Why I Am Sticking With Club Carlson

Over a year ago, I wrote about my experience Churning After Midnight. For some reason, I decided that applying for credit card drunk would be fun. Well, I don't recommend doing it.

At the time, I applied for and was approved for the Chase Southwest Business & Personal cards and the US Bank Club Carlson Visa.

One year later, its annual fee time. At the moment, I am unsure about keeping the Southwest Credit Cards. However, I have decided to pay the $75 annual fee for the Club Carlson card.

For $75, I get the following benefits:

•  40,000 Bonus Points

                 

            That's enough for two nights at a Category 4 hotel.

         

•   Buy 1, Get 1 Free Award Nights

           When you redeem Points for 2 or more consecutive Award Nights, your last night is free. 

           That is why your 40,000 bonus point is worth 2 free nights at Category 4 hotels.

•  Gold Status

          Having the credit card automatically upgrades your status with Club Carlson to Gold.

          Gold Status gives you a wide range of benefits; late check-out, room upgrades, free

          internet and many others. You can see the whole list of benefits, here.

The 40,000 bonus points, Buy 1, Get 1 award nights and Gold status are the main reasons for me to pay the annual fee for the credit card. I only used the award night benefit once in 2013, on a trip to Austin. My sister and I stayed at a Country Inn and Suites and saved over $200+ by using 28,000 points for 2 nights.  

This year, I hope to use the award night benefit more often. My travels will take me to places with more Club Carlson hotels.  Plus I am sitting on a nice stash of Gold Points. I plan on sticking with Club Carlson even with their most recent devaluation.

Earlier this month, Club Carlson announced the creation of a 7th redemption level. The 7th redemption level is only going to have a few properties in it (Most in Paris, London and New York City). At the moment, I have no desire to travel to any of those area, so it doesn't really effect me. If Paris builds the restaurants in the abandon metro stations; then I might change my mind.

One of the biggest decisions in this game is the annual fees. It isn't cheap to keep all of the credit cards with annual fees. However, you can't cancel every credit card either. You need a balance. Keep some and let some go is my strategy. 

Congratulations Club Carlson for making it to Year 2!
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Which One of My Friends Is Coming On Vacation With Me?

I am days away from embarking on my trip to Argentina. One of my last decisions to make is which of my friends is making the trip with me. As I have previously written, I have a love/hate relationship with my credit cards.

On this trip, I hope not to have to use credit cards often. Due to the economy in Argentina, US Dollars are getting a premium in a black market known as Dolar Blue. The current government exchange rate is $1 = 6.1 pesos compared to $1 = 9.85 pesos at Dolar Blue. For this reason, I might be paying for everything in cash. However, traveling with credit cards is a must. The only things I can foresee using credit cards there is for hotels, expensive meals and /or large purchases.

Now back to the question, which friends (credit cards) do I take with me?

The credit cards I have are:

Alaska Airways
US Airways
IHG
Delta AMEX
Hyatt
Hilton AMEX
Southwest Premier
Club Carlson
Chase Ink
United
Debit Card
Banana Republic
US Airways World
Chase Sapphire

The number one thing I am looking for in a credit card is one with no foreign transaction fees. The following cards offer that benefit:

IHG
Hyatt
Southwest
Chase Ink
United
Chase Sapphire

As we can see, my Chase credit cards are the ones without foreign transaction fees.

The next criteria is to look at what I will be charging: hotels in Miami area &n Buenos Aires, restaurants and some transportation, etc. Looking at my spending needs, lets look at what I will earn:

IHG - 5x at IHG hotels, 2x at Restaurants

Hyatt - 2x at Restaurants

Southwest - 1x on all spending

Ink - 2x at Hotels

United - 1x on all spending

Chase Sapphire - 2x at Restaurants, Hotels, Transportation

With this information, my Hyatt, Southwest and United credit cards provide no real benefit for my travel needs. That leaves the following:

IHG

Ink

Sapphire


Final Decision:

I am going to bring three cards with me: IHG, Sapphire and my debit card.

                

 





The Ink Bold provides the same benefits (2x on hotels) as the Sapphire. However, the Sapphire offers 2X on transportation and restaurants that the INK does not.

Why the debit card?

