Let's get the disclaimers and downsides out first. It is important to not overspend on credit cards just because you have them. I keep a very strict rule of paying off my monthly balance and would recommend that strategy. Also, your credit score matters, opening credit cards doesn't automatically mean that your credit score will go down, because additional credit is a positive for your score, but in the short term it will show up as a check on your credit. New credit cards also decrease the the average age of your credit lines (PS. don't get rid of credit cards you've had for a long time because that will have the same affect). So if you are planning to buy a house in the next year now might not be the best time to maximize a credit card point strategy.
My Number 1 credit card recommendation is....
Chase Sapphire
Fees: $95 after the first year
Perks: 40,000 points after you spend $3k in the first 3 months
Double points on dinning and travel
No foreign transaction fees
Extremely flexible points!
The last perk is worth emphasizing because flexibility is very helpful when you earn points with other cards but need additional points for different accounts. For example, I've traded in Sapphire points (1 for 1) for United Miles and Marriott points. Other accounts that you can transfer points to include Southwest airlines, Hyatt, Ritz Carlton, and others (though I've basically listed the big brand names here). There are other benefits as well (you can trade in for cash back, or use points to make direct purchases on amazon.com ect.) but I think the best way to use the point is for booking travel.
Our big win...Flying 1st class to Geneva, Switzerland and Economy from Vienna, Austria for ~$500
Around January 2012, yes I am a planner, I started looking into how many United points we would need to fly to Europe in August 2013. Over the next 6 months Paul and I each signed up for 2 credit cards, the Chase Sapphire and the United Explorer card. The United Explorer card came with a 40k sign up bonus at the time (its 30k right now). Between the two big sign up bonuses we had 80k in points each. Then we spent exclusively on the Sapphire card. One way to increase points is to shop via their online mall - an online portal where you click on a link to a store and it takes you to that store's website and if you buy something you get extra points. For example, I've purchased shoes through onlineshoes.com after going through the shopping portal and got 10 extra points per dollar spent, say the shoes were $70, then I got 700 bonus points, along with one point per dollar spent, for a total of 770 points for one purchase.
Between the sign up bonus points and the additional points we got through spending I was able to book two round trip tickets for our trip to Europe in August 2013 for a total of $284 in taxes and fees! I value the total cost of the tickets to be about $3,000 or $1,500 each. The real kicker? We flew first class from Dulles Airport to Geneva Switzerland! That's right, lay down seats, free drinks, and an ice cream sunday. So, while I would have never paid for first class tickets (which I booked the tickets the cost of the first class ticket was like $5,000 each for one way) it was a great benefit and a really special way to start off our trip. (Although, it cost more in points and I might save them next time and fly economy both ways.)
Cost of our flights in points:
1st class tickets to Geneva: 67,500*2=135,000
Economy tickets from Vienna: 30,000*2=60,000
Total in points: 195,000
Total points via sign up bonuses: 160,000
Additional points earned through regular spending and strategy shopping: 35,000
Cost of our flights in cash:
Total cost in credit card fees: $190 (I love the sapphire card so much we kept it rather than canceling before we had to pay the fee this year, however, we canceled the united explorer card rather than pay the fee).
Total cost for round trip flight: $284
Total cost in cash: $474
I said before I value to the round trip flight to Europe at around $3,000, and adding the credit card fees and the cost of the flight that equals $474, with a total benefit to me of $2,526 (3,000-474).
Is there a catch? Not really. Both of the flights that I booked, the one to Geneva and from Vienna were "saver awards" as oppose to standard award flights, which means that they required less miles to book them. However, I had no issue finding saver award flights on United. In fact, now that we've been at this long enough we've also flown to San Francisco (with less advanced planning) on saver awards at 15,000 points per person each way or 60,000 points total. I think it might be harder to get flights in and out of certain cities in Europe, for example, maybe Rome or Athens, but that might be an opportunity to hunt around a bit. Also, I have looked at using award points to go to places in South America and have found it harder to find saver awards. I think the best benefit it flying to Europe, if you want the big win.
There are a lot of websites that focus and strategize much more with reward points. To some extent it makes my head spin. I was very focused on getting us to and from Europe and starting with a goal was helpful for keeping me sane as I jumped into the world of reward points. What would your goal be? Good luck!!
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