Beginner Series: Part 8
Choosing a card

As you can see from the image above, there are DOZENS of credit card options out there that fall into the points and miles space, and if you plan to be in it for the long run, it's more than likely that you will obtain multiple cards. But before you get to that point, you have to start with one card.

So how do you go about choosing one card among dozens? That's a loaded question, and as you embark on this journey, you will notice that each card has different characteristics, like different annual fees, different spend multipliers, and different benefits. It can be overwhelming for most, and therefore, that's where most folks get tripped up. However, when you understand what is most important to you in a card, then you can usually filter your choices down to as few as two or three options.

Let's discuss the considerations.

Top spend categories
When choosing a card, you should first consider your top spend categories from the last 6 months. This is probably the most important step in this process because your spending should dictate what card suits you best. You should NOT let your card dictate where you spend. This is where folks can often get into trouble and heavy debt, because when they spend on things that they normally don't for the sake of earning extra points, the risk of accumulating massive debt increases. The highest risk is with the rotating category cards, which allow you to earn higher multipliers during certain periods in certain categories. For example, the Chase Freedom Flex typically offers 5x on "select live entertainment" at least one quarter per year. Does this mean that you should go spend on concert tickets to earn the 5x? ONLY if you were already planning to and budgeted for it! Don't fall into the trap of spending beyond your means.

Remember, to get the most value, you MUST pay your bill in full every month. The accumulation of interest charges devalues any points you earn, and when you are spending on things that you don't normally budget for, it can lead to trouble. Fortunately, there are cards out there that offer strong multipliers in pretty popular categories, including dining and groceries. Other cards are out there that act as great catch-all cards and earn at least 1.5 - 2x points on all purchases.

If you're not sure what your top spend categories are, log into your bank account and do some analysis on the top categories where you spend the most. After reviewing a few statements, it will become clear where you are spending the most. I personally use Quicken to consolidate all of my finances into one centralized platform so that I can easily see where every dollar goes. It also categorizes all of my spend but also gives me the flexibility to re-categorize and tag transactions at my own discretion, which has helped me manage my budget more diligently.

Quicken's MacOS app

Annual fee

Recall from Part 2 that one of the methods that banks use to profit from credit cards is to charge an annual fee. This fee is to help offset any costs that the bank will incur from any benefits offered to the cardholder, such as credits, perks, or generous multipliers. When choosing a card, the annual fee should align with the benefits that you plan to utilize from the card. For example, would it make sense to pay $650 for the American Express Platinum Card? Hmmm..maybe. If you believe that the total value of the perks and credits that you will utilize equal or exceed the cost of the annual fee, then it's justified. Otherwise, you might want to look for a card where you get outsized value compared to the annual fee.

Benefits and perks

The benefits and perks of a credit card go hand in hand with the annual fee. When choosing a card, you should consider whether you will use the benefits and perks. Of those that you decide to use, you should calculate the expected value that you believe you will receive from them each year, and then compare the total expected value of those perks and compare them to the annual fee. If the total value is greater than the annual fee, then the annual fee is justified. Examples of common perks include, but are not limited to:

Free checked bags
Automatic hotel status
Annual credit towards CLEAR
Lounge access
Enhanced spend multipliers
Travel credits
No foreign transaction fees
Rental car insurance
Purchase protection

While most of these perks have some type of monetary value, their perceived values ultimately are to be determined by the cardholder themself. Take lounge access, for instance. The average cost to enter a lounge is about $55 per person, but my own perceived value is much greater. As a new parent, I place a high value on the seating space and clean bathrooms so that I can relax with my family without feeling like I'm crammed at the gate. I also appreciate using the CLEAR security line so that my family can move more quickly through the airport so that we can make time to go to the lounge and take advantage. For me, those two perks alone are worth more than face value, so a card that could grant me those perks has a higher perceived value than perhaps others would place on them.

Bottom line: it all comes down to the type of traveler you are.

Transfer partners

A notable difference between the credit card points programs is their transfer partners.

Chase points can be transferred to 11 airline programs and 3 hotel programs

American Express points can be transferred to 17 airline programs and 3 hotel programs

Citi points can be transferred to 14 airline programs and 4 hotel programs

Capital One points can be transferred to 15 airline programs and 3 hotel programs

Bilt points can be transferred to 7 airline programs and 3 hotel programs

Transfer partners are important to consider because much of this specific consideration has much to do with where you live and where you plan to travel. See below for more on airline and hotel transfer partners.

