20112012Credit CardsStrategy

2011 Credit Cards Strategy & 2012 Strategy

I realized this morning that in my last post about my 2011 trips /miles earned,  I forgot to mention my credit cards situation for 2011 and 2012.

2011:

In 2011, I was fairly conservative in my credit card sign up bonus strategy. At the start of 2011, I had a couple hundred thousand UA / CO miles from all the various Chase sign up bonuses & from previous trips, so I wasn’t desperate for anymore of those. Additionally I still had the 100k miles from British Airways in my Mileage Bank.

Capital One Status Match

In March of 2011, Capital One had a promotion where they matched your miles up to 110k points. While it wasn’t the same as say UA matching your miles (if anyone from Chase or UA is reading this, I think I speak for everyone in the community when I say an offer like that would be AMAZING!), 110k Capital One miles translates into $1,100 in travel reimbursement. Luckily when we signed up for this Capital One card, my girlfriend and I both still had our 100k+ miles from the British Airways sign up bonus, so we both jumped at the chance to each get $1,000 in travel credit. In the end, we both were matched up to 110K Capital One points. While on some of the blogs I read about people redeeming the points for Hyatt gift certificates, I personally do not have a ton of hotel points so we gladly used the points on actual travel reimbursements like hotel and site-seeing. Combining both my girlfriend and my 110k points, we had about $2200 to blow over the year. Some people may knock Capital One for their cards and poor customer service, but I’ve had their cards since freshman year of College (2006 to be exact), and I still have it to this day. Capital One is one of the only issuers to have cards that have no annual fee AND no foreign transaction fee. Can’t get much better then that.

Chase Sapphire Preferred

Initially I was hesitant on signing up for this card because after seeing the BA sign up bonus, I was hoping that they would also run a 100k sign up bonus for this card. Then over the summer, when word got out that certain individuals were getting 100k sign up offers, I jumped in and signed up. Unfortunately by the time I physically got the card and tried to get the 100k points, it was over so I ended up settling for the normal 50k sign up bonus.

Now after using the card for a few months, it is really starting to grow on me. Not only is the card physically cool to use but the transfer partners are awesome. It’s like having a UA / CO / BA / Hyatt / Marriott / Priority Club card all in one. Plus the fact that they have real agents who are based in the US and pick up the phone instantly when you call is awesome when you have to call and tell them you are traveling abroad.

While the 2x points on Dining and Travel is pretty good, my favorite feature is the link up between the Chase Freedom card. I’ve also had my Chase Freedom for many years and while it typically sat in my drawer, it is fairly obvious Chase is gunning for Discover and their cash back program (and AMEX’s Membership Rewards), so Chase is really stepping up their credit card game. With a Chase Freedom and Sapphire Preferred, you can convert your Freedom points into Ultimate Rewards points. While this may not sound like a big deal, when the rotating Chase Freedom categories were Dining and Clothing stores in quarter 4 of 2011, I earned 5% cash back (which converts to 5 UR points)  per $1 spent on those 2 categories. This is much better than the typical 2x that I would have earned if I had put that spend on the Chase Sapphire Preferred card.

2012 Strategy:

The Cards I Currently Have Open:

Discover Cash Back Card – Don’t really use this card but sometimes the rotating quarterly categories are really good. I’ve had the card for years and it’s has always been free, so there is no real reason to close it.

Chase Freedom – Found myself using this card more and more towards the end of 2011. Quarter 1 of 2012 is 5% cash back at Amazon, so I can see myself using it this card especially for that. Given that the card is free, I’ve had it open for many years, and the rotating categories seem to only be improving, this card will definitely be used in 2012.

Capital One Basic Card – While this card earns me NO points and still after 7 years it only has a $1,000 credit limit, I’ve somehow have managed to still kept it for all these years. Since it also has no annual fee and doesn’t hurt my credit score by sitting in the drawer, it will remain open.

Capital One Venture Card – This card I got in March of 2011 with the Status Match promo. For a few months after that promo, I put all my spending on this card because it earns 2x points or essentially 2% cash back. However after the Chase Sapphire arrived in my hand over the summer, this card has found its way to the sock drawer. There is an annual fee due for this card in March, so I will either be closing this card or asking them to downgrade this card to the No Fee Venture card that earns 1 point per $1 spent. While I doubt I will use this card regardless of if it is 2x or 1x the points, it might be a good card to have in the future for any international trips because my current Capital One card above doesn’t earn any miles.

Chase Sapphire Preferred – Now that the Chase Freedom card’s categories have again changed for this new quarter, for most of my basic spending like Rent, Food, Eating Out, etc, I suspect it will probably go on this card. While it only earns 1x-2x points depending on the category, I do have almost 60k+ UR points sitting in my account currently, plus the 7% annual dividend from last year should be posting soon. While I do like the card, it is difficult to justify paying $95 when the fee comes due over the summer, especially when I have the Chase Freedom card which is free. Depending on how I feel, when the fee comes due in the Summer, I may ask them to downgrade me to the basic Chase Sapphire card with no annual fee.

2012 Predictions:

I am fairy conservative about credit cards, so unless there are any exceptional offers (ie 75k-100k+ offers), I doubt I’ll be jumping in on any offers right away unless I need the miles for a trip coming up.

As we have seen in the recent 2 years, due to the Recession and Wall Street Regulation, banks are looking for ways to make money to replace their lost revenue.  Therefore, they have no problem shelling out a few thousand more miles up front to convince you to sign up for a credit card, all in the hopes that you will be unable to pay your bills and have to pay them back lots of interest and fees. That being said, I suspect we will see some more 100k+ offers this year (most likely with $5k-$10k spend requirements) and slowly what is now the average 50k point offer will creep up closer to 75k.

-Parag

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