I Teach People How to Plan Their Credit Card Strategies. This is What I Tell Them

I’ve been obsessed with credit cards and award flights for nearly 20 years, and I’ve made a career writing about it. 

Not surprisingly, people began reaching out to me to ask how they too can travel for free, and I started offering individual award travel consultations. After spending time talking to dozens of people from all walks of life about their credit cards and travel rewards, here’s the advice that I find myself giving out the most.

1. Be careful how you spend your reward points and miles

My consultations always start with a list of the credit cards my clients have, and a list of their points and miles. 

My clients frequently tell me that they’ve been using one card for their purchases for many years, but don’t currently have many points. 

When I ask how they used them, the response I often hear is that they redeemed them all for an airline ticket by calling up the card issuer and redeeming their points directly through their travel agency. 

It pains me to break it to my clients, but this is a big mistake.

This will usually provide just 1 cent in value per point redeemed. For example, American Express Travel offers 1 cent in value per Membership Rewards point redeemed, so a $2,000 ticket will cost 200,000 points.

But you can receive far greater value by transferring your points to a travel partner. 

For example, 200,000 Membership Rewards points could have been redeemed for two round-trip business class tickets to Europe on any Star Alliance partner such as United, Air Canada, LOT Polish and Turkish, among others. Certainly, two round-trip business class tickets to Europe are worth far more than $2,000.

2. Earn flexible rewards points

Flexible reward points can be extremely valuable when transferred to travel partners. Transfer programs include: 

• American Express Membership Rewards
• Chase Ultimate Rewards
• Citi ThankYou points
• Capital One Miles
• Bilt Rewards
• Wells Fargo Rewards

But if you earn travel rewards points with Bank of America, U.S. Bank or Discover, you won’t have these options. 

You also miss out on these valuable options when you earn cash back. Only flexible travel points allow you to receive several cents in value per point redeemed when you transfer your points to travel partners. 

3. Don’t stand still

Are you still using the same smartphone that you got 10 years ago? Probably not, because you know that there are much better phones available now. 

The same is true of credit cards. When your travel and spending needs change, it may also be time to change the cards you use. 

The credit card industry is so dynamic. New cards are coming out all of the time, and card issuers frequently offer valuable welcome bonuses to encourage people to try them. 

If you haven’t reevaluated the credit cards in your wallet, you should do so regularly. Look for new offers with generous welcome bonuses, but also ones that can provide continued value.

4. Use the right card for the job

You don’t use a sports car to help your friends move or take your minivan to the racetrack. But that’s what you’re doing when you use your travel rewards credit card to buy groceries, where it only earns 1 point per dollar (with some exceptions -- like the Citi Strata Premier℠ Card or American Express® Gold Card). 

And when you do find a card that gives you a large bonus for groceries, don’t check into a hotel with it, where you’ll get the minimum number of rewards points or miles. Instead, switch to a card that offers higher rewards for hotel stays like the IHG One Rewards Premier Credit Card.

You should always use the card that gives you the most points for each purchase. Sure, there are apps that will tell you how to do that, but you can also just put a piece of masking tape on your cards with labels like “gas,” “groceries,” “travel” and “everyday expenses.”

5. Don’t be afraid of annual fees

One of my clients recently asked me if it was worth it to pay a $375 annual fee (see rates and fees) to get an American Express®️ Business Gold Card, which, at the time, had a 150,000-point bonus for spending $10,000 in the first three months of card membership. 

I showed him how he could redeem those points for thousands of dollars of travel, making the annual fee worth pennies on the dollar compared to this card’s value. And if he later decides the card doesn’t offer lasting value, he can always cancel it before the annual fee is billed next year. 

Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.

6. Never cancel your card right away

When I recommend my clients apply for a new card to earn a large bonus, many ask if they should immediately cancel the card afterward. 

I always answer with an emphatic “No.” 

First, there’s no point in canceling the card until the next annual fee is billed. But also, many card issuers frown on those who immediately cancel their cards after receiving a bonus. 

In fact, American Express specifically says that it may take back your bonus if you do. And finally, it’s worth giving the card a good-faith try. You may eventually discover that it’s worth keeping for at least another year or two. You could always use it for small purchases or a subscription to avoid closing out the card.

For rates and fees of American Express Business Gold Card, click here.