Airline transfer partners

Depending on your preferences, each of these airline transfer partner structures will have different values for you. For example, each card program has at least one member of the three major airline alliances (more on this in a later post). This is important because your preferred airport is likely a hub for one of the five major domestic airlines (United, American, Delta, JetBlue, and Southwest). If this is the case, you may want to consider a card that transfers directly to the airline for which your home airport is a hub because it gives you the most flight options for that airline. If United is your preferred airline, it might make sense to get a Chase card or a Bilt card. If Delta is your preferred airline, American Express is your best bet. NOTE: Capital One is the exception; they do not have a domestic airline transfer partner.

If you're not entirely sure where to start, use the guide below:

If your preferred domestic airline is:

American Airlines: No cards mentioned above transfer direct to American Airlines, unfortunately. But you can find American Airlines award flight availability via British Airways, Iberia, and Aer Lingus booking portals, which allow transfers from the major credit card issuers.

Delta: American Express is recommended

JetBlue: Chase or Citi are recommended

Southwest: Chase is recommended

United: Chase or Bilt are recommended

It's also worth mentioning that each of these points programs (except for Bilt) transfers to some of the same airline partners. For example, each of the five points programs transfer to Emirates, AirFrance/KLM Flying Blue, and Virgin Atlantic. These are some of the most valued transfer partners in the game, so regardless of what card you choose, you will be in good shape!

Hotel transfer partners

For hotel stays, transfers from AMEX to Hilton's and from Bilt or Chase to World of Hyatt will get you the most value per point. This is because AMEX transfers its points at a 1:2 ratio to Hilton (1,000 AMEX points = 2,000 Hilton Honors points) and because World of Hyatt free night redemptions start as low as 5,000 points for its budget brands and top out at roughly 45,000 points for high-end hotel stays. With Marriott stays, you can stretch your point value if you redeem at least 5 nights because you get the lowest point value night free thanks to its generous Stay 5, Pay for 4 program perk when booking hotel stays with Marriott Bonvoy points.

If you're still not entirely sure where to start, use the guide below:

If your preferred hotel chain is:

Hilton: AMEX is recommended (1:2 transfer ratio)
IHG: Chase or Bilt is recommended
Marriott: AMEX, Chase, or Bilt are recommended
Hyatt: Chase or Bilt is recommended
Wyndham: Capital One is recommended

Key points

Choosing a new travel credit card can seem like a difficult process, but it doesn't need to be. You can take the following steps to help make an informed decision:

Consider your top spend categories, and choose cards that offer at least 2x in at least one of your top categories
- Dining, Groceries, Gas, Hotel, Airfare
Consider transfer partners and domestic airlines that offer the most flights from your local airport
- American Airlines (any cards above) is great if you fly out of:
  - Charlotte, Chicago–O’Hare, Dallas/Fort Worth, Los Angeles, Miami, New York–JFK, New York–LaGuardia, Philadelphia, Phoenix–Sky Harbor, Washington–National
- Delta is great if you fly out of:
  - Atlanta, Boston, Detroit, Los Angeles, Minneapolis/St. Paul, New York–JFK, New York–LaGuardia, Salt Lake City, Seattle/Tacoma
  - Consider AMEX cards
- JetBlue is great if you fly out of:
  - Boston, Fort Lauderdale, Los Angeles, New York–JFK, Orlando
  - Consider Bilt or Chase cards
- Southwest is great if you fly out of:
  - Atlanta, Baltimore, Chicago–Midway, Dallas–Love, Denver, Houston–Hobby, Las Vegas, Los Angeles, Nashville, Oakland, Orlando, Phoenix–Sky Harbor
  - Consider Chase cards
- United is great if you fly out of:
  - Newark, Denver, San Francisco, Chicago–O’Hare, Houston–Intercontinental, Los Angeles, Washington–Dulles
  - Consider Bilt or Chase cards

That's a wrap on the Beginner Series! But this isn't the end! Visit my blog page to get access to content that goes deeper into strategies, hacks, and personal recommendations based on my own experiences.

If you want to chat more about credit card strategies, redemption hacks and tricks, or anything related to points and miles, feel free to set up time with me to get customized recommendations and personalized point hacks.

The Chase Sapphire Preferred® Card

Current Welcome Offer

100,000 Membership Rewards Points after spending $4,000 in the first 3 months of card membership

The American Express® Gold Card

Current welcome offer

90,000 Membership Rewards Points after spending $6,000 in the first 6 months of card membership

The American Express® Platinum Card

Current welcome offer

125,000 Membership Rewards Points after spending $8,000 in the first 3 months of card membership

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Beginner Series: Part 8 Choosing a card