Need credit card advice?

Whether you're trying to maximize rewards or minimize debt, we're here to help. Learn more about what makes CreditCardForum different from other sites.

Credit cards and charity: 3 ways to give back with plastic

Posted by on

The main draw of credit cards is their ability to get you something back on your spending (whether it’s rewards or credit-building). But what if you want to give back? Credit cards often allow you to be philanthropic as well.

For example, MasterCard (via its Priceless Causes program) is donating 1 cent (up to $4 million) to Stand Up To Cancer every time a cardholder uses a MasterCard credit, debit or prepaid card to spend more than $10 at a restaurant. MasterCard has been running this campaign for Stand Up to Cancer for the past couple summers now, and, in 2014, it will run until Sept. 15. If you happen to be in New York City, you can also give back by reserving a spot at MasterCard’s Priceless Table above Times Square until Aug. 2. Making a $50 donation with your MasterCard gets you a five-course meal.

Learn more about the program (and how you can participate) here. And check out the TV spot for the campaign below:

In addition to unique, limited-time programs like this, there are more permanent ways you can use your card to do good. Read on for some examples from a variety of card companies and issuers.

1. Co-branded charity cards

Charity cards (cards co-branded with the logo of your cause) are pretty scarce these days (the Make-a-Wish Foundation, ASPCA and others have seen their co-branded cards discontinued in the past several years). But a few are still around. Some notable examples (all of which have no annual fee) include:

The World Wildlife Fund Credit Card from Bank of America: Bank of America will give $100 to WWF for each new credit card account opened and activated. After that, it will donate 25 cents for every $100 spent on the card:

WWF Card fine print

The card also gives you 2 percent back on groceries and 3 percent back on gas for the first $1,500 in combined spending each quarter — and 1 percent cash back on everything else.

Stand Up to Cancer Credit Card from Fifth Third Bank: Every year your card stays open, Fifth Third Bank will donate $5 to Stand Up to Cancer. Plus, 0.2 percent of your net retail purchases on the card automatically goes to the charity:

Fifth third fine print 1

The card also allows you to earn one “Real Life Rewards” point per dollar spent. These points can be redeemed for cash donations for Stand Up to Cancer, and, when you redeem this way, Fifth Third Bank will make a donation equal to 10 percent of the cash value of your donation:

Fifth third fine print 2

Susan G. Komen Pink Ribbon Card from Bank of America: In addition to donating $3 per card activated within 90 days of account opening, Bank of America will give 0.2 percent of all retail purchases made with the card:

Komen card fine print

Cardholders will also earn 3 percent cash back on gas and 2 percent on grocery store purchases (for up to a combined $1,500 spent per quarter) — and 1 percent on everything else.

Humane Society Credit Card from Discover: Discover donates 0.2 percent of your net purchases to the Humane Society of the United States. The amount it donates when your account is approved, however, depends on how you applied for the card:

Humane Society Credit Card Discover fine print

The card also has the same rewards structure as the Discover it card: 5 percent cash back in rotating categories (for up to $1,500 in purchases each quarter) and 1 percent back on everything else.

2. Giving portals

Given the limited options for co-branded charity cards, you might have more flexibility if you redeem the rewards you earn on a regular rewards card as charitable donations. Fortunately, various issuers have giving portals which let you do exactly that:

Capital One’s No Hassle Giving site: You can donate the cash value of your rewards points to 1.2 million charities. The site allows you to search by ZIP code, if you’d like to donate to a cause near you.

American Express’s Members Give site: Here you can donate Membership Rewards points to more than 1 million charities, including local ones. As of January 2014, for every 1,000 Membership Rewards points you redeem, the charity of your choice gets $5 (for the first 500,000 points you donate in a calendar year). That’s a point value of half a cent – the same value you’d get if you redeemed your points for a statement credit via AmEx’s Membership rewards program. After you’ve donated 500,000 points in a calendar year, the charity will receive $10 for every 1,000 points donated (a point value of 1 cent). American Express is a CreditCardForum advertising partner.

