Loyalty Points!.

Written By Lloyd Shuffler

Loyalty Points!

The first thing to do with loyalty points, or if you already have been accumulating loyalty points, the next thing to do is: determine your objective!

Loyalty points can be beneficial for:

  • Cash back or gift cards

  • Travel with specific airlines

  • Stay at specific hotels

  • General travel cards that transfer points to various hotels, airlines, or cash/gift cards.

Cash Back Credit Cards

While Discover invented the cash back credit card, no cash back credit card beats the Fidelity Visa Signature Credit Card. This card gives you a straight 2% back on every purchase 24/7/365. Other cards may give you a lot of points (Talking about you Capital One - you are not in my wallet!), but they have been devalued in redemption. Some cards offer special incentives, like 3% back on gas, phone, utility, grocery stores, or other catagories. Sometimes these higher points are only good for a limited time. No flash with Fidelity and their sign-on bonus is weak at (usually) $100. Best of all, these funds are deposited into an account you set up with Fidelity. So you can use it as a savings account and even invest it. You can also transfer it to your bank and spend it, or use it to pay on your credit card. 

There are other cash back credit cards from most major banks. Some, like Citi, offer the opportunity to transfer points to lower tier hotels or airlines. Capital One also has some cash and travel opportunities and offers high point earnings, but several years back, they devalued the redemption level. So you get a lot of points, but those points don’t go as far. Others are Bank of America, Wells Fargo, USBank, and the creator of cash back - Discover. Most have a better sign-on bonus than Fidelity, but don’t match the daily cash back opportunities. Virtually all credit cards that offer points allow redemption for gift cards to major online and brick and morter merchants, usually at a  one point to one cent ($0.01) redemption rate.  

The plum in the pudding of any credit card is usually the sign-on bonus. These require a specific amount of spending (usually $1,000 to $5,000) in a short period, usually 90 days after the account is open. If you miss any term of the sign-on bonus, you miss 100% of the bonus. Some points to consider:

  • The annual fee does not count toward required spend.

  • The fee starts when the account is approved. This may be 2-3 weeks before you physically receive the card.

  • Plan ahead - what expenditures are coming up that will enable you to meet the annual spend without spending on something you would not have bought or paid for normally. 

    • Do NOT let the spend requirement dictate or change your spending

    • Again, Do NOT run a balance! If you cannot pay off the balance when due, this is NOT for you!

    • Don’t pay anything that charges a fee for using a credit card.

  • Suggestions to meet spend limits:

    • If your spending increases significantly at Christmas, birthdays, or any time you have non-recurring larger expenditures, that could be a good time to meet a minimum spend requirement.

    • Most insurances (home, auto, life) will accept credit card payment without charging a convenience fee.

      • If your mortgage lender is paying insurance and other fees out of escrow, inquire if you can pay these amounts directly. This is normally based on the amount of equity in your home. Open a bank account for direct deposits from your paycheck and deposit the escrow amount plus 10% (to allow for increases.) This will ensure you have the money to pay insurance or taxes when due and give you an opportunitiy to meet minimum spend. Plus, you will earn interest on the amount throughout the year. Do not use a brick and morter bank account. There are a lot of options, but if you don’t know what to do, I recommend a Fidelity Brokerage Account and have all deposits got into a money market. This is very easy to do online. Banks don’t like it when you do this because THEY make money off of YOUR escrow funds!

      • If you are paying auto insurance monthly, see about paying it semi-annually. See previous bullet about having amounts taken out of each paycheck to ensure a balance to pay off when due. Usually, you can get a discount to pay semi-annually in advance. Plus if you have the funds going into a savings or mutual fund account, you can earn interest on the balance. Then the larger single payment can also help make a minimum spend requirement.

    • If buying a vehicle, most dealers will allow a small amount of the purchase ($1,000-$3,000) to be charged without a penalty.

    • Gift cards to the grocery store, home improvement, Amazon, Walmart, etc. You need to have the cash to cover these so you don’t run a balance on the credit card, but this allows you to spread some of your normal spending over a period longer than the 90 days.

      • Note: some merchants offer incentives to buy gift cards from them. In my location, Kroger offers 2-4 fuel points for buying gift cards. Not just Kroger gift cards, but a wide array of restaurants, home improvement, online merchants, etc. During the periodic 4 point offers, a $250 gift card can result in a $1/gallon discount at the Kroger pumps. The Lowes store I use is across the street from Kroger. I have went to Lowes for one or two items, then start realizing I need fertilizer, bird seed, or other sundries and planned small purchase becomes over $200. I have parked the basket in Lowes, ran over to Kroger and bought a Lowes gift card for $250, then returned to Lowes and used the gift card to pay. Then filled up my 30 gallon truck at $1 off. (After driving it close to empty!) So I got, in effect, about a $27 discount on my $250 Lowes purchase. Buying gift cards at Christmas or birthdays at Kroger could result in multiple discounted fill-ups!

    • Any recurring payments to utilities or phones - that don’t charge a convenience fee - should always be put on the credit card.

