Credit Cards

I once was one of those cash back people, you know, the ones who would look down on people who would play “credit card games”. I’d always hear about that friend, or that coworker who was going to Dubai for free. I’d always think to myself, this person is a big nerd, and they’re not going to have fun. I’ve literally seen accountants do this in the corporate world, which I get a giggle out of, but I have to say they knew more than I did at the time!

Joke’s on me I suppose. It took me a few years, but now I’m at the point where I can confidently say I’m an expert at accruing points. So, I figure I’ll start sharing my insights. Let’s start with credit card duos.

You know the common advice about get a card or two, and you’ll be all set. Well let’s throw that idea out the window and focus on having multiple sets of credit card duos. Here’s the thing, getting sign up bonuses on all the great cards is important, but with the ever changing market and restrictions banks are creatively coming up with, it’s time to embrace spending multipliers and maximizing your spend. Anyone that even dreams of traveling somewhat frequently should be thinking about acquiring one of the following combos:

Combo #1: Chase Sapphire Reserve (CSR) & Chase Freedom Unlimited (CFU):

• Pros:
  • 3X points per dollar on virtually anything having to deal with travel
  • Baseline of 1.5X points per dollar spent
  • Acceptance of VISA not a problem
  • CSR gets full point recognition worldwide
  • Great travel protection and rental car insurance, among other fantastic benefits

• Cons:
  • Ultimate Rewards program at a low point currently with limited international partners
  • Not the highest point earning combination available for U.S. spend
  • CFU does have foreign transactions fees
  • $450 in annual fees to maintain this combo (net $150 with statement credit)

My Take: This is an excellent combination aiming for simplicity. Have the Chase combo provides piece of mind to accrue points at a great rate, but not at the strongest rate per category. If you are a true maximizer / optimizer, look elsewhere.

Combo #2: American Express Gold Card & American Express Blue Business Plus Card:

• Pros:
  • 4X points per dollar on restaurants in U.S.
  • 4X points per dollar on groceries in U.S. up to $25K
  • 3X points per dollar on flights
  • Baseline of 2X points per dollar
  • Membership Rewards program very strong for international travel, variety
  • $250 in annual fees to maintain this combo (net ~$50 with statement credits)
    
    
• Cons:
  • Amex Gold does not accrue more than 1 point outside of U.S.
  • Not great for domestic travelers, only Delta and JetBlue
  • No worthwhile hotel transfers
  • Amex BBP does have foreign transactions fees
  • Limited travel protection and rental car insurance
  • Many transfer partners levy large fuel surcharges

My Take: This is the best combination currently available on the market. The multipliers are huge. A 2X base with arguably the most valuable currency… this is a true winner. The area where you may miss out is on international spending and the travel protection / rental car insurance.

Citi does not offer a compelling combination of cards that promote spend across every day spending categories, so there is no need to comment further. 1X point per dollar is all you will get for your spend outside of travel, entertainment, restaurants and flights.

The Chase and American Express card combos truly are the most compelling on the market. Sure, you can maximize earnings by using more than two cards, but for most, these two simple solutions will provide great value to cover with little headache. Both programs offer a solid list of transfer partners. All you need to do is decide on your redemption preference: hotel stays, domestic flights, or international flights.

Please, do yourself a favor and pick up one of these card combos today. If you are a newbie just diving into the points world, I don’t think there is a better combo than the Chase products. If, on the other hand, you are a seasoned veteran looking for award sweet spots, big redemptions, and can suck up a few carrier imposed surcharges, pick up the American Express combo.

It may seem like a simple question on the surface, but many credit card enthusiasts that have moved past Chase’s 5/24 rule struggle with identifying their next card. Don’t be one of these people! In this post, I will outline how I think about my next credit card choice.

Let’s dive in. In summary, there are three key questions I ask myself to determine my next card:

1. Where do I have a points gap in a currency I value greatly?
2. What points do I want to acquire that I do not already have?
3. What cards are offering all-time high bonuses that fit my criteria?

Personally, I really like pooling complementary cards and bonuses together in order to maintain a large points stash in a single currency. It makes planning easier when I can rely on a large pool of points. It also decreases my anxiety so I do not have to scramble last minute in an attempt to find enough points for a redemption. So, even though I have over 200,000 Amex MR points, I still want to accrue them since I value them highly, and I know I will eventually use them for my favorite sweet spots (i.e. Aeroplan to Europe, Iberia to Europe).