Citi ThankYou Donate With Points site: Citi has partnered with PointWorthy to allow cardholders to donate Citi ThankYou points to a variety of charities, searchable by state. To use this feature, you need to link your Citi card’s account to PointWorthy – and PointWorthy will waive its standard processing fees. Every 1,000 ThankYou points donated results in a $10 donation, a value of 1 cent per point. That’s a better value than you get for cash-back redemptions (which is half a cent per point).

Discover Charitable Partnerships: Discover lets you donate your cash-back bonus rewards to several charities, including the American Cancer Society, ASPCA, American Red Cross, Children’s Miracle Network, Junior Achievement and more. Whichever charity earns the most in a given year will receive an extra donation of $25,000 from Discover:

Discover charitable donations

3. Donating miles

If you have a couple thousand miles that you earned with an airline card sitting in your account, there’s not much you can do with them, other than get a 15-month subscription to Wine Spectator Magazine via American Airlines’ “Magazines for Miles” program — or a pin commemorating hockey great Mark Messier (Delta’s got one in its catalog for 1,800 miles).

But combined with other donors’ contributions, your spare miles could help the Make-a-Wish Foundation fly kids and their families around the world — or help the families of wounded military men and women travel to visit their loved ones via Hero Miles.

The best way to give back?

Whichever of the above options you choose for credit card philanthropy, the rewards that end up going to your favorite charity may seem like a pittance. But, across thousands of cardholders, those micro-donations can result in a groundswell of giving. Plus, when you give via a card, the donation process is automated (in the case of co-branded charity cards) or at least very easy (in the case of giving portals and miles donations). While you may think you’ll regularly take the time to write out a check or open your wallet for a worthy cause, you might forget or find it too hard to part with real cash; donating rewards can be a painless option for those who may not regularly give.

That said, the above options may not be the best way to give back. Co-branded charity cards give just 0.2 percent of your spending to the charity — and some of the giving portals offer a value of less than 1 cent per point donated. If you DO want to be extra generous and can remember to do so, you can earn a lot more for your favorite charity by getting a high-yield cash-back card (such as the Chase Freedom, or American Express Blue Cash card), depositing your rewards into a bank account and making an equivalent donation to a charity.


-----
Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

American Express gift cards – good for givers and recipients?

Posted by CreditCardGuru on

Gift cards are a great way to reward employees, give your kid some birthday money, please a hard-to-shop-for person who has everything, and help brand-new parents who need everything.

All the card networks, some banks and many retailers offer prepaid gift cards. Yet American Express (a CreditCardForum advertising partner) has some of the most customizable, high-limit and easy-to-order options out there. Read on to find out why – and to compare AmEx’s offers with competitors. image of American Express Gift card

Types of American Express gift cards

American Express’s gift cards come in three main flavors:

1. Personal gift cards

Anyone can buy these for $3.95 each, and they come in a variety of designs. You can buy these in person at participating retailers, although you’ll be limited to the denominations and designs in stock.

If you’re ordering online, the denominations you can get depend on the design you choose. In general, however, you can get a card loaded with between $25 and $3,000 and can order up to $5,000 in cards at a time.

These cards also have a personalization option, which allows you to emboss the recipient’s name on the card. To order personalized cards online, go here.

2. Business gift cards

These cards are meant for businesses looking to reward employees and customers, as per these terms and conditions:

American Express Gift Cards Business Purchase Terms and Conditions 2014-07-22 13-54-54

The cost per card is $3.95, and these cards can be purchased only online. For the recipient, there’s no difference between the personal cards and business cards. But, from the purchaser’s perspective, the per-order max is much larger ($75,000 vs. $5,000 for the personal cards).

Plus, the business cards allow for a custom message to be added. So, if you want to give 200 employees (or clients) $50 gift cards that all say “Happy Holidays,” ordering AmEx business gift cards allows you to do that. You can order business custom-message cards here.

3. eGift cards

Only current AmEx cardmembers can order these, and you must purchase them online. The cost per card is $2.95, and you can put up to $100 on each “card” (essentially an email with a card number that allows the recipient to make online purchases). With eGift cards, you’re limited to $250 worth of cards per seven-day period.