To take out cash. Its always smart to bring a debit card with you. Cash is king in many societies and your ability to access it is key. Before you leave, you should notify your bank that you are traveling overseas. Failure to do so could result in your debit card being frozen and your access to cash cut off. To get your card back in order, a phone call must be made to your bank's security department. While overseas this could be costly and timely and even then they might not turn your card back on.

Sapphire and IHG pack your passports, we are going on vacation.
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Always Register Your Credit Cards

Dining Rewards is an amazing program. I have written about it extensively here and here.

The key to being successful in Dining Rewards is registering all of your credit or debit cards with the program. You never know when you might visit a Dining Reward's restaurant.

For instance, one of the items on my bucket list was to take my grandparents to dinner. I don't why this was important, but it was important for me to do. I think the significance of taking my grandparents out to dinner was that it was proof that I finally accomplished something. I could afford to take my grandparents out to dinner without eating Ramen the rest of the week.

Back to the reason for the post. My grandparents picked the restaurant and had no idea that I was going to pay for dinner. When the bill came, I paid it with my Chase Sapphire to earn 2 points per dollar spent on the bill.  I was expecting nothing more out of the dinner. So, you could understand my surprise when I received this email:

An extra 234 miles for only registering my credit card. Oh ya!

Conclusion:

Register all of your cards for dining rewards. If you don't, you could be leaving valuable miles/points on the table.

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Day 9: Earn Big with Credit Cards

Important Note: We talk about credit cards on our blog because they are an important part of the “game.” Any credit card links in this post will be public application links taken from the issuer's direct website. We do not earn income from you applying from the links. Similarly, please take an extra minute or two before applying for credit cards. If you do not pay your credit card balance off every month then you should stay away from this aspect of the game. Credit cards can lead to major long-term problems if not used correctly. I encourage you to read my post on Young People and the Chains of Credit Card Debt for more details.  

Credit cards can be a valuable way to earn miles. One of the fast ways to increase your mileage account balances is signing up for credit cards. Nowadays, most mileage/point earning credit cards come with big sign-up bonus; anywhere from 25,000-100,000 miles/points. As stated in previous posts, I will only be focusing on credit cards that earn United miles. However, almost every airline and hotel chain now has at least one credit card, if not more; therefore, what I write below can be applied to many other frequently flyer/stayer programs.

The obvious place to start a conversation about earning United miles is the Chase United Mileage Plus Credit Card. As you will soon see, United's credit card partner in crime is Chase, which is a good thing.

The current offer on the Chase United Mileage Plus Explorer card is 30,000 miles after $1,000 in 3 months.

The 30,000 mile bonus is good, but I have seen it as high as 50,000 miles. If you are not in desperate need of miles, I would wait. Typically, the best place to find the higher offers is in your United Mileage Plus account. Log into your account and look for a banner ad for their credit card similar to the one below. I had to refresh my page twice before the following ad appeared.

My banner ad led me to the 30,000 offer, but check ever so often. Typically, the bigger bonus offers appear in your account page before going public.

The card earns 2 miles for ever $1 spent on tickets purchased at United and 1 miles per $1 spent on all other purchases. The card offers two other ways of earning miles. First, add an authorized user within the first three months and earn 5,000 mile. Second, spend $25,000 miles in a calender year and earn 10,000 bonus miles.

Another card that earns United miles is the United MilagePlus Club card. It does not provide a sign-up bonus, but does let you earn 1.5 miles per $1 spent.

Chris wrote here about a possible way of getting this card with no annual fee for the first year. Both the MileagePlus Explorer and Club Card come in business versions with similar offers. If you live outside the United States, check this United page to see if they offer a card for where you live.

With the obvious credit cards to earn United miles out of the way, here are three others to consider.

My favorite credit card in my possession is the Chase Sapphire.

The current offer for the Chase Sapphire is a 40,000 mile sign-up bonus after spending $3,000 in 3 months.

The card earns 2 Ultimate Reward points per $1 spent at restaurants and on travel and 1 Ultimate Reward point per $1 spent on everything else. Also, the definition of "travel" is pretty large and includes taxis, metro, and parking.

One does not earn United miles directly from the Chase Sapphire, but Ultimate Reward points, the currency of Chase Sapphire, can be transferred to United at a 1:1 ratio. Ultimate Reward points can be transfer to the following travel partners:

Another card that allows you to transfer to United is the Chase Ink Plus Business.