If I feel that my stash is sufficient or that no bonus offer exists to grow my existing currency stash, I will next look to acquire points in a program that I have no experience with, but that holds a lot of value. One of these for me is Citi ThankYou points. I do not have any Citi TYP earning cards, but I want to dive into ecosystem. This would be a top candidate after I have filled in my “mission critical” points needs at Chase and/or Amex. Moreover, if you can dive into a new currency with overlap transfer partners, it will essentially grow your existing stash because you can pool points together. For example, 200K Amex MR points and 100K Citi TYP points can all transfer to get you 300K Avianca miles. This is the power of points pooling across currencies!

My one word of caution here is that it’s crucial to be able to gather more than enough points from a bonus or multiple bonuses to acquire value. For example, I recently decided to dive into Hilton points. As many know, Hilton points aren’t that valuable, and a single sign up bonus isn’t going to get you too far. In this scenario, though, I know that American Express offers multiple Hilton cards where I can bundle multiple sign up bonuses together to book a lucrative award. This isn’t the case with other currencies…think Citi TYP on this. Citi only offers a bonus on the Citi Prestige or Citi Premier (you can only choose one), and you need to wait 24 months after closing the card to get another bonus! That’s a long time to wait, and Citi makes it difficult for you to acquire a lot of Citi TYP points unless you spend a lot! Go figure.  

In short, I personally try to double down on a few key currencies to build “points proficiency”. And once I’ve accomplished this feat, I move into new currencies that can potentially be equally lucrative. In fact, I’ll give you a few examples of where I built “points proficiency”:

• Chase Ultimate Rewards:
  • Acquired 170K UR
  • Bonuses:
    • Sapphire Reserve
    • Sapphire Preferred
    • Freedom
      
      
• American Express Membership Rewards:
  • Acquired 300K MR
  • Bonuses:
    • Everyday
    • Gold
    • Green
    • Platinum
    • Schwab Platinum
    • Business Gold
    • Business Green
    • Blue Business Plus

• Marriott Bonvoy (previously Marriott Rewards & SPG)
  • Acquired 420K Marriott Bonvoy equivalent points
  • Bonuses:
    • SPG Personal
    • SPG Business
    • Chase Business
    • SPG Luxury (new)
    • SPG Luxury (upgrade)

• American Airlines AAdvantage Miles
  • Acquired 420K AAdvantage miles
  • Bonuses
    • AAdvantage Platinum Select (5x)
    • AAdvantage Platinum Select Business

Note that two of these (and arguably three) currencies are transferable currencies, meaning I’m able to maximize flexibility and value. American Airlines AAdvantage miles are the sole proprietary currency that doesn’t transfer, but I have achieved huge value redeeming miles for travel to Asia. I needed to double down on that currency because 150K mile round trip rewards were needed to make it to Thailand!

Now that I’ve given you a framework and examples of how I’ve doubled-down and explored new currencies, it’s up to you to find your next card! At this time, your best bet is to look up potential cards that match the currencies you aim to acquire, and do your share of research to identify the corresponding cards offering all-time high bonus offers. This last component will narrow your options down greatly. As I’ve mentioned before, always apply for cards with all-time high bonuses if you can, but only do so if the card fits into your particular strategy. Happy applying!

Generally speaking, it almost always make sense to rack up as many credit cards as you can and pay annual fees, given you can attain more value out of the card than the fee you are billed. This is certainly true if we think about the premier travel rewards cards issued by Chase, Citi, Barclays, Bank of America and American Express.

But, there is one bank where the strategy of accruing cards comes to an end when you already hold five credit cards: American Express. This creates a variety of issues if you highly value those five credit cards in the long term. You might want to add a few more cards to your portfolio to generate sign up bonuses and accrue points more quickly, but you’ll hit a wall where you either give up on the application, or are forced to close out an older card. I know, definitely a first world problem, but thinking this through will help clarify your action plan.

Take my recent situation for example. I held five credit cards and two charges cards from American Express: SPG Business, SPG Luxury (two of them), Everyday Card, Amex Blue Business Plus, Platinum and Gold. Unfortunately, four of my five credit cards have credit histories shorter than one year, meaning if I were to cancel any of those, I would risk losing the sign up bonus and be added to American Express’s “blacklist”. The only card that I could cancel in lieu of a new card would be the SPG Business card.

