I have been asked the question many times, “What is the best card to use?”. Every time this question is asked of me by one of my friends I end up giving the standard answer…”It depends.” This usually leads to a longer discussion about goals and what they want out of their rewards. In my post regarding developing a rewards strategy, I tried to lay out the steps a person should consider when choosing their credit card(s). Tonite, I want to share with you what cards I use and more importantly WHY I use them.

Goals and Old Strategy…
Before I talk about the specific cards in my wallet, I think its important to understand my goals. My goal for my credit card rewards is to get a round the world airline award ticket in business class. This is a very specific goal that points me in the direction of cards that offer programs that turn points into air miles in a variety of frequent flyer programs. This is also helped me develop a specific strategy of targeting airline, hotel, and American Express point programs. Originally, I wanted to earn as many frequent flyer miles as possible. This meant that I would fly the same airline, sign up for the credit cards with bonus miles, and earn American Express and hotel points as a secondary strategy as a way of getting more air miles. The problem was that I focused on a specific airline instead of focusing on a program that was flexible and gave me options in choosing the best airline miles. It was only after I realized that the airline programs were being devalued that I knew I would have to change things up. What I wish I would have realized was the flexibility of the SPG starpoint.

What I carry currently and how it helps me….
In my wallet, I carry two credit cards that I consider to be among the best for maximizing my rewards – the Starwoods Preferred Guest (SPG) American Express Card and the Schwab Invest First Visa Card .

The SPG amex card allows you to earn 1 point per dollar spent. There is a 10,000 point sign up bonus. You can redeem SPG points for gift cards, buy flights with points, hotel stays, or you can transfer points to miles in most major (over 30) frequent flyer programs. It is these last two things that I listed that I want to discuss further. If you’re interested redeeming for a hotel room, you can do a straight award starting at 3,000 points depending on the category hotel you choose. A much better option is to look at the cash and points redemption option. At certain Starwood properties, you can get a room for a small amount of points and a reasonable price. I’ve seen awards start at $60 a night plus a couple thousand points. Looking at the big picture, this let’s your points go further and doesn’t cost you much especially when you are talking about burning 50 – 60 thousand points at a category 4,5, or 6 hotel for a few nights or paying $60-100 a night plus 3,000 points. The cash and points deal is really good. Another fringe benefit is redeeming is if you redeem for 4 nights, you can get the 5th night free. If you wanted to use this card just for hotel points, it would be a great card to use, but I want to point you in the direction of transferring points to airline miles.

With Starwoods, if you transfer 20,000 points to participating airline programs , SPG will add another 5,000 bonus miles to the transaction. This effectively turns the SPG Amex card into a 1.25 point per dollar card if you redeem in 20,000 point increments. Some will argue that cash back cards are better. I would argue that the value of travel points is when you start talking about redeeming for premium class seats on airlines. I highly recommend that you don’t use miles or points to redeem for domestic coach seats unless you urgently need seats and can’t afford to buy the tickets.

An Example Calculation
Business Class seat on NWA/DL to Taipei, Taiwan – $7167.02
Dollars to spend using average cash back rate of 2% to purchase this ticket – $358,351
Air miles required to get a saver class award ticket – 120,000 for a round trip
Starpoints required to redeem for NWA seat – 100,000
Cost for obtaining those 100,000 SPG points – A maxmium of $100,000
Return on 100,000 starpoints for a $7,167.02 premium seat – over 7%

The above example is a worst case scenario. If you have status you are earning points are a far greater rate through bonuses when you stay with at SPG hotels. Your return % could be much greater than 7%!

One other way to quickly obtain points is to purchase them. . I usually don’t recommend this, but this will help me leap frog towards my goal quicker. I can get 20,700 points for $700 or I can run $20,000 through on the Amex card and get 20,000 points. (20,000 is the max points that may be purchased in a year) It might take awhile to run 20k in expenses and it would depend on your immediate need for points. The US Mint Strategy I talked about earlier will help you quickly run expenses through.

Pitfalls of this card….
There are some pitfalls that I have chosen to live with regarding the SPG card. First, it is an American Express. AMEX is not as widely accepted as Visa or Mastercard. Second, through credit card transactions only, I get 1 point per dollar. Other cards give certain bonuses for gas and grocery purchases whereas the SPG is a straight 1 point per dollar.

How I mitigated the pitfalls
Since I realize AMEX isn’t accepted everywhere and because I have Schwab Checking, Brokerage, and Savings accounts. I decided to get the Schwab Invest First Visa card. This is a straight 2% cash back credited to the brokerage account every month. Now one of the cool things about this card is that there is no foreign transaction fees charged. So when you go overseas, you’re not stuck paying the ridiculous fee for using a credit card.

In my next credit cards post, I will talk about my secondary strategy to complement my reward programs earnings.