Special note: I do NOT recommend using a debit card for any expenditures! You can request an ATM card that is not a debit card from your bank. If you lose an ATM card, it is worthless without the password. If you lose a debit card, it can be used for many purchases without the password. Yes, the bank will reimburse you for the fraudulent spend, but when? Will you miss a house payment? And while they may waive any overdraft fees, they will not reimburse you if any merchant charges a fee for a returned payment. What if your credit card is set to pay the balance automatically, but a stolen debit card results in a missed payment and interest and/or late fees? Will the bank pay that? A debit card is wonderful if you need to control your spending to ensure you don’t spend more than you have. Other than that, it has no other benefits and several detriments. Use a credit card for all payments you can. Then if you lose the card, someone stole the bank’s money, not yours! Only the bank benefits all the time from a debit card!

Airlines

Several rules for airline loyalty points. Again, planning is paramount! What do you want to do with your points. There are multiple ways to get points. Pick an airline and stay mostly with it. First and foremost, I recommend an airline with hub close to your domicile. 

  1. Learn the partners of airlines. Flying on these airlines can earn points for your primary airline and flights on them can be redeemed for points with your primary airline program. For example, United is in the largest alliance in the world - Star Alliance. This includes Lufthansa for Europe, Singapore Airlines, EVA Air for Asia ,and South African Airways for Africa. American in is in the OneWorld airline group. This includes British Airways (See my travel cheap - British Airways has bad ju-ju for free flights!) to Europe, Japan Airlines and Cathay Pacific to Asia, Qantas to Australia. Delta is Sky Team with Air France, KLM, LATAM, Korean Air. Southwest is not affiliated with anyone, but their points have more value at redemption. If you are only traveling within the USA or to/from Mexico, this may work best for you.

  2. You may get cheap airfare with travel sites (travelocity, trivago…), but miles awarded may be limited and you may be comparing apples to oranges. Consider all fees. Don’t buy the most expensive, but often the cheapest is not the least expensive!

  3. The best bang for the buck is to get a credit card on your primary airline. And the best deal of all is the sign-on bonus! Most of the majors offer 50,000 points if a specific spend is met in a short time. This can be anywhere from $1,000 over 3 months to $5,000 or more over 6 months. More on how you can afford this later. If you can handle credit cards responsibly with zero carryover each month. If you ever let a balance ride, you have probably undone all the good and more! See credit card point maximization section below.

  4. What other non-airline partners does your primary airline have? Can you get points for power, mobile phone plans, etc, but WARNING: verify you are not buying a more expensive plan to get those points. Check prices independent of the airline link. I have found that often the partner offers are not the lowest cost. Don’t spend more to get the points unless the entrinsic value of the points subtracted from the partner price is the same or better than the best price at the partner without the point promotion or from a competitor of the partner.

  5. Several airlines and hotels offer cruises on all major cruise lines. Again, verify you are not paying more than you would elsewhere. I use United Cruises. (American Airlines, Delta, Marriott Hotels - to name a few - offer cruises.) I use vacationstogo.com to find cruises and check prices, then once I find a price and cruise I want, I log onto United Cruises and verify prices. Then I call my United Cruise agent and book it. The price and benefits (free gratuities? Onboard credit?) are always within $100, but I can get 4 to 10 United miles per dollar spent. 

Hotels

Again, where are you going to be traveling? What hotels are prominent in your plans? Before I get too far into this, let me make this simple for you:

  • Marriott - probably the best all round program based on worldwide hotels available, the cost in points for redemptions, and ability to earn points.

  • Hyatt - probably the best value for individual points, but not near as many hotels as other chains.

  • Hilton - the least valued points. They have opportunities to earn buckets of points for various activities, but have raised the redemption price to barrels of points! Hilton Garden Inn is the best of this chain. Hampton Inn can be more reasonable on points, but I have been in a few that need to be plowed under!

  • IHG (Holiday Inn Et Al) - middle of the road, but hotels can be good or can be old and crappy. I generally stick to Holiday Inn Express as the best USA option. I avoid Holiday Inns. Some are great, most are old and run down.

  • Choice Hotels - great for basic low point basic rooms. These are very available in Europe, but the rooms are usually very basic. I have been in some that are suites only that are very nice, but still cheap on a point basis.

On to hotel points! Again, don’t overpay, but never use the discount sites without checking the direct website. For longer or recurring stays, call the hotel (Note - I mean the hotel and not the chain!) and talk the manager or reservation person. I have not called that many times, and always for recurring or multiple rooms for work, but always got a lower rate than what was available online. The discount sites may not result in points. Try to determine what the points are worth - this applies to all categories. Research how many points or dollars for specific rooms, then divide dollars by points. The average is usually one cent ($0.01) per point. So $100 would equate to about 10,000 points. So if you went thru the company site and earned 10 points per dollar spent (Marriott basic, non-tier rate) and you can get a room at Marriott.com for $200, and Trivago et all has it for $180 but no points, that is effectively the exact same price! Plus you don’t get nights credited and the opportunity to get tier status and more points per dollar spent. If the discount site have the same room for $150, you’re probably best to forego points. Buyer beware staying at non-major-brand sites. Might be bougie, but it might be the Bates Motel renamed…

  • The hotels have partners, but usually the value is not that great and better used on airlines unless you just drive everywhere.