As you can see, the current offer is 50,000 points after you spend $5,000 in the first 3 months. The card offers the following earning opportunities:

The final card is the Chase Ink Bold Business.

The card is very similar to the Chase Ink Plus Business:

Conclusion 

No other option that we will talk about this month will increase your mileage balance like applying for credit cards. However, if you don't pay off your credit card balance each month then don't apply for credit card. The interest you will pay on the outstanding balances will wipe away any benefit the miles might give you.

If paying off your credit card balances each month then mileage earning credit cards can help you see the world. Your travel goals are within your reach, but you have take the first step.

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Secondary Benefit of American Express Card: Return Protection

Credit cards have three levels of benefits: initial, primary, and secondary. Most of the time, we only focus on the initial and primary benefits of credit cards.

Initial Benefits: Sign-up bonuses in the form of points, miles, free flights, and nights

Primary Benefits: Miles/Points per $1 spent, threshold bonus (spend $20,000 in a year and earn X)

As one can see, the initial and primary benefits tend to be the ones that get the fancy promotions, the mention by fellow bloggers, and big bold print when the credit card. What gets lost is that many credit cards off valuable secondary benefits.

Secondary Benefits: Rental Car Protection, Travel Insurance, Lost Luggage and Roadside Assistance

Yesterday, I learned that American Express has a great secondary benefit that I might use: Return Protection. As detailed here, American Express will reimburse one up to $300 for any item that a merchant will not accept back up to $1,000 annually. Here are the caveats of the program:

1) Must have made the original purchase with an American Express card

2) Purchase must have been made within the past 90 days

3) Card member must maintain permanent residence in the United States

4) The item trying to be return can't be: animals and living plants; one-of-a-kind items; limited 
     edition items; going-out-of-business sale items; consumable or perishable items with 
     llimited life spans; jewelry; watches; services and additional costs; rare and precious coins; 
     used, altered, rebuilt and refurbished items; custom-built items, cellular phones; pagers; 
     compact discs; digital video discs; mini discs; audiotapes; videotapes; computer 
     software; firmware (such as console games, Nintendo, etc.); maps; books of any kind; 
     health care items; formal wear; tickets of any kind; motorized vehicles and their parts; 
     land and buildings; firearms; ammunition; negotiable instruments (such as promissory notes, 
     stamps and travelers checks); cash and its equivalent; and items permanently affixed to home, 
     office, vehicles, etc.

5) Must return the item to American Express 

This secondary benefit could be very helpful for stores with only 30 and 60 day return policies. I forget to return items often. I tend to buy a lot and return 80% of it. However, sometimes I get burned by 30 and 60 day return policies, because I forgot that I purchased something. Return protection can save me money and may justify a credit card's annual fee.

One question about this benefit, where does all the returned merchandise go? Is there an American Express Return store somewhere?
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Whats in My Wallet & Sock Drawer

The Frequent Miler had an article about which annual fee cards he is planning on keeping. It got me thinking about my own credit cards.

Quite a few are up for their annual fee and its time to make some decisions. Do I keep the credit card and pay the annual fee or singing “na na na, hey hey good-bye,” to it. The decision is not easy, because I deduct credit card annual fees from my travel budget. They are an expense to my travel hobby/addiction. Keep to many and the annual fees can add up quickly.

Here is a list of all the credit cards in my possession and my thinking at the moment of keeping or canceling:

Keeping:

Banana Republic (no annual fee)

Hilton AMEX (no annual fee)

US Airways World Mastercard (no annual fee – oldest credit line)

Capitol One Card (no annual fee)

Chase Hyatt ($79 annual fee – free night on anniversary)

Chase Priority Club ($49 annual fee – free night on anniversary)

US Bank Club Carlson ($75 annual fee - 40,000 point anniversary bonus)

Undecided:

Chase Sapphire ($95 – 7% dividend every January – last years’s: 1500 points)

Chase Southwest – Personal ($99 annual fee, 6,000 miles anniversary bonus)

Chase Southwest – Business ($99 annual fee, 6,000 miles anniversary bonus)

Alaska Airlines ($75 annual fee, $99 companion pass each anniversary)

US Airways Premier World Mastercard ($89 annual fee, - 10,000 miles anniversary bonus)

Bye Bye

Chase British Airways ($99 annual fee)

Chase United Airways ($95 annual fee)

Delta AMEX ($95 annual fee)

Citi American Airlines ($95 annual fee)

Last weekend, I wrote that one of the keys to a great credit card is a bonus on the anniversary especially if there is an annual fee. As reflected above, those credit cards with annual fees that I am keeping offer me that anniversary bonus. I have great credit, use my credit card frequently and always pay my bills on time, I should be reward for keeping their credit in my rotation. Yes, that sounds spoiled, but every time I swipe their card, they earn money. And I swipe alot!

