Duración de la práctica profesional

There are a ton of credit cards to choose from and picking the right one is important. As we saw in Miles vs. Miles, many offers can appear to be the same at first but can have very different values. So how do you choose the right one?

That choice can be made by looking at the 6 characteristics of a credit card: 1. Sign-Up Bonus 2. Spending Rewards 3. Annual Fee 4. Minimum Spend 5. Card Affiliation 6. Other Benefits

Let’s take a look at them one at a time. 1. Sign-Up Bonus

The sign-up bonus is the number of frequent flyer miles that the card offers as an incentive to sign up. Most credit cards will offer between 25,000 and 50,000 miles with occasional offers up to 100,000 miles. In general, the more miles offered the better the deal. Don’t forget to calculate the Value per Mile just to be sure.

Just like sales at your favorite store, most credit card sign-up bonuses will come and go throughout the year. Because you can only sign up for most credit cards once, be sure to only sign up when you can get the highest bonus. After all, you wouldn’t want to spend a fortune on a new TV when it is about to go on sale.

To put things in perspective, 50,000 frequent flyer miles would likely allow you to book

2 round trip flights within the US or 1 round trip flight to

Europe or South America In order to use this strategy you will need to have a FICO

credit score that is a 700 or higher.

In general, you should avoid signing up for cards that are offering less than 35,000 miles as a sign-up bonus. Chances are good that a higher offer will come along at some point.

Before signing up for any credit cards I recommend that you check out the Best Current Deals page on my website. There you can see all of the most up to date information on the credit card offers I recommend.

2. Spending Rewards

In addition to the points you receive as a sign-up bonus, many credit cards will give you points for every dollar you spend on them. Most cards offer 1 point per dollar spent but some will offer higher amounts for certain spending categories, stores, or promotional periods.

For example, Chase Sapphire Preferred, one of my personal favorites, offers 2x points on all dining and travel spending and 3x points on any dining spending on the first Friday of each month.

While spending rewards are valuable, it is important that their value is kept in perspective when compared to sign-up bonuses. You would have to spend $20,000 on dining and travel with the Chase Sapphire Preferred to earn the amount of points (40,000) that you get with the sign-up bonus. So while spending rewards should be considered before signing up for a credit card, they are still secondary to the sign-up bonus that is offered by the card.

3. Annual Fee

The third thing you need to look for before selecting a credit card is the annual fee. Most travel cards have an annual fee between $40 and $400, but many of them waive the fee for the first year. This means that you can earn the sign-up promotion miles then cancel the card 11 months later to avoid the annual fee. Once you earn the miles they are yours so you don’t have to worry about losing them when you cancel the card.

This is another concept that goes against traditional credit card logic. Like me, I am sure you have probably heard that opening and closing credit cards just for the sign-up promotion is a bad idea. While that is generally true, there are a number of ways to eliminate that risk. You can read about them in my Insider’s Guide to Credit if you have not already.

While you always have the option to cancel a credit card if you would like, there are some occasions where you may want to keep it and pay the annual fee. There are three main reasons why you might want to do this:

1. The card offers you an anniversary bonus, such as 5,000 - 10,000 frequent flyer miles 2. The card has great spending rewards

3. The card has no annual fee

Another thing to keep in mind is liquidity. Liquidity is a concept that is usually applied to finance but it is also relevant in the world of frequent flyer miles. We will talk more about liquidity in the Common Mistakes section.

4. Minimum Spend

Many credit cards will require you to meet a minimum spending amount before you are given the miles offered by the sign-up bonus. These amounts typically range between $500 and $5,000 and you usually have 2-6 months to meet them.

The most important thing to remember about this characteristic is that you should never sign up for a credit card if you cannot meet the minimum spending requirement. If you don’t meet the minimum spend you won’t be able to receive the sign-up bonus miles. You also will also be unable to apply for the card again in the future.

This is a good time to remind you of the third rule of travel hacking that we covered at the beginning of this section. It can be very easy to justify spending money simply to meet your minimum spending limits. This is incredibly dangerous and can lead to some serious consequences if you are not careful. Luckily, I have a number of tricks to help you meet the minimum spend that we will cover in the next chapter. Although most cards have some sort of minimum spending requirement, some cards will give you your sign-up bonus “after first purchase”. Your first purchase can be absolutely anything, even something as small as a cup of coffee. These cards are easy to add to your portfolio so always keep an eye out for them.

5. Card Affiliation

Every credit card is affiliated with an airline, hotel, or some sort of financial company such as a bank. This affiliation determines what type of points you will earn with each specific card.

Affiliations are easy to determine because they are usually stated in the name of the credit card. The Delta Skymiles card will earn you frequent flyer miles with Delta, the Hilton HHonors Credit Card will earn you hotel points with Hilton, etc.

Credit cards that are affiliated with financial companies (banks, credit card companies, etc.) are generally the best because the points can be transferred to that company’s partners, which include multiple airlines, hotels, and other travel companies. This gives you more ways to redeem your miles, making them more valuable than miles that are tied to a specific airline.

When choosing a card, try to pick one that is affiliated with an airline that you typically fly with or that flies to the location that you would like to visit. The same concept applies to hotel points. Frequent flyer miles are only valuable if you are able to use them in a way that is beneficial to you.

6. Other Benefits

The last thing to consider before signing up for a credit card is the other benefits that it offers. The most common benefit to look for is no foreign transaction fees. Foreign transaction fees are additional fees (typically 3%) on all purchases made outside of the United States. While most cards have foreign transaction fees, there are a few major travel cards that do not.

I always try to keep at least one card with no foreign transaction fees in my wallet at all times just in case I want to book a spontaneous trip to a foreign country. You never know when the urge to plan an international trip will sneak up on you.

Some other benefits to look for are extended warranties on purchases, rotating category bonuses, and specific store discounts. You can find a more detailed overview of these features in the appendix. Although these benefits are not as vital as the other characteristics of a credit card they are still important to note before applying for a new card.

We will talk about credit card strategy a little later in the book so please hold off on applying for cards for now.