Use our chart to quickly compare your three options:

Compare American Express gift cards
Who can purchaseCost per cardMax per cardMax per orderPurchasing with Membership RewardsPersonalization/customization options
AmEx personal gift cardsAny consumer$3.95$3,000$5,000Redemption value = half a cent per point (5,000 points = $25 card). Can pay for part or all of order with MR points (1,000-point minimum required).Can emboss recipient's first name, middle initial and last name (up to 21 characters).
AmEx business gift cardsCompanies, businesses or other corporate entities$3.95$3,000$75,000Can emboss 2-line custom message. Form message ("Congratulations," "Thank you," etc.) on first line and up to 21 characters on second line.
eGift cardsAmerican Express cardmembers$2.95$100$250 per 7-day periodup to 350 characters) to email containing eGift card.

Important terms

  • The cards are not reloadable.
  • You can’t use them at ATMs.
  • AmEx gift cards are not available to residents of Vermont and Hawaii.
  • You can use Membership Rewards points to pay for the entire or partial cost of the gift cards.
  • Shipping charges will apply if you’re ordering physical cards. Currently, shipping costs range from $5.95 to $15.95, depending on how fast you need the cards.
  • Besides the purchase fee, there are no other fees for inactivity, purchases, etc.
  • All cards have a “good thru” date, but you can request a free replacement if that date passes by calling 1-877-287-4438 for personal and eGift cards and 1-800-297-7327 for business gift cards.
  • If your card is lost or stolen, you’ll be refunded for any funds used after you report the theft – but not before:

Lost stolen gift card

The competition

Visa, MasterCard, Discover, and various banks and retailers offer gift cards. Because it’s always smart to check out the competition, here’s a run-down of what’s out there:

Vanilla Visa gift cards: You can find these at checkout in many drugstores and supermarkets. You can get them in $25, $50 and $100 denominations, and the activation fee is between $4.95 and $7.95. There are no after-purchase fees, such as inactivity fees.

Discover gift cards: Next to American Express, Discover presents the most gift card options. However, ONLY Discover cardholders can purchase them. Discover has business gift cards, personal gift cards and eGift cards. The per-order maximum is 20 cards (up to $3,000) per 7-day period, and the per-card maximum is $500. The cards cost $3.95 each, and a maintenance fee of $2.50 is deducted from the balance after 12 months of non-use. If you’re OK with standard shipping, it’s free. You can also customize cards with a personal message (four lines, up to 160 characters) and name.

U.S. Bank gift cards: Each Visa gift card costs $3.95 at branches and $6.95 online. You can load up to $500 on each card. If the recipient doesn’t use the card for 12 consecutive months after issue, a $2.50 inactivity fee will be deducted from the balance.

Visa and MasterCard gift cards: These can be purchased at certain bank branches and partner bank websites. Visa has a list of its vendors here, and MasterCard has one here. Check with the vendor for purchase costs and fees.

Are American Express gift cards a good option?

American Express’s gift cards have some of the lowest purchase fees out there – and, unlike some other gift cards, you won’t have to worry about the recipient getting hit with an inactivity fee down the road. The only other cost to worry about is the shipping fee if you’re ordering physical cards — and these costs can be pretty high for a single card. Yet, because the shipping fee is per order (not per card), it’s still pretty cost-effective if you’re buying in bulk.

The customization options are a nice touch as well and can make gift cards (often called an “impersonal” gift) a little more personal.

With these gift cards, American Express is catering to those who need to make big online orders, whether that’s a single card with a big balance (up to $3,000) or hundreds of cards with smaller balances. Other gift card providers cut you off with a relatively low per-card maximum or restrict the number of cars you can get at once, meaning large corporate orders are out of the question. Amex gift card payment options

Perhaps the biggest advantage of these cards, however, is that practically everyone can get them (see your online payment options to the right). Only the eGift cards are restricted to AmEx cardmembers. The physical cards can be purchased online with Visa, MasterCard, AmEx and Discover, and there’s no need to visit a branch, go to the store or be an American Express cardmember.

If you’re wondering how American Express is making money on these cards while keeping costs low for purchasers, it’s the swipe fees – the amount merchants pay whenever one of these cards is used. If a company places a huge order and gives out 500 of these cards to all its employees, American Express makes money when those lucky recipients go shopping.

It’s true that some merchants may not accept American Express. But so many do nowadays, that givers can rest assured they’re giving a nice, usable gift.