As stated above, one of the main reasons I let cards go is the hit to my travel budget from the annual fees. If I kept all the cards above, the annual fees would be over $1,000 or 1/3 of my travel budget. Wasting a 1/3 of my travel budget on credit card annual fee is crazy.

The decision to keep or cancel a credit card is an important part of the game. Annual fees are not going away anytime soon. To succeed in this game, one must way the cost associated with having a credit card vs. the benefits that you receive from it.

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Building The Best Credit Card

Credit cards are valuable tools in "winning"  in the points & miles game. To often, people focus only on the sign-up bonus when choosing whether to sign-up for a credit card; overlooking the other benefits the card may provide.

One of the questions that has been swirling in my head is, "what makes a great credit card?"

Image taken from random Google search

All of my favorite credit cards tend to have similar secondary benefits:

1.     No foreign transaction fees
2.     Status of some kind
3.     Anniversary Bonus (free night, extra points)
4.     Bonus for spending x dollars in a year (status, extra points, free night)
5.     Primary rental car coverage (I don't have car or car insurance)

Lately, my favorite two credit cards is the Chase Hyatt and Priority Club. Both offer a no foreign transaction fees, anniversary bonus, and hotel status. In addition, the Hyatt credit card offers the ability to earn night credits towards higher status after spending specific amount of money within a year.

No single card will have all of your wants on it. However, put two or three credit cards in your wallet and one can check all of their wants off their list.

If you could build your perfect credit card, what benefits would your card have?

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Oops...I Have Been Breaking a Golden Rule

In this points and miles game, there are a few Golden Rules that one must always follow to be successful .

Taken from Google Search

From never take "no," from the first customer service representative to never leave free one ways on the table, the Golden Rules help guide one from making silly and costly mistakes.

One of these golden rules is though shall not pay interest finance charges on credit cards. When one incurs interest charges for failing to pay their credit card balance, any benefit received, in the form of points/miles diminishes. On the blog, I have always preached that if one does not pay their credit card bills in full each month stay out of the credit card game.

Well, I feel like a hypocrite. In the past two months, I have paid over $15.00 in interest charges for failing to pay my credit card bills in full. GASP! The reason for the failure to pay the bill on time is not about the lack of money rather carelessness. Carelessness to ensure that I paid the entire bill. You see I pay my credit card bills little by little throughout the month; instead, of paying the entire bill once a month. On top of that, I have been using multiple credit cards, like five or six, because of the large amount of travel.

$15 is not a ton of money. I will not eat out for lunch or dinner out one night to save the $15. Its more the principal. In my early twenties, I was in credit card debt and I hated how I felt. Everyday sickened by the sight of the credit card balances going up and up with no plan for them to go down. I don't want to have that feeling ever again.

My punishment for breaking one of the Golden Rules is that I can only use one credit card from now on. Doesn't matter if I can get 20 points per dollar spent by using a particular credit card on a particular transaction, I'm not using that credit. (I say this here, but I know I would break it for 20 points per dollar earning, but you get my drift). The rest of the cards go into the drawer. Once I can pay that bill on time and in full, I may move to 2 cards in my wallet, but no more!

Even of those of us with a few year under our belt in the game need to be reminded about Golden Rules from time to time.

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Check Your Credit Card Accounts

One of the downside to having so many credit cards is that I open myself up to a ton of risk. Why you may ask?

In our community, people apply for a credit card, spend the minimum for the sign-up bonus, and then put the credit card away until the annual fee comes around. The problem with this strategy is one falls into "out of sight, out of mind syndrome." When one does not use a card, one tends to forget to check the activity on that card.

This is what happened to me. Last Spring, I applied for a credit card, made the $3,000 minimum spend and then locked it up. For some reason, I decided to check the online statement for this card and saw a $600 charge. I was shocked. I had not used this card in 5+ months. I quickly called the credit card company to dispute the charge and cancel my card. Luckily, the charge occurred only a few days early, so I was not liable.

