Credit Card Earnings

Yesterday I spoke about how you can use the airlines loyalty programs to earn miles, bonus miles and how elite status can work to your advantage. In that article was the mention that for me, this is only the second most miles I earn. So what is the best earnings?

Credit Cards…

Yep, it is the single best way to get miles. Before I go any further, this really needs to be said and emphasized. If you cannot pay off your credit cards at the end of the statement period, in full, then do not use this strategy. The second you get charged interest on any card, it immediately negates the points you get from those cards. Do not carry a balance on a card.

With that little disclaimer out of the way, let me dive into this. We’ve all been online, or walked by a TV commercial advertising bonus miles when signing up for credit cards. These rewards cards work in two ways. There is a bonus when signing up for the card, then there are rewards earned from spending on that card. The sign up bonuses are the most lucrative of the lot, then comes the spend earnings.

There are two different directions you can go with this, either you sign up for many credit cards and get the bonuses associated with the signup, and also get points from spending. The other option is to pick some really good candidates and stick with them in order to earn solely from spending. Spend only rewards aren’t going to give you as many rewards, but it’s easier to maintain, track, and try to figure out. I personally do a lot of credit card signup bonuses, but this requires a lot of spreadsheets, weekly work to keep track of everything, and more. You must keep on top of these in order to maximize points and minimize money expenditure. I will dive more into the bonuses in an upcoming article.

Right now I’m going to focus on picking the right rewards card for you. The best cards are probably the Chase Ultimate Rewards cards, Citi ThankYou rewards cards, and the American Express Membership rewards cards. Each of these groups covers multiple cards. The reason I chose these is because they are flexible currencies, and they have bonus spend categories. For instance, Chase Ultimate Rewards cards transfer to a number of different airlines at a 1:1 ratio. So one Ultimate Reward point equals 1 air mile. These currencies are very valuable because they aren't locked into one company.

The other part is the bonus spend categories. We’ll take the Ultimate Rewards example again, where parking is 2x bonus spend. Since I park in Philadelphia a lot, when I spend money on parking, I get 2 points instead of one. Each card has different bonus categories, review these before choosing which bonuses work best for you. Also review transfer partners before choosing as well (warning: American Airlines doesn’t partners with any of these cards yet, we’ll see if that changes after the US Airways merger).

These cards do have yearly fees on them, but that isn’t a bad thing. Learn to make good use of the card. Those debit card purchases could be earning you points. Use the cards wisely and the points will come rolling in, but remember the new motto, pay off the card, pay it off, also… pay that sucker off. Don’t carry a balance, the interest will kill you.

As a teaser for tomorrow.. Stay away from Capital One! I’ll explain that one further in the next article.