May 28, 2016

The Three Best Credit Cards for Beginners

I am often asked "what is the best credit card to get."  The answer is typically "it depends."  Let's assume that you meet the minimum criteria to more aggressively apply for credit cards in order to earn points for award travel.

1)  You have a job that pays you money consistently
2)  You don't have credit card debt or carry a balance ever
3)  You desire to travel
4)  You have a high credit score (call it north of 720 - this one isn't a deal breaker but will certainly help)

Assuming you meet these four criteria,  here is where I would start:

Chase Freedom:

This is a great place to start as one of the most powerful points earnings cards comes with no annual fee.  The current bonus will net you 15,000 points after spending $500 in 90 days. The card enables you to earn 1x cash back for everyday purchases.  You'll get 5x on specific category bonuses each quarter which is an easy 30,000 points per year.  The kicker is that the cash back can be transferred to Ultimate Rewards points if you have the Chase Sapphire Preferred (or another Ultimate Rewards earning card such as a Chase Ink card)  making this one of the most powerful card duos on the market.  You can then leverage the Ultimate Rewards points to transfer your points to a variety of travel partners (United, British Airways, Hyatt, etc...).  When you redeem those points for travel you're likely to earn a return far greater than the 1% cash back.

Chase Sapphire Preferred:

As one of my first posts ever, I wrote about the value of the CSP.  The value proposition remains solidly in place.  Sign up for the card and you'll receive 50,000 Ultimate Rewards points after $4,000 in spend.  You'll also receive 5,000 UR points for adding an authorized user.  That makes the signup bonus worth 59,000 UR points.  You'll earn 2x UR points for spend in the travel and dining categories...which is most of my personal spend.  The 59,000 UR points can be combined with the 15,000 you earned from the Freedom card and the transferred to the partners mentioned above.  The annual fee (waived for the first year) is $95 but given the everyday earnings power of this card, I think it's worth keeping the card.

American Express Starwood Preferred Guest:

Many of you know that Starwood if my favorite hotel chain.  I've been an elite member for over ten years, I'm a current former stockholder and former employee.  I've also held this card in my wallet (and paid the $95 annual fee) for over ten years.  The signup bonus is pretty great - 25,000 SPG points after spending $3,000 in the first 90 days.

That means your total haul will be 28,000 SPG points.  That is enough for a couple of nights at a high end W or Westin.  You can also transfer the points (in 20,000 mile increments) to dozens of airline partners.  When doing so, you'll receive a 5,000 mile bonus meaning 40,000 SPG points will you get 50,000 airline miles.  While there are no category bonuses on the card (beyond spend at SPG properties and Uber) it  is worth keeping the card given the extreme value (almost 2.5 cents IMO) of SPG points.

If you and your spouse picked up these three cards each, you would have 164,000 Chase Ultimate Rewards points and 56,000 SPG points.  You could leverage the UR points for roundtrip economy tickets to Europe on United.  Then leverage your SPG points to get 2-5 free nights at SPG hotels.  All for free.  If you are planning a honeymoon, a special anniversary trip, or just want to get away for a bit, this combination of cards will take you VERY far.

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