Immediately, I put a monthly reminder on my calender to check all of my credit card online statements and I recommend you do it as well. I have talked about the danger of credit card debt, but another danger is ignorance. Not checking your credit card accounts can lead to unauthorized charges going unnoticed and possible late payments being reported to the credit bureaus.

Lesson Learn: check online statement frequently for all credit cards



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Financial Check-Up

One of my goals for 2013 was to take a look of where "I am leaving points on the table." What does this mean? I feel like I am not optimizing my monthly budget in terms of points. Are there places that I am spending money that I am either 1) no earning points or 2) could be earning more points.

With a limited monthly budget, I need to make sure that every dollar I spend earns me the maximum points possible. To ensure this, the first thing I need to do is figure out where I spend my money. I am sad to write that I don't have a monthly budget or know where I spend my money. That is really bad, I know.

For this reason, I am planning on writing down every dollar I spend in February. From money spent on dining out to the money spent on my dry cleaners, every dollar, every merchant and the reason for the purchase. By detailing every purchase, I will be able to see where I spend my money, but more importantly where I maximize points.

For example, my last dry cleaners gave 1 point per dollar through Thanks Again. However, I moved to Virginia from DC. Maybe there is another dry cleaners that participates close to where I work or live.

Similarly, buying gift cards for grocery stores I frequent, might earn me more points, if bought at office stores than me charging my grocery bills directly to my credit card.

Another benefit of this financial check-up is the ability to learn your maximum limit in regards to credit card spend. Previously, my limit was $5,000 in three months. That was before I started a new job. Could I hit $10,000 now in 4 months? This knowledge will help determine which credit cards I go after in 2013.

Detailing your every purchase can be extremely scary. You might find out that you send $400 a month eating out for lunch only? Or you could learn that you are spending money on things that you don't use ie cell phone insurance? Worse, could you find out that you send more money than you earn? Knowledge is power regardless if it is bad or good. Walking blindly will only result in future missteps or many wrong trips taken.

Will you join me in the February Financial Check-Up?

Are Hotel Credit Cards Better Than Airline Cards for the Casual Traveler?

It seems like a majority of travelers that are involved in this little hobby of ours are a lot like JD and myself. We don't really travel for work that often, and if we do it's just a few times a year for just a few days. Instead we just travel for fun to destinations in the US or we travel to see family all over the country. Most of the time that results in us purchasing airfare and trying to find a hotel to stay for a few nights if you don't have family to stay with.

This travel style got me thinking about the value of airline credit cards versus hotel credit cards and which had the higher "value" to a traveler that is like us. Both JD and I have used our airline miles to go on a few great trips and have used it to get us into Business Class and First Class, but those trips happened just once or twice in the past few years...a normal trip for the both of us looks like the back of the airplane in Economy with a carry-on (The very back row if you are crazy like JD). 

Looking at most of the airline credit cards their value, in my opinion, starts to dip quite a bit when you exhaust the initial sign-up bonus. Most of the common cards offer at least one free checked bag, some type of early boarding and one or two club passes. Some other cards have other benefits like a companion pass which can be useful to bring down the cost of an expensive ticket if you need to purchase more than one. 

But if we look at the current state of air travel does a free bag and some type of early boarding really matter that much? If the airport gate area is any indication most people are not checking a bag these days and are often just try to stuff their "rollar board" into the overhead while the rest of the plane tries to figure out how they managed to get that suitcase through security. If you are really that averse to bag fees and are carrying a carry-on suitcase you can often just wait until boarding time and wait for the sure to happen announcement that "The plane is very full and we will gladly check any bags to save space" and boom...you avoided the bag fees. 

Early boarding of some kind is a nice perk and this one can provide lots of value if you get on and don't have to stuff that bag 30 rows behind you. But I've run into the problem that not all airline credit cards will give you early boarding if you don't book with that card, I'm looking at you U.S. Airways, so if you are trying to use airfare to help meet a spend on another card or you just forget to put it on your branded credit card you may find yourself at the gate with no early boarding. But if you are someone that just flies every couple of months...this might not be as big of a deal to you. 