  • The best partner is the hotel credit cards. And the far and away best deal is the sign-on bonus. These vary considerably. Hilton will offer 125,000 points, but you would get more several more stays with a 30,000 point Hyatt credit card sign on bonus. Plus any Chase Bank hotel credit cards offer a free hotel night (category will exclude top tier of hotels) annually with the $95-$110 annual fee. That is usually considerably less than you could pay for a room at a middle tier Residence Inn (Marriott) or Hyatt Place.

Credit Cards

Again, be sure you can control your credit cards and will not let them control you! Next is, use your credit card or bank online tools to monitor your credit rating. Every major bank will do this for free without requiring you to directly access a credit bureau. Learn your specific credit score changes when you get a credit card, cancel a credit card, make a large purchase on a credit card, etc. Only those with the best credit ratings get the best deals!

When you determine what points and therefore what credit card meets you needs, get two! That is, if you’re married. Even better, some credit cards (most of Chase’s) offer a referral bonus. So person #1 gets a new Sapphire Preferred credit card and gets a 75,000 sign on bonus. This person then refers their spouse/partner thru the app. They get a 75,000 sign-on bonus and the first person gets 10,000 points. Now, together, they have 160,000 points they can transfer to several airlines or hotels. That could be a free vacation if managed right! 

Best overall credit cards for all-round travel (Note sign-on bonus and annual fees change, be sure to read both:

  • Chase Sapphire. No comparison. 

    • Earn one point on all purchases, two on travel, and three points per dollar spent on dining.

    • Chase Sapphire transfers to more programs than any other non-branded card. This includes United Airlines, Southwest Airlines, Marriott Hotels, Hyatt Hotels, and IHG. It does not transfer to American or Delta Airlines, but it does transfer to some of their international partners (e.g. British Airways and Air France) and you can redeem points on those sites for flights on American or Delta.

    • Chase Sapphire has the best travel insurance on direct purchases of any credit card terms I have read. I never by cruise insurance, but use my Sapphire credit card to pay. There are limits that you need to be aware of if you are adverse to risk, but their coverage is very close to the insurance offered for a substantial fee when you purchase cruise or air travel.

    • There are two Chase Sapphire cards. The Sapphire Preferred has an annual fee of $120 with a sign-on bonus of 50,000-75,000 points. The Sapphire Reserve has an annual fee of $850 with a 125,000-175,000 sign on bonus. 

    • Many credit cards, including Chase Sapphire and Chase United, have benefits such as full reimbursement once every 5 years for getting Global Entry/TSA PreCheck or Clear.

    • While the Sapphire Reserve is expensive, it has many value benefits such as lounge access at many airports worldwide. If traveling thru airports at mealtime, these lounges normally offer light buffet meals plus more comfort and less commotion than the terminal. If two of you fly 10 times a year (5 round trips) and avoid an airport meal each time by visiting a lounge, that alone could save you $500.

  • Chase Hotels

    • Chase offers Hotel Credit Cards for Marriott, Hyatt, IHG. All have varying sign-on bonuses that can vary consistently. Recommend looking for a special offer yellow banner on the credit card on the Chase site indicating inflated bonus for a limited time.

    • The annual fee is $95, but after the first year Chase gives you one free hotel night with each renewal.

  • Chase United or Southwest

    • Chase also offers on some international airlines. 

    • Both United and Southwest have several different tiers of cards offering different sign-on bonus, different earning rates, and different annual fees. The higher annual fees have special benefits that can offset the fee if you would use the benefit.

      • United offers two United Club passes on the $95 annual fee. The lounge pass costs $56 each if purchased outright.

      • Southwest offers varying bonus points for renewals.

  • American Express

    • Once the king of cards with the ability to transfer points to various reward programs, American Express is still the premier card for Delta Airlines, offering several cards that provide a sign-on bonus and miles for daily purchases. Most cards have an opportunity to transfer points to Delta.

    • Other airlines that can accept transfered points include Cathay Pacific, Emirates, Air France, Singapore Airlines (several others).

    • Hotels eligible for points transfered include Marriott, Hilton, and Choice.

  • Citi Cards

    • Citi has several credit cards with a sign-on bonus that give points that are easily redeemed for gift cards or transfered to various airline programs: American Airlines, Cathay Pacific, Emirates, Air France, Turkish Airways. The points also transfer to Wyndham or Choice Hotels. 

    • Citi has a specific American Airlines Card with a sign-on bonus and benefits such as free luggage on paid fares. (Does not apply to point based travel.)

  • Barclays 

    • A holdover from the US Airways acquisition, Barclays offers several American Airlines credit cards with a sign-on bonus.

I hope you found this helpful! If you’re thinking about getting a Chase United Airlines or Sapphire Credit Card and feeling particularly generous, I can get a referral bonus if you send me an email at run.with.scissors.shuffler@gmail.com and use the link in the return email to apply.

Lloyd Shuffler