|by Mr Credit Card|
I recently got an email from Amy asking for some suggestions about getting a new credit card/s based on her needs. We exchanged a few emails. And after pondering over it for a while, here are my thoughts.
Hi Mr. Credit Card,
I’ve been reading your site off and on for about 4 months now. I think I’m going through what you went through when you started this website. Thank you for doing so! It has been a great help to me and I’m sure to many others.
So, on to my conundrum. I currently have 3 credit cards: 1) Nordstrom Platinum Select Visa (am very happy & am an often shopper); 2) Citibank Driver’s Edge card (moderately happy – 20k miles on my car a year so lots of gas); 3) Premier Pass (not sure if I’m happy or not)
I pay in full every month and am not a big fan of annual fees but would pay it if I thought the card was worth it. (I have a degree in math so I watch all of my numbers closely). I’m looking for a card that will help with travel and other purchases since my Driver’s Edge gives me 3% on Gas/Groceries/Pharmacies. The AMEX Blue Cash is enticing but not as much for me since I use the Driver’s Edge. I thought the AMEX Costco was a good idea, but I’m not a member and don’t know that I would shop there.
I called Citibank today and apparently they are changing all of their credit cards somehow and no longer offer either of my current cards (which makes me nervous). I expect some changes in the next month – they said to call back in December. I’ve been wanting an AMEX but none really strike me as a winner for my situation. The PenFed seemed interesting as did the BofA Accellerated Cash Rewards.
Do you have any other suggestions? Or any thoughts in general would be great. =)
Thanks so much.
I probed further about her credit card spending patterns.
how much do you charge a month to your cards?
which gas station do you use? how much do you spend a month?
what do you want to redeem points for? cash travel?
This was her reply
I spend about $800 on my Driver’s Edge, about $800 on my Premier Pass, and somewhere between $200-300 on my Nordstrom card.
I generally go to Shell or Chevron.
I put all purchases on my credit cards, but not bills. So, $1800-2000 a month.
My grocery expenses are $400-$500 of the $800 on my Driver’s Edge.
I’d be interested in redeeming the points for cash or travel. I’m leaning more towards cash currently but I’d like to get points for travel purchases.
But I had to probe further.
when do you travel
any particular airlines or hotel where you are a frequent member and want to remain so?
And she duly obliged by answering my questions.
Thanks – I appreciate the questions.
I travel very often by car (20k miles a year on my car) to visit family within state (every 2-3 weeks). I fly all other times – probably 3-4 times a year. I travel for work probably 2-3 times a year (company paid).
I am a frequent flier of American, Delta, Southwest. I stay at either Marriotts or Starwood hotels (they really are the nicest). I intend to stay with all because of work.
Hope that helps.
Answer (more like Opinion) – OK Amy, your question is actually fairly typical, but is complicated by the fact that you use several cards (probably not optimally) and are torn between earning cash back or frequent flier or frequent points. Here is my take on your situation. You have three routes to go with this
- Earn Cash Rebates
- Earn Frequent Flyer or Guest Points
- Earn Regular Credit Card Reward Points
So here goes.
The Cash Back Alternative – It looks like the most important spending categories for you would be gasoline (since you drive a lot) and travel. If you are going the cash back route, you should actually combine a few cash back credit cards. But first, we have to choose the right cash back credit card because and we start by looking at the quarterly rotating categories that these cards offer.
Discover More Card – The Discover® More Card pays 5% rebates on
January To March – Airline, Hotels, Car Rentals and Cruises
April to June – Fashion and Home
July to September – Hotels, Gas, Theme Parks
October to December – Grocery stores, restaurants, movies
Aside from these rotating categories, Discover has an online shopping portal called shopdiscover.com where you can earn anywhere from 5% to 20% rebates when you shop with their partners. Orbitz and hotels.com happen to be their partners. So you could use the card to book your rooms and flights with them.
Chase Freedom Visa – $100 Bonus Cash Back – The Chase Freedom is like the Discover More Card. Here is their 5% rotating category schedule.
January To March – Dining, Utilities, Education/Child Care
April to June – Home Improvements, Home Furnishings, Lawn & Garden, Drugstores
July to September – Gas, Airlines, Auto Rentals and Hotels
October to December – Grocery stores, Department stores, movies
Citi Dividend Platinum Select Card – Here is the rotating categories for Citi Dividend.
