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1/24/2011

For years I have been buying everything on my debit card. I don't have any credit card debt and wanted to keep it that way. But lately I have been thinking about the benefits of owning a credit card. My brother-in-law Todd was telling Emily and I about how he buys everything with his American Express card, then uses the points to book free flights and hotel rooms. My dad does the same with his Southwest Airlines card. I figured I should be taking advantage of rewards cards as well, so I spent last weekend researching rewards credit cards.

Keep in mind that these rewards programs only work if you buy everything you possibly can on your card and pay it off in full each month. Running a balance quickly nullifies any rewards you may earn. In addition, you have to spend a LOT of money to make it worthwhile - especially with the cards that have yearly fees.

Before we look into my findings, here were my considerations:
- I was really only looking at rewards cards that were good for travel.
- I gave special consideration to the American Express cards, because Todd spoke so highly of them. I liked the fact that on the Green and Zinc cards, you are required to pay them off in full each month.
- I looked very carefully at the USAA cards, because Emily and I have all of our bank accounts with them.

I put stars next to the ones I liked. Look down at the bottom to see which one I ended up choosing. Here are my research notes...



AMEX Green Card - $95/yr
No bonus points at sign up
Pay in full each month
Online financial tools
1 point per dollar // 2 points for travel THROUGH THE AMEX TRAVEL SITE ONLY
Transfer points to airlines for travel
Purchase Protection, Extended Warranty, Roadside assistance, Car rental / Travel insurance...
If we spend $25,000 per year, transfer to airline and get a flight in North America

 **AMEX Zinc Card - $25/yr + Eco pack $0 + Connect Pack $20 = $45/yr
 10,000 bonus points at sign up ($100 value)
 Pay in full each month
 Get the Personal Finance Pack for financial tracking
 1 dollar = 1 point
 Buy Travel Pack for $20/yr, if we spend over $1000 in airfare per year on the card
 1 dollar = 2 points for Eco friendly purchases like shopping at Whole Foods and many others (with Eco Pack)
 1 dollar = 2 points for Cell phone and internet bills with Connect Pack $20
 CAN NOT transfer points to airlines for travel
 Purchase Protection, Extended Warranty, Roadside assistance, Car rental / Travel insurance...
 Book flight on AMEX site with points

 AMEX Blue Sky - $0/yr
 No bonus points at sign up
 1 dollar = 1.3 points ($7500 spent = $100 in travel rewards)
 Can not transfer miles to airlines
 Purchase Protection, Extended Warranty, Roadside assistance, Car rental / Travel insurance...
 Travel on any airline, stay at any hotel, book through any site - Redeem points for travel expenses after you travel
If we spend $25000 per year, we get $330 towards travel expenses

  **AMEX Blue Sky Preferred - $75/yr
  7500 bonus points at sign up ($100)
  1 dollar = 1.3 points ($7500 spent  = $100 in travel rewards)
  2x Rewards on hotel, dining and rental cars (with no limit?)
  $100/yr allowance on airline expenses like excess baggage, in-cabin seat upgrades, meals, entertainment, etc.
  Can not transfer miles to airlines
  Purchase Protection, Extended Warranty, Roadside assistance, Car rental / Travel insurance...
  Travel on any airline, stay at any hotel, book through any site - Redeem points for travel expenses after the trip.
  If we spend $25000 per year, we get $330 towards travel expenses (minus $75 fee for card, plus $100 travel credit and any extra points)

  AMEX Starwood Guest Card - $65
  10,000 bonus points at signup ($100)
  4 - 5x points per dollar spent at Starwood hotels
  Transfer points to airlines for travel
  Purchase Protection, Extended Warranty, Roadside assistance, Car rental / Travel insurance...
  Best for hotel rewards
  If we spend $25,000 per year, transfer to any Starwood airline and get a flight in North America

  Discover Escape - $60/yr
  25,000 bonus miles if you make a purchase every month for the first 25 months
  1 dollar = 2 points ($5000 spent = $100 in travel rewards)
  No other allowances, so first $3000 is spent on yearly fee
  Can not transfer miles to airlines
  Car Rental Insurance, Lost or Damaged Luggage Insurance, Travel Delay Insurance, and Trip Cancellation Insurance.
  Travel on any airline, stay at any hotel, book through any site - Redeem points for travel expenses after you travel
  If we spend $25,000 per year, we get $500 in travel expenses, minus $60 for card = $440
 
  **Capitol One Venture Rewards Visa - $59/yr
  10,000 bonus points when you spend $1000 in the first 3 months
  1 dollar = 2 points
  No other allowances, so first $3000 is spent on yearly fee
  Can not transfer miles - buy tickets, then cash in points for travel reimbursement.
  Concierge service, Travel assistance, Roadside assistance, Extended warranty, Travel accident insurance, Auto rental insurance
  If we spend $10,000 per year, we get $200 in travel expenses, minus $59 for card = $141
  If we spend $25,000 per year, we get $500 in travel expenses, minus $59 for card = $441
 
  **Capitol One VentureOne Rewards Visa - $0/yr
  No bonus at signup
  1 dollar = 1.25 points
  Can not transfer miles to airlines
  Concierge service, Travel assistance, Roadside assistance, Extended warranty, Travel accident insurance, Auto rental insurance
  If we spend $10,000 per year, we get $125 in travel expenses
  If we spend $25,000 per year, we get $312 in travel expenses
 
  Chase Sapphire Preferred - $85/yr
  1 dollar = 1 point
  Adds 7% to your total number of points each year, even if you've already redeemed them.
  Transfer points to Airlines at 1:1 ratio
  Points are worth 25% more when purchased through their online store
  If we spend $25,000 we get one flight plus 7% or 1.25 flights booked through Chase store. 

  **USAA Card (AMEX or Mastercard) - $0/yr
  2,500 bonus points
  Cash rewards of $135 + 1.25% of purchases when you spend over $17,000/yr
  Auto rental insurance, Travel insurance, Warranty coverage, Purchase protection,
  If we spend $25,000 per year, we get $250 towards travel expenses
 
  Southwest Card
  One free flight with sign up
  1 dollar = 1 point // 1200 dollars = 1 credit // 16 credits = 1 standard flight // $19,200 per flight
  If we spend $25,000 per year, we will get a free flight plus carry over points till next year.

  Chase United Card
  One free flight with sign up
  25,000 miles per flight in US
  1 dollar = 1 mile
 
  Citi American Airlines Card
  75,000 bonus miles if you spend $4000 in first 6 months - More than enough for a trip to Europe
  1 dollar = 1 mile
  100,000 miles per year is the limit
  25,000 per round trip flight in US
  If we spend $25,000 per year, we will get a free flight in the US


I ended up applying for the Capitol One Venture Rewards Visa card, because it gave the best return per dollar spent. I was also concerned that if I got an American Express card, it wouldn't be accepted in as many places and therefore I wouldn't earn as much money towards travel. The airlines cards are great if you are loyal to one airline, but I want the freedom to use any airline when I travel.

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