The other benefits of a club pass, companion pass and reduced redemption rates can come in handy when you are traveling and need a little bit extra so I am not totally downplaying the useful value of airline credit cards. They are great for the initial sign-on bonus and some of the benefits are nice to have, but if the annual fee is more work than keeping the card, they can be of less value to you as time goes on. 

But, hotel cards continue to keep their value as time goes on. I personally have the Hyatt Visa Card and the Hilton Reserve Visa and I have seen incredible value from the both of them. The best part in my opinion is the granted status just by holding the card, Platinum for Hyatt and Gold for Hilton. The initial sign-up bonus of points or free nights at properties all over the world are also great values. People all over the blogosphere have used them for great redemptions at Park Hyatt's and Hiltons or Insert Awesome Property in Bora Bora here, so that part of the sign-up really holds water in the end. 

But if you are an average traveler who only takes those grand vacations once or twice a year the real value comes from the other amenities that you get with hotel cards. With the Hyatt card I have received upgrades to higher floors and nicer rooms every time I have stayed and the service from their associates has been great for the most part (always a few bad apples). But even better than Hyatt is the benefits from the Hilton Reserve Card. Not only have we received upgrades, but those upgrades have been to Executive Level floors and that opens the door to the Executive Lounge which often will feature snacks, drinks and an evening reception which is perfect if you just want a snack in the afternoon or to have a few drinks in the evening before dinner, but don't want to pay out the wazoo for them in a city where you don't know the best places to go. This has saved us many times over so we can save a few dollars on snacks and drinks and go to a nicer dinner to celebrate visiting a new city. 

Beyond that the Gold status given with the card also entitles you to a free breakfast for every guest in the room. Now I have heard that this can often vary in nature from a Continental type breakfast to a full buffet breakfast depending on the property, but this is the real money saver in the end. Multiple Hilton properties we have stayed at had beautiful restaurants where the price for the buffet or a basic "American Breakfast" was anywhere from $15-25 per person. Instead of paying that price we just presented our vouchers and chowed down. For travelers on a tight budget this can save you so much money over time on your trips big or small. 

The added benefits of the hotel cards have really changed the added value calculation for me in comparison to airline cards. The airline cards do provide some value beyond the sign-up bonus and you should consider keeping them a part of your portfolio of cards if you can justify the annual fee for the benefits you get. But when it comes to hotel cards you should look at how often you stay at the property, the benefits you get and how much added value you get out of the card on every stay and take advantage of every benefit you can! 

Credit Cards for People with Limited Budgets

Last week, I wrote a blog post entitled, Young People and the Chains of Credit Debt that urged young people to be careful with obtaining credit cards. After I wrote the article, I heard from some friends that the article might possible scary people from getting credit cards. That was not my intention.

As much as having credit card debt can hurt your credit score, not having credit cards can hurt your credit even more. Many young people, I work with obtaining their first mortgage, are under the assumption that the less credit cards one has will translate into a higher credit score. Most of the time, people who have one or two credit cards have low credit scores. This is not a stead fast rule, but more of a professional observation.

Since you need credit cards to maintain a good credit score and the easiest way to travel for free is points, here is a list of 5 credit cards that I think are great for people with limited monthly budgets.  Each of these are public links, I do not get commission for you clicking on them. I would recommend taking a screen shot of landing page for your records, just in case something happens later on.


1) US Airways Mastercard - This credit card offer gives you 40,000 miles after your first use of the card. In addition, the card gives you a 5,000 mile discount on award travel. Therefore, your first use will give you the ability for two tickets in the USA. The annual fee is waived for the first year -  $89 fee after your first year. This offer says for Preferred Chairmen only, but many people, including me have used it without status.

2) Delta Gold AMEX - This credit card offers you 30,000 miles after your spend $500 in the first three months. If you are participating in the Delta Grandslam (see here), you will earn a bonus of 5,000 miles for getting the card.

3) Chase Hyatt - This credit card gives you two (2) nights at any Hyatt Hotel worldwide after spending $1,000 in three months. I used my two nights at the Park Hyatt Tokyo, normally $500+ a night. On your card anniversary, you will receive a free night certificate good at Calgary 1-4 hotels.

4) Chase Priority Club  - This card gives you 60,000 points after spending $1,000 in the first three months. The card comes with platinum status. The $49 annual fee is waived for the first year. What makes this card a keeper is that on your card anniversary, you receive a free night certificate good worldwide, well worth the $49 fee.

