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At the beginning, learning how to use points and miles can be intoxicating — especially when you realize exactly what kind of travel you'll be able to do with these rewards. After all, travel rewards can take you to far-flung islands in first class, enjoying yourself with a glass of champagne. It can be tempting to go in hard on credit cards, but you'll want to be wary. Using points and miles is a long game. If done correctly, you'll be able to redeem those rewards many years into the feature. Let's take a look at how to plan a long-term credit card strategy and the process of continuing to earn credit card rewards.
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Decide Where You'd Like To Go
The first step to opening a credit card is figuring out the vacation you'd like to take. This is incredibly important. Often, people will open cards that simply don't work with their needs. For example, let's pretend that you want to travel to Europe and you'd like to use points and miles to lessen the cost.
It's easy to immediately open up a co-branded American Airlines credit card, especially if you live in the airline's hubs like Dallas or Charlotte. That makes the most sense, right? Well no, not necessarily, because it turns out that American Airlines doesn't release a ton of award flights to Europe. And while you can use your AAdvantage® miles for flights with British Airways, BA charges hundreds of dollars in fees on most award flights.
So before ever opening a credit card, you'll first want to figure out where you want to go. Then, you'll be able to research the available flights and the best credit cards for your needs.
Research Credit Card Issuer Restrictions
Opening your first couple of credit cards is easy. With relatively few inquiries on your credit report and a low number of new accounts, nearly every credit card issuer is willing to let you open a card if you have good credit.
This changes nearly immediately. In an effort to combat those who are simply getting cards for welcome bonuses, every credit card issuer has its own set of rules. These impact how often you can apply and be approved for new cards. For example, Chase's 5/24 rule means you won't be able to get a new Chase credit card if you've already opened five new credit cards within the last 24 months.
These rules generally aren't published, which is why we've gathered them together for you in a handy guide detailing credit card issuer application rules.
Strategize the Cards You'll Open
We discussed above that you should open credit cards that make sense for the trip you're planning, but there's more to it than that. Once you've read up on credit card issuer restrictions, you'll want to make sure you're being very strategic about how and when you open new cards.
This is especially true when it comes to a long-term credit card strategy. After all, if you go absolutely ham on cards that you'll never use again, you miss out on earning rewards with your everyday spending. The same is true if you apply for new cards just because you don't have them, only to realize a few months later that the bank bumped up the welcome offer and that waiting to get this card would've made more sense.
For example, let's say that you decide to open two new airline credit cards to book your trip to Europe — one from United and one from American Airlines. You also open a new co-branded Hilton credit card since you've seen that there are plenty of Hiltons in Europe.
After earning the welcome bonus and redeeming the points for your trip, you quit using the cards. Why would you keep using them? You don't usually fly United and only travel once every few years, so Hilton points aren't a great option for you.
Instead of taking this route, you'll want to open cards that you can continue to use long after your first vacation has ended. Cards that earn transferable points currencies are especially good for this, as the rewards that they earn can be converted to numerous different hotel and airline partners. These currencies include American Express Membership Rewards, Capital One miles, Chase Ultimate Rewards, Citi ThankYou® Points, and Bilt Rewards.
Related: Back to Basics: An Introduction to the Types of Reward Points
Resist the Temptation of New Cards
This is probably the hardest part of planning a long-term strategy for credit cards, but it's important. Because credit card issuers are so strict with welcome offers and how often you can open a new card, you'll want to make sure that you're only opening credit cards that fit your needs. It can be incredibly difficult, especially amongst the euphoria of a credit card-opening spree. However, keeping your open credit card count low has two benefits.
The first is that some credit card issuers, like Chase, will lock you out after you've opened too many cards. Staying below this threshold leaves the door open for a new Chase card, including any of Chase's excellent business credit cards. The second is that annual fees can get really expensive — really quickly. If you're not paying attention, or you end up accruing multiple premium credit cards, the annual fees you end up paying can easily run into the thousands.
