Credit Card Rewards for Beginners - What to Know Before You Start
Credit card rewards have become very popular, and due to their popularity, there is a huge selection of cards out there for you to pick from. If you’re trying to get started, the number of cards that exist can be very intimidating and you can find yourself asking the question, “Where do I even start?!”. So, let’s take some time to break it down to help you get started and begin earning those points towards your future travel.
First and foremost, when getting started with credit card rewards there are two main paths you can go down. The first path is cashback cards which will give you a certain percentage of cashback per eligible dollars spent on purchases. These cards will have a base earning rate and then have specific categories (i.e. groceries, restaurants, gas stations, etc.) that earn a higher cashback rate. The second path (and the one that we’ll focus on) is travel points and miles cards. These cards either allow you to earn a flexible points currency (i.e. Chase Ultimate Rewards, American Express Membership Rewards, Capitol One Miles, etc.) or points tied to a particular brand’s point currency (i.e. Hilton Honors points, Marriott Bonvoy points, Delta SkyMiles, etc.). This will be your first big decision that you’ll have to make, cashback or travel rewards.
Now if you’re new to the blog, my chosen strategy is earning points to use on travel. At one point when I was in my early 20’s I was on what they call team cashback, but now, I enjoy using points that I earn on our everyday spend to take nice trips when we travel domestically and abroad. And that’s why I feel a lot of people choose to go down the path of travel points and miles. It’s a creative way to have your cake and eat it too, so to speak. I remember taking a business trip and I stayed in a pretty nice hotel. And I remember thinking in that moment that I would love to stay in nice hotels or fly in business class (or even first class) and pay a fraction of the cost or even better….nothing at all!
Before I run away with this and dive too deep, let’s go back to square one. For the purposes of this blog, I’m going to focus on earning travel rewards because my focus has been earning points and miles so that my wife and I can travel nicely and not pay the astronomical costs that come with doing so. To start your journey let’s focus on one card and one goal. Do you want to start off with a flexible points currency (points currencies that have multiple different transfer partners that they can be transferred to)? Or do you want to focus on earning points with a particular brand (i.e. Hilton Honors, Marriott Bonvoy, or a particular airline)? Since we’re focusing on one card for now, my tip would be to consider a flexible points currency card since these cards have multiple transfer partners that you can transfer your points to whether it be an airline or a hotel. That way if on one trip you just need to cover flights because you know you’re staying with family or a friend, your points can go towards your flight. Or if on another trip you’re road tripping so you just need points for a hotel, your points can go towards your accommodations.
One thing I wish I had done differently when I first started out with credit card rewards was to have been more open to credit cards with annual fees. Because I was a “broke” college student when I first started, I did everything I could to avoid annual fees, even if it was $95 per year. The reason I would say consider an annual fee card is because normally they have better perks and some will even have credits that can effectively cover the cost of the annual fee. Now I’m not saying jump straight to a premium card like the Sapphire Reserve or the American Express Platinum card (unless that’s what you’re looking for then don’t let me stop you) but maybe consider something that has an annual fee between $95-150 per year. But if you want to start smaller, then there are plenty of no annual fee cards out there that can get you started and can either be upgraded later, or you can choose to get a separate card in the same ecosystem to accompany that existing card.
I’ll list out a few cards from each category, no annual fee: moderate annual fee ($95-$150 per year), and then high annual fee ($150 and up). I’ll also put next to the card if it is a transferrable points card or brand specific points card. For cards that my wife and I use the name of the card will be a hyperlink that is tied to our referral links should you decide those cards are a good fit for you. We may get a small bonus for the referral should you get approved, so thank you in advance for supporting the blog. Now, here are some cards you can consider to start your journey listed in no particular order. The annual fees listed below are the fees at the time of writing this blog.
No annual fee cards:
- Chase Freedom Unlimited (earns cashback but can be transferred to a higher tier points earning Chase card like the Sapphire Preferred or Sapphire Reserve)
- Chase Freedom Flex (earns cashback but can be transferred to a higher tier points earning Chase card like the Sapphire Preferred or Sapphire Reserve)
- Hilton Honors American Express (earns Hilton Honors points)
- Capital One Savor (earns cashback but can be transferred to a higher tier points earning Capital One card like the Venture X)
- Delta SkyMiles Blue American Express Card (earns Delta SkyMiles)
- Citi AAdvantage MileUp Card (earns American Airlines miles)
- United Explorer Card (earns United Airlines miles)
Moderate annual fee cards:
- Chase Sapphire Preferred ($95/year) (earns transferrable points)
- Capital One Venture Card ($95/year) (earns transferrable points)
- Marriott Bonvoy Boundless ($95/year) (earns Marriott Bonvoy points)
- IHG One Rewards Premier ($99/year) (earns IHG One Rewards points)
- American Express Green Card ($150/year) (earns transferrable points)
- Hilton Honors Surpass American Express ($150/year) (earns Hilton Honors points)
High Annual Fee
- American Express Gold Card ($325/year) (earns transferrable points)
- Capital One Venture X ($395/year) (earns transferrable points)
- Hilton Honors Aspire($550/year) (earns Hilton Honors points)
- Citi Strata Elite ($595/year) (earns transferrable points)
- Marriott Bonvoy Brilliant ($650/year) (earns Marriott Bonvoy points)
- Delta SkyMiles Reserve ($650/year) (earns Delta SkyMiles)
- Chase Sapphire Reserve ($795/year) (earns transferrable points)
- American Express Platinum Card ($895/year) (earns transferrable points)
These are just some of the many cards that are out there. The goal was to give you an idea of what’s out there in each category. In my post “How to Save Thousands on Travel with Credit Card Points – My Experience”, I share specifically what cards my wife Amie and I use in our daily setup and why we use those particular cards. Feel free to read that post so you can get an idea on how our credit card strategy works.
Now, back to our goal – to help you find your first card. For now, let’s focus on getting one card to keep things simple. Trying to get too many cards can get overwhelming and it’s also not good for your credit score. Think of your travel goals and decide if you need airline miles, hotel points, or a flexible points currency to meet your travel needs. Once you narrow it down to one type of point currency you’d like to focus on, next would be to narrow it down further to a card that earns the points you’re looking to earn. Another thing to consider is the sign-up bonus on the card and the spending requirement to get said bonus. You’ll want to make sure that your normal spend is enough to meet this requirement. Now the advice on this page is not financial advice. You don’t want to go out spending money you don’t normally spend just to meet a sign-up bonus amount. That defeats the whole purpose of why we’re doing this, plus if you pay interest on that amount because you carried a balance, the value of your points is essentially wiped out. So please handle this responsibly! One thing I’ve done in the past for sign-up bonuses that require slightly higher spend, is I will hold off on getting a card I’m looking to add to my wallet and time it around a big purchase that I’m planning or if I know a big bill will be coming up that I can put on the new card.
Hopefully you’ve now figured out what card is going to be your first points earning credit card in your wallet. The next step is to apply and get approved. From there, when you receive your new card, you want to start using it so that you can meet the spend requirement for the sign-up bonus. Congratulations you’re now on your way to earning points for your next trip, and more importantly you’ve begun your journey with credit card points that can be used for all trips in the future! As this blog continues to grow, we’ll dive into deeper multi-card strategies, but feel free to contact me via the contact page if you have questions or tips and tricks of your own that you’d like to share!
