purchase requirements. If you are using the American Express Platinum Card, you must make $5,000 in purchases in the first three months to earn 60,000 Membership Rewards Points. For the Chase Sapphire Reserve Card, you must spend $4,000 on purchases in the first three months to earn 50,000 Bonus Points (referral).
To ensure I receive the credit card bonuses, I only opened one credit card at a time to meet the minimum expenditures to get the initial point bonus. I don’t intentionally rack up unnecessary purchases to meet the minimum requirement. Instead, I change all of my monthly billing payments to the new card and only use it exclusively until I meet the requirement.
Optimize Usage of Cards
The American Express Platinum Card earns 5x on airfare (booked directly with airlines) and hotels (booked through amextravel.com). The Chase Sapphire Reserve Card earns 3x on travel, 3x on dining, 1x on services (shipping, internet, cable, phone, etc.) and 1x on other.
Therefore, my general guidelines are to use my American Express Platinum Card on airfare and hotels. I use my Chase Sapphire Reserve Card for travel if rates are cheaper than amextravel.com and dining. I split my monthly bills across both cards.
Develop a credit card points reward strategy: What not to do
It’s important to note I don’t go point crazy and constantly find credit cards. I have limited myself to only these two credit cards. I’m not going to own multiple credit cards to receive a few hundred dollars in savings each year.
Also, I plan for all of the expenses on my credit card with my budget. Each month, I pay my credit card balances in full. There is a reason credit card companies can afford skyscrapers in major cities—don’t get caught paying interest on a credit card balance.
Lastly, don’t purchase unnecessary stuff to meet the required minimum amount. If you start altering your purchasing patterns for credit cards, you will end up losing in the long run. You will end up spending more in a year rather than taking advantage of the bonuses.