This is all relevant, since I’ve been eyeing the American Express Hilton Aspire card. The benefits are great. Even without accounting for the sign up bonus, the card pays for itself! The $250 airline credit is easy to redeem for American Airlines gift cards, and the $250 resort credit can be used for my upcoming stay in Utah snow country. Yes, $500 is great value when you pay a $450 annual fee, considering the sign up bonus isn’t included in the value. If we value Hilton points at .004, then the bonus of 150,000 points is conservatively valued at $600 (150,000 * .004). Add in the $50 gain from the credits, and in the first year I’m ahead $650. Great value!

I want the card, but is it worth giving up my SPG Business card? Afterall, I am more of a Marriott loyalist, as I have Platinum status and frequently choose Marriott since it’s my employer’s preferred hotel chain, and the resort portfolio is fantastic internationally. Nonetheless, I want to dip my toes into the Hilton world, and a great start would be the Hilton Aspire card. $650 is hard to pass up, so what would it cost me to get that?

Well, the SPG Business card is essentially useless for hotel spend, since it’s redundant due to my SPG Luxury cards. What may hold value is the annual free night certificate, valued at a maximum redemption of a 35,000 point hotel room. At face value, that looks great. Paying $95 for a free hotel room almost always seems like a good deal. In fact, I am using a 35,000 point certificate in Austria on an upcoming trip for a hotel room worth $375 the weekend I will be there.

It’s not that simple, though. Marriott’s big devaluation is coming. Namely, they are adding peak vs non-peak pricing which likely will greatly decrease the usability and accessibility of hotels I would like to frequent during my travels. Just because I can get great value from the certificate today doesn’t mean I can gain that much value in the future. Moreover, today Marriott announced a plan to implement category changes effective March 5th, leading to many hotels going up in price (New York City – I’m looking at you!).

Ultimately I decided giving up the SPG Business card was worth acquiring increased value through the Hilton Aspire card. It also led me to the following conclusion: applying for new cards with sign up bonuses is always the most profitable route. Ongoing card benefits generally do not outweigh the opportunity cost of new value elsewhere. Just keep in mind that if you are getting your sixth credit card with American Express, only cancel a card you’ve held for longer than a year to avoid being blacklisted!

More news is good news in the credit card market, and things are really starting to heat up. It appears there is a duel between American Express, Citi and Chase, all vying for the most business. We are seeing improved earning rates on bonus categories at a rapid pace, and it’s hard to keep up with all the activity. For this article, I want to explore more deeply the new Citi Prestige card and my take on its place in the market.

For starters, let’s review the key benefits taking place with the updates on the Prestige card starting in January 2019:

• 5x points on dining and air travel
• 3x points on cruise lines and hotels
• $250 airline credit
• Cell phone protection plan (starting in May 2019)

Unfortunately, this increase in value on the earning side accompanied by the generous travel credit is hampered by a few items as well, starting in September 2019:

• Annual fee increases from $450 to $495
• Fourth night free benefit only usable 2x per calendar year
• 2x points on entertainment will move to 1x
• 25% decrease in redeeming for air travel

Looking at all changes at first glance, I thought this card might be valuable in my credit card portfolio. But, I have changed my mind. I do not believe this card fits into my personal portfolio, and maybe it shouldn’t for you either. Here are my reasons as to why I don’t think the Citi Prestige is a replacement for my cards. Keep in mind I currently hold the Chase Sapphire Reserve card, the American Express Platinum Card, and American Express Gold Card.

1. Citi Thank You Points Not as Valuable as Ultimate Rewards or Membership Reward

Despite the common knowledge out there purporting TYP as valuable as UR or MR, I do not agree. All partners aside from Singapore, Virgin Atlantic and Flying Blue are niche, complex to use, and do not have generous award charts.

Turkish Airlines has a nice 45K business class award, but you must stop in Istanbul and the layover is often very long, killing precious time you could otherwise use at your destination.

Asia Miles is a solid partner, but I would always book through American or Alaska to get to Asia on Cathay Pacific metal.

Avianca has a decent award chart, but the mile sales make these points cheap to acquire. And, the booking engine is terrible, often not showing award availability that United sees. Imagining the frustration with this, I can’t recommend transferring miles over.

Etihad Guest has a good award chart to Europe, but you must fly Brussels Air or find award space on American Airlines flights. Good luck with that.

Bottom line, I don’t find the sweet spots here. I would rather take on more miles with Amex to book through Aeroplan for Europe, accrue Alaska miles for redemptions to Asia, or apply for a few more Citi AAdvantage cards to acquire American miles for trips to South America. I would even forgo extra TYP earnings for MR since the MR partners are that good.

