In Part 1, I broke down the credit card reward programs where we received the most amount of value in 2016. Since those programs are where we intentionally focus our earning and redeeming, the remaining programs are left to fight for our spending scraps. That being said, these programs are a great way to supplement our primary rewards with additional value. We use them only when it is optimal for us to do so. Depending on your own situation and habits, these programs could provide you with much greater value.
Frontier Airlines ($313.62)
The Frontier Airlines Mastercard is, without a doubt, the worst credit card I have ever opened. After earning the sign-up bonus, I did not receive the points and had to call in multiple times to get the issue resolved. Somehow they created an airline-branded credit card that does not sync to their airline rewards program. Does that make any sense? It took a three-way call between Frontier and Barclay to get the miles and the accounts linked. Hopefully this has been resolved by now.
The availability of Frontier flights, or lack thereof, made it difficult to actually use the miles for an award flight. When we finally identified award flights that fit our travel plans, there was a glitch in the website that prevented us from booking them online. Lots of negatives from a user standpoint. However, the actual flight experience met expectations for a no-frills airline.
The Frontier experience provided more hassle than value. We used 40,000 points for our pair of roundtrip tickets, a pitiful 0.78 cents per point. Unlike most airline credit cards, the annual fee was not waived the first year, so the $69 had to be paid upfront. The most satisfying part was canceling the credit card. We did end up coming out a good bit ahead with the credit card, but there are so many other better credit cards, airlines, and rewards programs.
Starwood Preferred Guest ($285.60)
Card: Starwood Preferred Guest
ThePointsGuy values SPG points at 2.7 cents per point, the highest among all rewards programs. You can get free nights for only 3,000 points at Category 1 properties or 4,000 at Category 2. On our sole Category 1 stay, we saved $98 or 3.7 cents per point. You can also get your 5th night free at Category 3 and above properties. Personally, I think the SPG program offers great value but I prefer earning Chase Ultimate Rewards and transferring to Hyatt.
Except for Starwood and Marriott hotels, the SPG card only earns 1 point per dollar spent. With the Chase Freedom Unlimited, I can earn 1.5x Chase Ultimate Rewards on all spending. For example, the same $3,000 of spending it took to earn the Category 1 free night with Starwood would give me 4,500 Ultimate Rewards points to transfer to Hyatt. From my experience, Category 1 Hyatt Place properties greatly surpass the same tier Starwood properties in terms of quality. On top of that, holding points in Ultimate Rewards gives me much better flexibility.
SPG points do have a good amount of flexibility as you can transfer points to over 20 different airlines. If you transfer at least 20,000 points, you even get an extra 5,000 point bonus. That makes the effective rate 1.25 points per dollar spent. I found this to be a much better use of the Starwood points than hotel redemptions and transferred the majority of our SPG points to American for our international award flights. My wife and I both cancelled our SPG cards before the annual fees were due.
Card: Discover It
The Discover It credit card is essentially a poor man’s Chase Freedom. They each earn 5% back on quarterly bonus categories, but the Chase Freedom earns Ultimate Rewards points instead of simply cash back. That is potentially double or triple the value with the Chase Freedom card. Sometimes the categories overlap as currently gas is the bonus category on both cards for the first quarter of 2016. The Discover card serves as a backup for us as it is difficult for multiple people to alternate a single card, especially for something such as gas.
When the bonus categories differ, The Discover It acts as a nice complement to the portfolio of credit cards described in Part 1. It has no annual fee so it is a no-risk card that adds a little bit of extra value each year. Discover offers an amazing benefit that f0r the first year they will match all cash back dollar for dollar. For year 1, you get 10% back on all category spending. That’s tough to beat.
Bank of America ($90.00)
This card is pretty straightforward — if you pay more than your minimum balance each month (it should be the whole balance anyway!), you get cash back each quarter. Bank of America customers earn $30 each quarter while others only get $25. The easiest way to put this on auto-pilot is to set up a recurring monthly charge that’s at least $40. Since our recurring bills are higher and I don’t want to leave rewards points on the table, I make a partial payment of $40 for our phone bill each month with the BankAmericard Better Balance credit card and then pay the remainder with the optimal card (Chase Freedom Unlimited).
I messed up one month and forgot to make the partial payment before the statement closed. As a result, I had nothing to pay off that month, preventing me from earning one of the quarterly bonuses. If you play this card right, you can earn $120 each year with only $480 in spending. That’s an amazing 25% return. With no annual fee, this card keeps building up a credit history and churning out tiny bits of value.
Ebates is not a credit card rewards program, but a cashback website that acts as a shopping portal. When I use shopping portals, I prefer to use rewards programs such as Chase Ultimate Rewards, Southwest, American, or United. But sometimes Ebates offers the best value. For instance, most of this value came from receiving 8% cash back on online Macy’s purchases.
You can always check which shopping portal offers the best value by going to evreward.com. Again, remember all points are not created equal as I would take 2% Ultimate Rewards over 3% Ebates everyday. The best thing about utilizing these shopping portals is that the points you earn are in addition to any credit card rewards.
Card: Chase Amazon Rewards
If I didn’t have this card already, it would not be a credit card I would open. As you can see, the value is the smallest of all our current rewards programs. I opened this credit card a while ago before stricter rules were put in place about opening accounts. Today it would not be worth one of those new accounts since there are much superior options. Since it has no annual fee, it is still worth hanging on to as it helps build a longer credit history and provides a little bit of value.
My main issue is that it probably hurts a little bit when I do use it. The best use of the Amazon Rewards card is obviously Amazon, providing 3% cash back on all purchases. My other option would be to use the Chase Freedom Unlimited card which generates 1.5% cash back on all purchases. The difference, however, is that the Amazon Rewards card provides a fixed 1 cent per point while the Ultimate Rewards points earned with the Chase Freedom Unlimited can be worth much more as seen above. Using the Chase Freedom Unlimited and transferring to Southwest or Hyatt appears to be the optimal strategy. The Amazon card tends to be a back-up plan.
If you are an Amazon Prime member, Amazon just launched the new Amazon Prime Rewards Visa Signature Card which offers 5% cash back on all Amazon purchases. This could definitely provide solid value if you rack up Amazon purchases and already have Amazon Prime. There may still be a time when this isn’t the best choice as typically the Chase Freedom quarterly bonus category for the 4th quarter includes Amazon, which means earning 5% Ultimate Rewards versus simple cash back.
My credit card strategy is a two-pronged attack:
- Optimize every purchase with a credit card portfolio
- Maximize sign-up bonuses to get lump-sums of value
The difference between 1% and 3% back on a purchase may seem insignificant. But when that applies to every purchase you make, an extra 2% of value starts to accumulate into substantial rewards. The sign-up bonuses typically offer significantly greater return on your spending. For instance, 50,000 points could take years to earn purely from spending. With a sign-up bonus, it usually requires $2-4k of spending in 3 months. Combine these two strategies and you can see how we got over $13k in net value last year:
Time is an important part of this equation. Once you set the system up, it requires minimal maintenance and can be put on auto-pilot. For less than an hour of work each week, I averaged $250.41 of value per week in 2016. That’s the best return on my time anywhere! Always remember that paying your statement balance in full and on time is essential. We did not pay a single penny in interest.
My goal here is to help you accelerate your learning curve and find the best rewards programs for your lifestyle and needs so you can start reaping big rewards too!
Featured image courtesy of frankieleon.