January To March – Drugstore, Health Care, Fitness
April to June – No Details
July to September – Restaurants, Auto Rentals and Hotels
October to December – Department stores and electronics
My suggestion for a cash back card is to get the Discover Moreې Card because you can earn 5% rebates from January to March and July to September on Hotels. You can get 5% rebates on airline ticket purchases from January to March. But if you use Orbitz or Hotels.com through your Discover account, you can get 5% rebates anyway. That is actually a good amount of savings and hence I would recommend this card if you are looking to earn cash rebates because you can use it to get extra savings from your travels.
I would also keep your Citi’s Driver’s Edge and earn rebates on gas. But from July to September, you have to use your Discover Card because you get 5% rebates instead of 3% from the Drivers Edge.
Or you could also combine the Discover Card with the PenFed Visa Platinum Gas/Cash Reward Card as it allows you to earn 5% rebates on gasoline.
Earning Frequent Flier Points – If you choose the route of earning frequent flier points or frequent guest points, then you could choose either or combine the cards that I’m going to recommend.
If you want to earn frequent flier miles, then SouthWest Rapid Rewards is probably the best program to earn miles, The reason is because it is the easiest program to redeem for an airline ticket. You require more miles on Delta for a regular economy seat sinced they tiered it (they don’t call them Sky Pesos for nothing!). With American Airlines, their credit card only does not allow you to earn double miles and yet you have to pay the annual fee. With SouthWest, you save money on baggage fees (a big deal these days). Hence, I would consider getting the SouthWest Rapid Rewards® Credit Card from Chase.
For hotel, both Marriott and Starwood have great programs and credit cards. I really like the Marriott Rewards Credit Card from Chase because you can get 10 elite night credits every anniversary date and that means you automatically qualify for an Elite Silver Status.
The Starwood Preferred Guest® Credit Card from American Express is also a great card to get because you can transfer points to frequent flier miles at one for one ratio. And when you transfer 25,000 points into miles, you get 5,000 bonus miles! Note – You can transfer StarPoints to American Airlines and Delta Skymiles. But since you stay at Starwood hotels, I would be preaching to the choir by telling you the great service they provide. Plus, there are no blackout dates when you use your StarPoints. You might also want to consider getting the Starwood Preferred Guest® Business Credit Card from American Express OPEN because as an OPEN member, you can get 5% Discounts at Marriott Hotels.
There are several combination that you can choose. For example, a combination of SouthWest with Starwood (since you can transfer Starpoints to American and Delta miles) will cover everything (since the Starwood Business card allows you to get 5% discount off Marriott Hotels). Whatever combination will depend on which hotels or airlines you spend more on.
Earning Credit Card Travel Reward Points – The last alternative would be to get a no annual fee travel rewards card like the Chase Sapphire or the Blue Sky® from American Express. The advantage of these programs is that you could book any airlines or hotels and use your points for it. The disadvantage is that in most cases, your points are worth what is equivalent of a 1% in rebate terms and with some savviness, you can get 4% to 5% equivalent for your points with frequent flier cards or cash back credit cards.
Conclusion – Amy, so to conclude, I think you really have to decide which method of earning rebates you prefer? At the end of the day, I think it boils down to preference.
Earning cash rebates has the advantages of being simple. You simply earn rebates for spending and get discounts! Plus, it will save you on annual fees. The disadvantage of earning cash back is that you never actually feel like you have gotten a “free ticket” or a “free nights stay” though you will earn the equivalent in cash rebates! If you choose this route, I would recommend the Discover More® Card together with the PenFed Visa Platinum Gas/Cash Reward Card.
If you go the frequent flier points route, then I would consider the SouthWest Rapid Rewards® Credit Card from Chase, the Marriott Rewards Credit Card from Chase and/or the Starwood Preferred Guest® Credit Card from American Express.
I think the ideal combination will be the SouthWest Rapid Rewards® Credit Card from Chase and the Starwood Preferred Guest® Business Credit Card from American Express OPEN since you can transfer StarPoints to American Airline and Delta Miles and you can also get 5% Discounts at Marriott Hotels.
As far as your existing card goes, I would keep the Drivers Edge and Nordstrom (though not use it since you want to maximize your points on your “new” cards). I would urge you consider dumping the PremierPass if you do not intend to use it or if the terms and conditions changes.