It’s not a secret that I’m a huge fan of reward credit cards. I got my first reward credit card in December of 2011, it was the Capital Venture card and I earned double miles on every purchase. I kept that card for a number of years, but continued to add to my wallet, eventually having 6 different cards that I kept up with. I did a fair amount of traveling for work, and for a while was able to use my personal cards and get reimbursed, thus earning me all the points. At my peak I was paying $959 in annual fees, but feeling like I was getting way more than that in rewards and perks. I’ve since downgraded as COVID and my work situation has reduced the traveling I’m doing and certain perks and rewards don’t make as much sense anymore to me. I’ve learned a lot, redeemed a lot and taken some phenomenal trips throughout my time earning and redeeming points. I’d love to share a few keys to success in how I approach and think through my credit card strategy.

Never carry a balance, otherwise you lose

I wouldn’t be doing a good job as a personal finance blogger if I didn’t start a post on reward credit cards by giving a warning about not carrying a balance on them. Reward credit cards often come with high double-digit (10-25%) interest rates, which means if you end up not paying the balance off in full each month, you’ll be paying the credit card issuer a hefty interest payment each month until you pay it off. Any miles, points or cash back you earn will likely be dwarfed in comparison by the interest you’ll be paying. It’s just not worth it! Be responsible and pay off your reward credit card balance each month.

Figure out what’s important to you

This should go without saying but I feel it often gets overlooked when it comes to reward credit cards. What do you actually want in terms of a reward? Is it free flights or hotel stays? Is it more of saving up for a ball out first class trip or would you rather take more lower key domestic flights? Or perhaps do you actually not enjoy travel that much, and would prefer to get straight cash back and then you can decide what to do with it. Or perhaps you’ve seen these fancy commercials to earn cryptocurrency and are intrigued by that offering.

If you’re going to win at the credit card game, you first need to figure out what winning looks like. Give some serious thought to what you value. For example, when I was traveling a lot, I really valued airline status. I flew enough to help me hit the lowest tier, with a shot at hitting the middle tier, and with the help of a credit card, by spending $25,000/year on the card, I earned a 10,000 qualification mile boost. Status was important to me and so the perks of the card really helped. I also really valued lounge access, and so I got a credit card that had a high annual fee ($450) but that came with lounge access. I used the lounge quite a bit and easily felt like I got full value out of that annual fee.

Focus more on redeeming vs. earning

I always bring this point up when talking about credit cards. I really don’t care how many thousands or hundreds of thousands of points/miles you have, I care about what they will get you. Unless the points/miles are actually helping you achieve your goal, they are really just pretty collectible items that are gathering dust.

I live in a Delta hub, and so a ton of my friends have the Delta Skymiles credit card. However, I’ve personally found that sometimes Delta Skymiles are not the best way to redeem travel. For example, when we took our first class flight to London, I did a ton of research. Delta was wanting some 300,000 Skymiles to get there, vs. United wanting 180,000 United miles. We did have to connect in Toronto with the United itinerary but that was ok by me! What would have cost an extra 120,000 on Delta was doable much quicker and much cheaper with United.

It’s helpful once you’ve figured out your goal to do a bit of research on what it would take to achieve that goal. It may make sense to pay cash vs. paying with miles to earn that flight. Or perhaps a flexible currency (Amex’ Membership Points or Chase’s Ultimate Rewards) offers more flexibility vs. an airline’s card.

Less is typically more

I’ve teetered back and forth on this point during my decade of earning and redeeming points. In the beginning, I was all for just having one card and sticking with it. I felt that having points in too many places (i.e. from having several cards) would lead to fewer trips (trips are what I’m after). I instead focused on accumulating as many Capital One miles as I could.

Fast forward, I got more sucked in to credit card perks vs. rewards, and ended up getting a Delta card, a Marriott card and a Chase card. Each came with a nice signup bonus and valuable perks, and so for a while it was great. However, where I’m at today is more focused on earning rewards/points, and I’m valuing the other cards less and less. I’m finding that I’ve got a bunch of points in several currencies but not really enough at this point to do much at all!

Periodically re-evaluate what’s important to you

I’ve kind of touched on this a few times throughout the post, but the real secret to winning with credit cards is to figure out what you’re after in terms of rewards and to stick with them. I’ve learned throughout my time with reward credit cards that what you’re after might change. For a while chasing status was really important to me, now not so much. For a while I was after signup bonuses but now that those have faded away I’m considering dumping those cards. Things will always be changing in life and the same holds true for your credit card strategy! Don’t be afraid to downgrade, or even cancel (with caution of course as that can and will affect your credit) or signup for new cards depending on what’s important to you!

Don’t be afraid of an annual fee (but be careful)

Finally, a lot of reward credit cards will come with an annual fee (but plenty don’t) and I’d encourage you to not be turned off just because there’s an annual fee, or even a high one. It all depends on the value of what you get out of it and how much that is worth it. For a while I was getting in my mind way more than $969 in value for the $969 annual fees I was paying. On the flip side if you’re not getting as much value out of the card as you expected, or if your priorities change, don’t pay the annual fee; either downgrade or (carefully) consider cancelling.

Summary

Reward credit cards are an incredible tool to help you achieve vacation or other goals that you may have for yourself. Using them responsibly and strategically can be a great way to achieve your goals!