The bottom line …

While there are plenty of gift card options out there, American Express’s gift cards are relatively low-cost, easy to get online and convenient for large orders.


-----
Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Chase cuts 7% dividend on Sapphire Preferred: Do new insurance benefits make up for it?

Posted by on

The Chase Sapphire Preferred has long been a popular card among our forum users. The 1:1 point transfer you get for a bunch of popular travel loyalty programs, along with double points on travel and dining, can make this card a rewards powerhouse.

However, Chase recently eliminated one of the card’s perks – the annual 7 percent point dividend. The good news? The card is bulking up some of its insurance benefits for travelers.

What’s changing?

Hat tip to The Points Guy for going through the newest Sapphire Preferred membership packet and summarizing the changes:

1. Annual 7 percent dividend is going away. Cardholders used to get a 7 percent bonus on all new points earned the previous year. The change is happening immediately for new applicants, although existing cardholders are grandfathered in for points earned in 2014 and 2015.

2. Rental car collision damage waiver (CDW) coverage will now be primary. This coverage used to be secondary, meaning the card’s coverage paid out only after your own auto insurance did.

3. Trip cancellation/trip interruption insurance maximum is increasing. This insurance reimburses you for expenses you pre-paid (such as flights and hotels) if you need to cancel your trip or cut it short for a covered reason. The coverage maximum used to be $5,000. It will now be $10,000.

What do these changes mean for me?

That depends on how you use the card — and on your traveling habits. Here are some things to consider about each of the changes:

Nixed 7 percent dividend:

Anniversary gifts like this one are hard not to like. They’re effortless (you use the card, and the issuer deposits the bonus in your account), and they can help justify keeping an annual-fee card around.

Yet, while this perk was nice to have, it probably wasn’t worth much to low spenders. Let’s say you spend $12,000 a year on the card – and that half of that was on travel and dining. You’d be looking at 18,000 points earned in a year – and a 1,260-point dividend. Better than nothing, to be sure. But that’s only about $13 cash back. Or 1,260 frequent flier miles/hotel points if you use the card’s point-transfer feature. That might help you top off your rewards balance – but it’s not enough to get you a free flight or hotel night on its own.

The bottom line: It stings to have free points taken away. High spenders (who could expect to earn thousands of points a year, or enough for a free hotel night) will miss the dividend – and possibly find it harder to justify keeping the card around. For lower spenders, however, the dividend probably wasn’t a make-or-break perk, considering the other robust benefits of the card.

Primary auto insurance:

This is an extremely rare benefit among rewards cards. Not even the $450-pear-year Platinum Card from American Express (a CreditCardForum advertising partner) offers primary coverage for rental cars. Chase’s United MileagePlus cards have it, however.

As with secondary coverage, primary coverage will save you money every time you rent a car because you can turn down the rental agency’s pricey coverage. Yet primary has an advantage over secondary, as it kicks in right away. There’s no need to file a claim with your regular auto insurance provider first (as you do with secondary coverage), meaning you wouldn’t have to worry about increased premiums.

Just keep in mind that there’s still one big coverage gap, even with primary insurance. Here’s what Chase DOES cover:

CSP auto rental coverage

Missing from that list are the damages you do to OTHER vehicles, property and people. You’ll need liability insurance for that, and that will have to come from your regular auto insurance (check to make sure it covers rentals) or from the rental agency (in the form of supplemental liability insurance, which you can buy at the counter). There are also excluded vehicles and countries.

The bottom line: If you get in an accident that damages other cars and property, and results in injuries, the Sapphire Preferred card’s primary insurance will not cover the bulk of the damages. But you can lean on the card’s coverage if vandals key your car, or a tree branch falls on it. Because the coverage is primary, you don’t have to file a claim with your regular insurance company and risk higher premiums for those minor incidents.

Increased trip cancellation/interruption coverage:

The jump from $5,000 to $10,000 is a generous increase, considering the Citi AAdvantage Platinum World MasterCard and Barclaycard Arrival Plus World Elite MasterCard (which have $95 and $89 annual fees, respectively) offer $1,500 in coverage.

