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Without a doubt, one of the best ways to save money on travel without compromising your experience is by using points and miles earned through credit cards to book flights and hotels for free. However, in an industry controlled by financial institutions and dominated by clever marketers, it’s hard to know which credit card offers are genuinely good and which ones should be ignored.
Here are 7 crucial things to do before applying for a credit card.
1. Check Your Credit Score
Your credit score is crucial when applying for travel rewards credit cards. Some cards require excellent credit scores, so it’s wise to check your score before applying. Use free tools like Credit Karma to monitor your credit score and get tips on managing your credit.
2. Consider the Number of Cards You’ve Opened
The number of credit cards you’ve recently opened can affect your eligibility for new cards. Certain banks pay close attention to this, and depending on your history, may automatically deny you access to certain credit cards.
For example, Chase Bank has this unwritten rule called the 5/24 rule, meaning if you’ve opened more than five credit cards in the past 24 months, you’ll be automatically denied for Chase credit cards no matter how good your score is.
Chase cards are some of THE best cards in the points and miles world, and for that reason, in many cases, it’s advisable to start your points and miles journey with Chase credit cards. If you don’t, because of the 5/24 rule, you could be seriously limiting your points-earning potential.
3. Understand the Type of Points You’ll Earn
Not all points are created equal. The value of points can vary significantly between programs.
You could have two credit cards with what appear to be identical welcome offers. For example, Card 1 offers 100K points and so does Card 2. Which one would you choose? My answer is, I need more info.
If Card 1 is 100,000 United Miles, and Card 2 is 100,000 Chase Ultimate Rewards, I’m choosing Card 2 every single time. At the time of this post, United Miles are valued somewhere between 1.35 cents per piece. Chase Ultimate Rewards are valued at 2.05 cents per piece, and you can use them in many more places.
The value of those offers shouldn’t be seen as 100K vs. 100K – it should be seen as $1350 vs. $2050. To value points currencies, I use sources like The Points Guy’s valuations, which are updated monthly.
4. Evaluate the Welcome Bonus
The size and timing of the welcome bonus can significantly impact your points accumulation. Bonuses can vary during promotional periods, so it’s essential to time your applications to maximize these offers.
If you’re trying to accumulate points and part of your strategy involves opening more than one card, the size of the bonus could dictate the order in which you apply for cards.
5. Assess the Minimum Spending Requirement
Most cards require you to meet a minimum spending requirement to earn the welcome bonus.
Ask yourself if you can reach this minimum spend with your regular life purchases. Most cards that offer a welcome bonus require some kind of minimum spend within the first few months of card opening in order to earn that bonus.
For example, a common minimum spend is spending $4,000 in the first 3 months. For many people, this amount, spread across three months, is achievable if you put all your personal spending on that credit card. However, if the minimum spend is higher, like $8,000, $10,000, or $15,000, the average consumer might not be able to reach it without unnecessary purchases.
Major life purchases can help you meet higher spending requirements without unnecessary expenses.
6. Consider the Annual Fee
Annual fees are a recurring expense, so weigh them against the card’s benefits. Some cards offer perks that easily offset the fee, such as free hotel nights or travel credits. If you find the fee unjustifiable later, consider downgrading to a no-annual-fee card instead of closing the account to avoid hurting your credit score.
7. Who is This Card For?
Can’t open a new card right now? Here are two additional avenues to consider.
Two Player Mode
Maximize points accumulation by involving your partner. By strategically applying for cards in both your names, you could effectively double your points-earning potential. This approach, known as Two Player Mode, leverages the combined efforts of your household.
Business Cards
Business credit cards can offer excellent bonuses and help you earn more points without affecting your personal credit. If you have a side hustle or any income-generating activity, you might qualify for a business card.
Here is a list of top business credit cards.
Getting Practical
If you came to me today and you wanted to get started with travel rewards credit cards. And you said “Nik, which card should I get to help me travel free”?
Let’s assume you have a great credit score and you haven’t opened a bunch of cards recently.
I’d first point you toward a card that would earn a versatile and transferable points currency. Like ones from Chase or Capital One.
If you’re under 5/24, I’d tell you to consider Chase cards because they can be a very good place to start.
I’d probably mention the Chase Sapphire Preferred® Card – which is my favorite credit card for travelers who don’t travel a LOT – it earns the most valuable points currency AND has a low annual fee.
But I’d also tell you to consider if you have specific trips or goals in mind and what airlines fly to those destinations and what hotel chains are available there.
Then, I’d tell you to research the available offers at that time. Depending on your goals, and depending on what’s available – things can really vary!
There’s also a tool out there called CardMatch which can help you figure out which credit cards you’re pre-qualified for – there’s no impact to your credit, it takes about 60 seconds.
Here are links to several great card options:
Happy Travels!
Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.