2. Transfer Times Take Too Long

I don’t have direct experience with the program, but by spending time online and reading stories about Citi Thank You Point redemptions, it is common for transfer times to take more than 2 days, often up to days or weeks. This is not an option for Practical Points Practitioners. Availability needs to be open and points available immediately for use. Chase and American Express often have almost instantaneous transfer times, which certainly does add value because you can book the award you want!

3. Trip Delay Protection Is Not as Good as Chase

Some might disagree, but I view the trip delay protection as significantly weaker than Chase. The key being that delays causing missed connections will not allow you to take advantage of the benefit for an overnight or extended delay due to the missed connection. Reports are out on the internet that a 2-hour delay on the first flight causing a 12-hour delay will not trigger this benefit.

I personally must connect almost every time I fly somewhere domestically. And in the last two years, EVERY time I have had an overnight was due to a missed connection from a delayed first flight. Therefore, in my situation this trip delay protection offers zero value. I’ll stick with Chase if I want this benefit. If not, I’ll stick with American Express to accrue Membership Rewards.

4.   No Primary Rental Car Coverage in the United States

I have a harder time giving up primary rental car insurance than any other benefit. A black swan event that could cause you to incur a huge dollar loss from an accident is not something I want to deal with. Chase will cover you in the U.S., while Citi won’t. I can forgo trip delay protection since you may be out a few hundred dollars. With rental car damage, it will be thousands. I’d rather protect myself fully here.

5.   No Diversification If You Go All-In

This is a catch 22. It is now possible to accrue a ton of Thank You Points with these new categories. Dining is my biggest spend category, so I would benefit tremendously. But, is it worth forgoing increased Ultimate Rewards and Membership Rewards earnings? In my case, I would primarily accrue TYP and MR while forgoing UR. I don’t think TYP are valuable enough to do so. My best redemptions are with MR, and I’d rather focus my points over there since I have found my favorite sweet spots, points transfer instantly, and I can bundle my unbonused spend from the Blue Business Plus card to have a lot of fire power when redeeming.

If I went all in with TYP on dining, airfare and hotel spend, I have a feeling I’d be left with a pile of TYP, and the inability to redeem for the awards I want, in a cheap manner, without any inconveniences of fuel surcharges or long layovers. I want simplicity, and TYP does not offer that.

6.   Annual Fee Increase

The annual fee increase is significant. The annual fee is going up, the travel credit casts a wider net, but is still lower value than what Chase offers. Outside of the increased earnings, there is no added value from perks or benefits. The Amex Platinum blows it out of the water. I can’t justify a net $245 fee for no added perks. I already have Priority Pass, and I don’t value price protection.  

7.   Fourth Night Free Benefit

I don’t stay in hotels for 4 nights. It’s rare when I do. Therefore, this benefit does not add value to me. But even if I did, it is now only usable 2 times per calendar year. For this to be worthwhile, you need to spend MORE money on the three nights prior to receive MORE credit on the fourth night. Spend more to save more, as it goes. This doesn’t make sense to me.

8.   Limited Complimentary Points Earning Options

If you somehow do disagree with my last 7 points, then this point might sway you. American Express and Chase both have baseline, no annual fee cards that offer 2x and 1.5 respectively as a base earning rate, on ANY purchases. Citi does not offer this, meaning you don’t have a true way to maximize earnings and go all-in on the currency.

9.   Citi Has a History of Devaluing Benefits

Even if all of these benefits make you want the Citi Prestige Card, you have to be skeptical of the long term value. Citi has notoriously downgraded benefits on this card over the years, making me apprehensive about choosing this card. I wouldn’t be surprised if the added earnings for airfare and dining are too good to last. Chase and American Express have figured this out, and they don’t devalue that often or nearly as much as Citi has.

Final Verdict:

To me, the Citi Prestige Card is not worth keeping in my wallet for any extended period. The American Express Gold Card will offer me 4x on most of my dining in the U.S., and the Chase Sapphire Reserve will cover me internationally.

On the travel side, the trip delay offers no value to me compared to what Chase offers. If I forgo insurance, American Express is still the winner.

The only way Citi will hook me on this card (only for a year!) is with a juicy sign-up bonus with a reasonable minimum spend. Last offer on the market was 75K TYP for $7.5K in spend. That’s a lot of spend for a bonus that isn’t even 100K. I would need a higher point offer, or a lower minimum spend to even consider applying.

Guys, what are you planning to do? Are you shifting your portfolio for the Citi Prestige?