But just because the coverage maximum is doubling doesn’t mean this perk will benefit you twice as much.

The first factor to consider is how much you spend on prepaid travel expenses. If you take one trip a year and pay $2,000 for flight, hotel and other prepaid reservations, that extra $5,000 in coverage doesn’t give you anything you weren’t already getting.

However, if you travel with a big family or take expensive vacations, the jump to $10,000 in coverage will be a welcome increase. Instead of having to buy extra stand-alone coverage, you can rely on your card’s coverage for those pricier trips.

The card’s trip cancellation/interruption insurance covers you, your immediate family members and traveling companions. There are some coverage holes, however, that may warrant a stand-alone policy:

  • Pre-existing conditions
  • Cancellations due to job conflicts, business obligations or job loss

Both these circumstances can be built into stand-alone policies, if you buy within a certain number of days of booking your travel. For example, I recently bought a stand-alone policy for an upcoming trip. The cost was about $100, combined, for me and my traveling companion. I had the option to add coverage for pre-existing conditions (if I bought insurance within 15 days of purchasing my travel). The policy I chose also covers cancellations due to involuntary termination of employment and “requirement to work” (which involves cancellations due to work-related emergencies) – this coverage includes self-employed people and was a necessity for this trip, given that I’m traveling with a small-business owner.

Bottom line: Despite a few gaps in coverage (that some travelers may need to fill with a stand-alone policy), the coverage on the Sapphire preferred is robust and will probably be enough for many travelers. Plus, it’s offered at no additional cost (aside from the card’s $95 annual fee) and is automatic if you use the card to book the travel you want to insure (no additional paperwork necessary). If you travel several times a year, you’ll probably derive some peace of mind from this benefit, especially if you take pricey trips.

Are the changes an improvement or downgrade?

Chase is eliminating a benefit that had an easy-to-calculate monetary value (the dividend) and beefing up benefits with a value that’s harder to ascertain.

To find out if the card is still worth the annual fee for you, figure out how much you were getting from the dividend. If you were paying $95 to hang on to the card for a few bucks worth of dividend points, it’s probably time to reevaluate that, regardless of the changes.

However, if this is your go-to card for travel perks, trip protection and point transfers, it might now be even more valuable to you, even without the dividend.


-----
Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Sign-up bonus chasing requires credit caution

Posted by on

Travel card sign-up bonuses can range from 25,000 to 100,000 miles (for certain targeted, limited-time offers). Get a bunch of those, and you’re flying free around the world.

That’s why plenty of rewards enthusiasts chase sign-up bonuses as a hobby, regularly applying for multiple cards with lucrative sign-up bonuses simultaneously and then cancelling before the annual fees kick in. But this strategy isn’t for everyone, and would-be card churners need to know the financial and credit consequences.rewards trap

“I understand the desire to chase sign-up bonuses,” says credit expert Linda Ferrari. “Every time I log in to my airline accounts, there’s another amazing offer of how I will get 40,000 bonus miles by opening a new card and spending $3,000. … The only advice I have is that consumers become more aware of the impact the process of opening multiple accounts in a short period of time can have on their credit worthiness and scores.”

Still want to pursue sign-up bonuses? Done correctly, it’s a delicate balancing act between chasing sign-up bonuses and creating the stable credit history that makes new approvals possible. Here’s how to churn without getting burned.

Why churning can hurt your credit

The immediate effect of numerous credit applications are the numerous hard inquiries (or “pulls”) that appear on your credit reports when lenders check your credit. Those pulls are a “red flag” to lenders looking at your reports, Ferrari says, because they suggest you’re desperate for credit. They’ll temporarily ding your credit scores, too.

“How many [points you'll lose] depends on where your credit is at the time,” Ferrari says. “The higher your credit scores, the less points you will lose for a hard inquiry. The average is five to 10 points each inquiry.”

Hard inquiries fall off your reports within two years. FICO factors them into your score for just six months. But rewards churners often have a constant stream of new applications, and those will “clutter up” your credit reports with inquiries, says Ferrari.

“The highest credit scores I see are on reports that have very little clutter,” Ferrari says.

Another potential credit consequence is tied to the spending requirements — the amount you must spend in the first few months of card membership to get the bonus. If your credit limit is low compared to the amount you’re required to spend, you might come close to your credit ceiling, another factor that can drop scores.