5) Hilton AMEX - This card gives you 50,000 points after spending $750 in the first three months. The card has no annual fee.

I would highly recommend the Hilton AMEX, as one of your first cards. One of the criteria for credit is the length of time that one has credit. Therefore, it is important to keep your oldest card open.  Since the card has no annual fee, the card can be kept for indefinitely making this a great first credit card.

I hope this list helps you start on your path of traveling for free. As I stated in my post last week, please only charge what you can pay off monthly. Please only bite what you can chew, because no amount of points is worth long term credit card debt.

Happy Hump Day!

Young People and The Chains of Credit Card Debt

A few days ago, Travel Blogger Buzz, placed an article at the bottom of his daily post about young people and credit card usage. Written by Brian O'Connell for the website, www.dimespring.com, his article delved into the question about young people and their use of credit cards. This article stirred something inside of me.

O'Connell writes, "That may not be the case when it comes to young consumers and credit cards, as younger card holders are wasting no time accumulating debt, and are taking their sweet time paying that debt off." The article centers around a Ohio State University study released a few days ago which learned:

              "that young people born 1980 to 1984 had on average over $5,000 more in credit card debt
               than their parents at a similar point in their life and slightly more than $8,000 more
               when compared to their grandparents.

               In addition, the results suggest younger people are paying off their debt more slowly,
               too. The study estimates that the children’s payoff rate is 24 percentage points lower
               than their parents’ and about 77 percentage points lower than their grandparents’ rate."

This graphic summarizes their study nicely:



When I graduated from college, I was $4,000+ in credit card debt (and this debt was on non-mileage earning credit cards - as I only recently got in the game). This debt was the culmination of Spring Break trips, late night beer and pizza runs, and not caring about where my money went. I always though that I could pay down my debt faster after college, when I "got a real job."

I got that real job with that real salary, but then the adult expenses came rolling around. I started having to pay my own rent, which in Washington, DC ain't cheap, my cell phone bill, and then I decided to go back to graduate school by paying for cash. After all my expenses, the money I could put towards debt repayment was small. On top of this, I was putting more debt on my credit card. I kept on rationalizing that my next bonus will clear all the debt. Well...it didn't.

Finally, I got sick one day looking at my credit card balances. Literally sick to my stomach. I think I threw up that morning. How did I allow myself to get this chain of debt attached to my leg? I decided to stop the madness and go on a strict cash diet. I cut my expenses by 70%, brought my lunch to work, reduced my nights eating out and restricted money spent on my social life. However, I paid off my debt accumulated in college ($4,000) in 24 months. 24 months to pay off those late night pizza and beer runs and that trip to Spain. What was I thinking in college? I don't remember what the interest payments added up to for the debt, but it was expensive. Not worth putting that pizza on the credit card.

Why do I bring this article up and my personal experience? A big part of winning the "game" is applying for credit cards for their sign up bonuses, spending the minimum required for the bonus and closing the card shortly their after. The big bonuses are eye popping and once you learn where those points can take you, the appeal of them gets more and more appealing. One can get caught up in the game and this is the where the real danger begins.

Let's take a young person, who reads about the fabulous trip reports by Lucky or The Points Guy and wants to emulate them. He reads that the best way to get your own amazing trip reports by signing up for credit cards for their bonus. This post is not laying blame on any one blogger. I use Lucky and The Points Guy as people who put together amazing trip reports. This young person is attracted to Chase Sapphire, because its cool looking and comes with a greats sign-up bonus of 40,000 points. However, he has to spend $3,000 in 3 months for the bonus. He is approved and the card is now in his hand. As recommended by the Bloggers, he puts everything on his credit card. Now, he is in his last month and he still needs to spend $1,500. He researches easy ways to meet credit card spend limits; he buys gift cards, VISA prepaid cards and even funds a KIVA account. 

Good News:  He hits the minimum spend and earns his 40,000 points

Bad News: His credit card balance is $2,200 with no real way of paying it off, so he continues to make the minimum payment only - it would take him about 191 months or ten years to pay off the debt.

Is 10 years of payments worth 40,000 points?

The real trouble probably does not happen by Joe Schmoe getting one credit card. Its most likely happens when he tries to get two or three credit cards with a combination of minimum spends of $5,000 or $7,500 in three months at the same time. He will ensure the minimum spend requirements are met and worries about paying off the debt later.

