The most common questions I hear from others when I talk about how we are using points and miles is: How can I get started on this? Or what credit card should I get?

Like with a lot of things in life, there is not one answer to that. To me I usually like to respond with a question of my own:

What are your goals and how will you use miles and points?

If you want to fly in business or first class around the world, my recommendation might be different than if you say you want to use it to be able to visit family and friends on a regular basis. Some people might say I just want to offset travel cost or in general travel more.

So let’s further look at some of those examples, as well as how I look at this. In my opinion, there are four big categories:

Category 1 – Cash back:

In the most basic form there are pure cash back credit cards and one of the more common ones are Capital One cards. While they advertise them as miles-earning, those cards are cash back cards, which allow you redeem their points for a fixed value of 1 cent per “mile”. Another good card could be a Fidelity Cash back card that allows you to earn cash that goes into an investment account. This could help to save some additional money.

Category 2 – Airlines:

Then you have airlines credit cards that will earn you miles on that particular airlines. Pretty much every airline has their own credit card. Usually those are best for spending on that particular airline, but otherwise might not be the best option. Again, here it might make sense if you live in a city that is dominated by a particular airline. Maybe you often check bags, as these cards usually waive the fee for the first checked bag. Those $50 savings per round trip for bag fee can certainly add up.

Category 3 – Hotels:

The third category is hotel credit cards, who work similar to the previous category, only, focused on hotels. There are quite a few of them out there with different benefits and earning structures.  Again, those cards are best for hotel spend or if your strategy is to earn free hotel stays. Some of these cards might give you elite status that comes with free breakfast, room upgrades and other perks.

Category 4 – Rewards:

The last category, in my mind, is the biggest category and that is bank credit cards that earn you points in their particular rewards program. The biggest issuers in this category are Chase, American Express and Citibank. When earning those points, they have multiple uses and provide you with more flexibility if you don’t know exactly how you plan to or are able to use them. They all have different transfer partners. Meaning you are able to transfer them at a set ratio to airlines or hotel partners. They also have their own travel portal where you can use them to book travel directly. American Express also has a partnership with Amazon and those points can be used at 1 cent per point for purchases. I don’t see 1 cent per mile/point as a good value. Often, these cards also have a slew of other benefits like rental car insurance and airport lounge access.

So based on all of the above, the next point should be about what you are spending your money on. As there are plenty of credit cards out there that have bonus categories that will earn you points faster, which I can cover in a future post. Some credit cards might also have certain benefits that become beneficial to you on a day-to-day basis that you had not considered before.

Summary:

Don’t be discouraged and think this is way too complicated. Remember there is no right or wrong way, but the way that works for you.

While there are plenty of credit cards out there, once you have a clear goal and strategy in mind, it becomes easier to get going. The most important item however is to not start spending more money then you normally would. Another one is to make sure to pay off your balance in full at the end of the month. All the rewards in the world will not be worth it if you are carrying a balance and paying the high fees on it.

Start small and build from there. These rewards will add up more quickly than you would expect.

In future posts I will go into more details on particular cards, but wanted to provide a general overview and start the conversation.

Questions on what’s right for you? Leave a comment or reach out.