Related: Our Favorite Benefits on Credit Cards With No Annual Fee
Maximize Your Daily Spending
To really get into credit cards for the long term, you'll need to look beyond sign-up bonuses. After all, there are only so many cards you're allowed to have, and many credit card issuers will limit how often you're able to get a welcome offer. This means you should have a well-rounded portfolio of credit cards on hand. Doing so allows you to keep earning rewards once you've slowed down on opening new cards.
The difference it makes is huge, especially if you spend a lot of money each month. How big of a difference? Let's say that you and your family tend to eat out a lot. You don't want to open too many credit cards, so you've stuck with the The New United℠ Explorer Card, which you opened for a trip you took last year.
The United Explorer Card earns 2x United miles per $1 spent on restaurants. At first blush, this looks pretty good. Recent AwardWallet user redemptions peg the average value of a United mile at 1.94¢ each. This means you'll be netting around 3.5% return on all your dining.
In contrast, however, the American Express® Gold Card earns 4X Amex points per $1 spent at restaurants worldwide on up to $50,000 per calendar year, then 1X. That's double the amount you'd earn with the United card, but there's more to it than that. Amex Membership Rewards points have a higher average value than United miles, with an average value of 1.96¢ each. So really, that 4X you're earning is providing twice as much value on your restaurant spending, plus you gain the flexibility of earning points that can be transferred to multiple partners — not just stuck in one airline program.
Consider Business Credit Cards
Did you know that most business credit cards don't show up on your personal credit report? This means the number of business credit cards you open won't impact your chances of approval for a new card with issuers that check this number, such as Chase and Bank of America. If you don't own a big store, don't worry. There are plenty of ways to create a business that's eligible for a business card, and the process is simpler than you'd think. You may already have a business without realizing it.
Plan Your Next Vacation
The most exciting part about earning rewards is redeeming them, so it's always a good idea to have a future trip on the horizon. This allows you to direct your spending and your strategy to be its most effective.
Cull Your Unused Cards
Not every credit card needs to be a permanent one. Sure, there are those that you might not use more than once a year but whose benefits are valuable enough that they're worth keeping. Cards such as The World of Hyatt Credit Card fall into this category for some people. Its $95 annual fee is worth paying because of the extremely generous annual free night certificate you receive on each account anniversary. It takes little effort to get more than $95 worth of value out of the Category 1–4 free night it provides, so keeping the card even when you don't use it regularly is a simple decision.
However, this isn't the case for every card you open, nor should it be. After all, why pay the annual fee for a card whose benefits you don't use? Culling your unused credit cards is an important part of your strategy, especially since some card issuers will either limit how many open cards you can have or how much credit they'll extend to you.
Related: You Shouldn't Cancel a Credit Card Within Your First Year of Membership. Here's Why.
How Long Will This Take?
How quickly you move is up to you. But this article is about long-term strategy, rather than blitzing through credit card sign-up bonuses. Would it be great to have a million points on hand in six months? Sure, but it's neither smart nor strategic to do so.
Creating the perfect portfolio is going to take time and a lot of research. You'll want to figure out how much spending you can place on a credit card each month, how you're going to use these credit cards, where you tend to spend the most, and how much money you're willing to spend on annual fees.
Here's a general guide for this breakdown: Most card issuers require that you meet a minimum spending goal within three months or 90 days of card opening. This means you'll want to plan for at least three months between opening any new cards — and sometimes more, depending on your card issuer.
This means it'll take you a few years to make it through opening your new credit cards (and maybe more, if you tend to open and close cards). But there's never really an end to tweaking the cards in your wallet. New cards are launched, banks change the earning rates on existing cards, and your lifestyle will evolve.
Bottom Line
Figuring out how to maintain a balance in your long-term credit card strategy can be difficult, especially when you're just getting started. However, starting strong is key to making sure you're never leaving points on the table. By pinpointing only the cards you need and ensuring you maximize every dollar you spend, you can keep those points and miles coming for a long time — while still leaving yourself room to open new cards in the future.
See also:
- Start Here for Collecting Points and Miles for Free Travel
- Why Starting With Chase Cards Matters if You’re Under 5/24
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Best post about strategy that Award Wallet has made in a long time! I always plan my my SUBs around my next destination.