Ferrari pull quote“In order to get the rewards, you have to spend, right?” Ferrari says. “How we use and manage our credit cards makes up 30 percent of our credit scores, and all it takes is one maxed-out credit card to drop a score by 75 points. Imagine what three to five maxed-out cards will do.”

Playing it safe

It’s possible to churn responsibly, those with experience say. But you need to take your circumstances and financial goals into account every step of the way.

1. Start small

“It’s good to get practice before you join the big leagues,” says Scott Mackenzie, owner of travel rewards site Hack My Trip.

Some seasoned bonus chasers may apply for as many as five or six cards in one go. Mackenzie recommends starting with two or three.

That lets you test your endurance for meeting all the cards’ spending requirements (which can be daunting) and tracking all their balances and due dates. You’ll also avoid getting into a lot of credit trouble right off the bat. If you’re rejected (perhaps because of credit report errors you weren’t aware of), at least you end up with just a couple wasted hard pulls instead of half a dozen. Plus, some banks ask on their applications if you’ve been denied credit with them before. Checking the ‘Yes’ box won’t automatically doom future applications, “but it would be great if you could just say ‘no’ to that question and say you’ve always been approved,” Mackenzie says.

2. Batch your applications

After your trial run, separate future applications into batches of several cards, says Ariana Arghandewal, founder of rewards travel site PointChaser.

“You’ll apply for maybe four cards at the same time from four different banks,” she says. “And you want to get [those applications] in at once. After 90 days, you can apply for four other cards.”

The advantage of simultaneous applications is that banks get spooked if they see fresh inquiries. Applying for several cards at once, in theory, ensures that banks won’t see the other cards you just applied for because it takes time for inquiries to show up on your credit reports.

“But I’ve heard other people say banks are smarter than that, that they see real-time updates in their system,” Mackenzie says.

Still, there’s another advantage to synchronized applications that has nothing to do with approvals:

“If all those inquiries are on the same day, they’ll drop off your reports at the same time,” Arghandewal says.

3. Be choosey

You don’t want to waste a credit pull on a sub-par bonus offer. Plus, not all cards will allow you to apply for a new, better sign-up offer if you’ve already been approved for a ho-hum offer on the same card. So, it pays to know when to pounce — and that comes from experience. You have to know that a card usually offers just 25,000 miles or points to know that an offer of 50,000 is worthwhile.

“That’s a strategy for a lot of things, whether it’s a credit card or buying a plane ticket,” Mackenzie says. “You need to always be searching around so you know whether an offer is a regular one or a good one.”

4. Respect the minimum spend
New cards obtained in quick succession means contending with multiple spending requirements standing in the way of your sign-up bonuses.Arghandewal pull quote2

“If you don’t meet the minimum-spend requirements, you’ve got these hits on your credit, and you don’t get the miles,” Mackenzie says.

Spending requirements might be chump change to those with high incomes or who can funnel work expenses through a card. Others can reach them, too, if they time their applications wisely. Mackenzie once timed a $10,000 spending requirement with a large tax bill and knocked out a couple more with wedding expenses last year.

Whatever you do, don’t use a sign-up bonus as an excuse to spend more than you otherwise would.

“If you’re a person who can’t handle a $10,000 spending requirement, and you’re not familiar with ways you can achieve that, don’t take that on,” Arghandewal says. “A lot of people go off and spend more than they need to.”

5. Get new cards, but keep the old

A long credit history strengthens FICO scores. So how do you maintain that with high card turnover? Have a core group of cards that you never close, Mackenzie and Arghandewal say.
Among their keepers are cards that offer travel benefits or anniversary gifts (like free hotel nights or companion fares) that offset the annual fee.

“If I can make it worth my while, I’ll keep a card if it pays for itself,” Arghandewal says.

Arghandewal also points out that American Express (a CreditCardForum advertising partner) will backdate your cards to your oldest account. So a brand-new card will register as a five-year-old account, if your oldest AmEx happens to be five years old. This unique policy can boost your average age of accounts and help stabilize your credit profile.

Mackenzie suggests using your keeper cards as a foundation for later churning.