Can you see where the "game" can becomes dangerous.? One can easily get caught up in the game. Do whatever it takes to get to the next free night, flight or status level. Before you get a credit card, you need to ask yourself, can I meet this bonus threshold in the maximum time frame. When I applied for the Starwood AMEX, I only applied for that one card as I was fearful, I could not meet the $5,000 minimum spend requirement in 3 months. $5,000 is a lot of money. I barely hit the $5,000 and now I know that is my limit.

Before you apply for a credit card, you need to ask yourself three questions:

           1)   Would I be able to hit the minimum spend requirements in the prescribed time?

           2)   Will I spend frivolously on things I don't need to meet the spend requirements?

           3)   Do I have the means to pay off the debt put on the credit card within 30 days?

If your answers are Yes, No, and Yes, then you need to ask one more question, "Will this hurt my credit?" Your credit rating is one of the most important assets you have. Your score is something that you have direct control over. This 3 digit score controls so much of your future: from your ability to get your dream job to being able to buy your dream first home. (Today, the difference between a person with a 720 credit score and 680 is 1/4% increase in rate - or  $170 more a year per $100,000 borrowed). As a mortgage loan officer, I have seen hundreds of credit scores. Some great, some good and many bad. One of the common threads of those who have bad credit is the amount of debt vs. maximum credit limits. Typically, when I talk to borrowers about the size of their debt or missed payments, it steams from their 20s. In our 20s, we are under the belief that we are invincible and we lack the focus for the future, so we make stupid decisions.

I concluded this post by urging all young people to live a credit card debt lifestyle. Live within your means. I am not advocating not getting credit cards, because the lack of credit cards can hurt your credit even more than excessive credit card debt. What I am urging all young people thinking about entering the "game" or already playing the game, is to think smartly. Ask yourself the three questions above before applying for every credit card. Track your credit report and score, by using your three free reports provided by www.annualcreditreport.com or use credit monitoring services like www.creditkarma.com. Power is knowledge in the credit game. Ignorance of your credit will only lead to trouble year later, when it time to make major decisions like a car, house or dream job.

Take it from me...paying off trips and dinners taken two years ago, sucks. No amount of points is worth adding the chains of debt to you.

Travel Dilemma

I have my first major travel dilemma, since joining this “game.” One major dilemma in two years isn't too bad. Many of you won’t say this is a “major” dilemma, but its has dominated way too much of my time.  So, what is this dilemma?

Which credit cards do I bring to Tokyo with me?

I have a lot at the moment and I don’t know which combination of card to bring. Here is what I do know:

1)      I need at least two credit cards and my debit card

2)      Credit cards must have no foreign transaction fees

3)      One should give me something extra for at least dining, possible travel expenses

4)      Staying at Hyatt two nights

5)      Staying at Hilton three nights

6)      Only paying cash for one night at the Hilton

I am pretty sure I am taking the Chase Sapphire, but I don’t know if I should bring the British Airways or Hyatt, both have chips, which can sometimes be helpful.

Anyone have a suggestion?

Do you have these problems when traveling or am I making a big deal out of nothing?

Credit Card Churn Results

This was my first churn since June when I picked up the Chase Hyatt Visa and the Citi AAdvantage Visa and AmEx.

I ended up settling on two cards for this churn:

The Citi Hilton HHonors Reserve Visa card which will get us:

-Two weekend night certificates after spending $2500 in the first four months
-A free weekend night after every year of holding the card
-No foreign transaction fees
-Hyatt Gold Status wile you hold the card
-Annual fee of $95 no waived

I plan on holding onto those Hilton weekend nights for a rainy day and will try to take advantage of the Gold Status when staying around the US.

The US Airways Premiere World MasterCard which will get us:

- 30,000 Dividend miles after using the card once
-10,000 miles with a balance transfer
-Two $99 companion tickets each year
-First Class Check-In
-Zone 2 Boarding
-US Airways Club Pass for One Visit
-Award Tickets discount of 5,000 miles

I plan on using these miles either for a few domestic trips or as a one way helper with some leftover Chase miles.

Results:

I was approved instantly for the US Airways card and was able to get approval on the Citi card after moving a line of credit around from my AAdvantage cards.

Another successful churn!