“If there are four cards you want to keep, apply for those in your first year,” he says.

6. Don’t carry a balance — ever

If there’s one cardinal rule that grounds you while you’re off chasing bonuses, make it this one. Carrying a balance and accumulating interest charges will cancel out any rewards you earn.

“These cards have annual fees, they have high interest rates,” Mackenzie says. “They make their money somewhere. You don’t want to be the schmuck who’s paying for someone else’s rewards.”

7. Maintain a hands-on approach

Keep a watchful eye on all your accounts. You don’t want late payments marring your credit. Plus, you’ll want to keep your credit utilization in check, as high utilization weighs down credit scores. Even if you pay in full each month, a high credit utilization can still get reported to the bureaus because banks often report your balance the day your statement cuts – not the day you pay.

Mackenzie pull quote“Pay your balances off before the statement date so the balance that gets reported to the credit bureau every month is under 30 percent,” Ferrari suggests. “That way you will mitigate some of the point loss due to the new hard inquiries and credit.”

Arghandewal uses that strategy, making a payment on her cards every two weeks.

8. Don’t compromise bigger financial goals

Got plans for major loan applications? Scrub your accounts of anything that will give a lender pause.

“Manage your balance-to-limit ratios based on where you are in your life and when you plan to use your credit,” Ferrari says. “If you plan on purchasing a home or car, you will need to pay down your new credit card balances to under 30 percent, two or three months before you apply.”

And cool it on the churning.

“If you’re planning to apply for a loan in the near future, you don’t want to be applying for cards right before that,” Arghandewal says. “You don’t want to take that hit on your credit. It will affect your interest rate, and that’s not worth the rewards you’ll be getting.”


-----
Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

5 dynamic credit card duos

Posted by on

Each rewards card has its own strengths but, often, a tag-team strategy is best for maximizing rewards. While one card may shine in certain spending categories or provide glamorous travel perks, another might be more of a rewards workhorse for every-day purchases.

So it’s best to combine their powers. These five credit card duos work best in tandem.

1. Chase Freedom + Chase Sapphire Preferred

Think of the Chase Sapphire Preferred ($95 annual fee) as the super hero with special powers and the Chase Freedom (no annual fee) as the faithful sidekick.

The Chase Sapphire Preferred (in addition to earning you 2 points per dollar on travel and dining), has the ability to transform points earned on the card into real loyalty points for several airline and hotel programs, as well as Amtrak Guest Rewards:

Chase travel transfer partners

Because it’s a 1-for-1 transfer (each CSP reward point yields one loyalty program point), you can get a lot of value out of your points if you then redeem them wisely.

So how can you get as many points as possible to transfer to these programs? That’s where the Freedom comes in. It has rotating 5 percent categories, allowing you to rack up points for gas, home improvement purchases, online shopping and more. Once you have a bunch of points, transfer them from the Freedom to the Sapphire Preferred online:

transfer-pts

… then transfer the points again into the travel loyalty program of your choice.

The bottom line: The Freedom allows you to farm points, and the Sapphire Preferred allows you to dispatch them where they’re needed.

2. American Express Platinum + American Express Everyday

(American Express is a CreditCardForum advertising partner)

Are you a fan of the travel and insurance perks of the Platinum card (which carries a $450 annual fee)? The roadside assistance, concierge, $200 airline fee credit and lounge access can be quite valuable – but the point-earning rate on the Platinum isn’t that great (1 point per dollar spent).

The no-annual-fee Everyday card, meanwhile, earns Membership Rewards Points (MRPs), just like the Platinum card does. But it earns you 2 MRPs per dollar on groceries, 1 point per dollar on everything else and a 20 percent point bonus after you make 20 purchases with the card in a billing period. Once you hit that threshold, you can start padding your MRP balance quite nicely. The Membership Rewards program is versatile: You can use MRPs to cancel out charges, redeem them for gift cards, convert them to loyalty points in more than 20 travel programs or use them to shop online.

The bottom line: The Platinum packs the perks coveted by frequent travelers, while the Everyday card, for no extra cost, picks up the point-earning slack.

3. A 5 percent category card (like the Chase Freedom or the Discover it) + the U.S. Bank Cash+ card

If your goal is to earn as much cash back as possible, this combo will keep you earning a pretty steady 5 percent back (the highest you can get on no-annual-fee cards).

The Chase Freedom and Discover it (both with no annual fee) have 5 percent cash-back categories that change quarterly. You earn 5 percent cash back on up to $1,500 in purchases each quarter.

As an example, here’s Discover’s calendar for 2014:

Discover 5 percent Cashback Bonus Calendar 2014

And here’s Chase’s:

Chase Freedom 5 percent cash back calendar

So pick one (or both). Then supplement it with the U.S. Bank Cash+. This card is unique in that it’s customizable. You get to pick two 5 percent categories (good for up to $2,000 in net purchases) and one 2 percent category – and change them each quarter:

US bank cash+ 5 percent

That means you might be able to plug some of the 5 percent holes left in the other cards’ calendars and get 5 percent back on a variety of spend categories year round.

While your Discover it is getting you 5 percent cash back on holiday shopping in Q4, your Cash+ could get you 5 percent on restaurants. While your ‘it’ gets you 5 percent on restaurants in Q1, you can recalibrate your Cash+ for department stores. You might also be able to flex both cards for a single project. For example, if you’re getting a new house, you might use the home improvement category on the ‘it’ or Freedom and then switch to the Cash+ card to get 5 percent back on all your new furniture.

The bottom line: With a little planning and willingness to maximize categories, you’re getting 5 percent on multiple categories year round. The Cash+ card adds the flexibility lacking in the ‘it’ and Freedom cards.

4. American Express Blue Cash Preferred + Fidelity Rewards American Express

Consider this duo the counterpoint to the 5 percent-powerhouse combo above –for those who don’t want to mess with changing categories.

The American Express Blue Cash Preferred ($75 annual fee) gives you a rather high 6 percent cash back at supermarkets and 3 percent back at U.S. gas stations and select department stores year round (no rotating categories). For all other spending, you’ll use the Fidelity Rewards American Express card (no annual fee), which lets you earn 2 percent back on everything. You will need a Fidelity cash management, brokerage, 529 or retirement account to get the card. But because Fidelity’s cash management account essentially functions as a checking account, you can consider this card a way to earn 2 percent cash back and have your earnings automatically deposited.

Don’t have a Fidelity account and don’t want one? The no-annual-fee Quicksilver Cash Rewards card from Capital one gives you 1.5 percent cash back on everything.

Bottom line: You’re getting elevated cash back in three very common spending categories and 2 percent on everything else. No need to plan for categories – you’ll reach for the same card for the same types of purchases year round.

5. Chase Sapphire Preferred + Starwood Preferred Guest card

Airline cards with their generous sign-up bonuses can be great for those who live in a hub and know which airline they’re using for a big trip. However, if you’re a frequent traveler but not a frequent flier on a single airline, you’ll need reward points that are a bit more flexible.
Both of these cards let you transfer your points into travel loyalty programs. We covered the CSP’s partners above. The Starwood Preferred Guest card ($65 per year) covers more than 30 airlines (and all but a couple let you transfer on a 1-for-1 basis). Between these two cards, you’ve got United, American, Delta and Southwest covered, in addition to a slew of international carriers. Marriott, Hyatt and Starwood hotels are covered, too. If your carrier or hotel isn’t on the list, you can also use your CSP to book travel via Chase Ultimate Rewards – and get a 20 percent discount.

One caveat is that you’ll basically have two currencies of rewards – one cache with Chase and the other with AmEx – and no ability to move them from one card to the other before converting to airline miles. You might be able to find a work-around, though. For example, you could transfer points from both cards into British Airways Avios – and then redeem your Avios with American Airlines (a British Airways partner).

The bottom line: Together, these cards encompass nearly 40 hotel and airline transfer partners, and Chase Ultimate Rewards offers a back-up option for any travel that’s not included. That means just two cards are basically doing the job of a wallet full of airline and hotel cards.

What are your favorite card combos?

The best card combination for you will depend on your rewards preferences and your tolerance for annual fees, and our list is by no means comprehensive. Tell us in the comments: what’s the most dynamic duo in your wallet?


-----
Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.