Credit card quandry
February 9, 2017 10:31 AM   Subscribe

I have a credit card from a long way back (about 15 years now) that doesn't really do anything for me - no airline miles, no points, etc. Is there any point in switching over to a card that gets me air miles or is it a fool's errand?

I know there is a benefit to having old credit. I've paid the card off a few times, then put a few things back on it. The interest rate is very high - %27.98. I have another credit card with my bank that has a more reasonable interest fee and also has a higher balance that I'm trying to pay down.

What I'd like to do is pay off this old card and stop using it, and then pick up a card that works to earn me air miles for overseas travel. (I currently have an account with Delta, and they would very much love for me to get a credit card with them, judging by the amount of mail they send me about it.) I think the bank that we have our mortgage through also offers a card that gives air miles in some way, so that might be another option.

But I'm not interested in gaming the system out to the level that I've seen the truly devoted people go to, like taking short flights to and from airports so you can go to Singapore for $5, or whatever. Is it worth it, or is the system rigged against the more casual user? Do old tricks like putting your mortgage or water bill on the card and then paying it off monthly still work?
posted by PussKillian to Work & Money (17 answers total) 6 users marked this as a favorite
You can open multiple cards.

Open a new rewards card, whatever card you want, and start using it for your purchases going forward. Always pay it off in full every month. (New cards often have balance transfer promos, so read that stuff VERY CAREFULLY if you want to do that and get that old high rate balance transferred.)

Stop using your old card with the high APR and work on paying the balance down completely. You can call that credit card provider and ask for your APR to be lowered. They might not do it but you can always ask.

I'd also stop using the low rate card as well. It's not doing anything for you. Just pay the balance off and put it away somewhere. Don't close any of the old accounts.

Multiple lines of credit are really not a problem, and are good for your credit score, as long as you're responsible with them. I've got something like 5 or 6 credit cards but I only use two of them. Excellent credit.
posted by phunniemee at 10:39 AM on February 9, 2017 [4 favorites]

You can get benefit from a miles or points card without spending a bunch of time gaming the system. IMHO the most important things are:

1. Make sure you pick a card that gives you rewards you can actually use! For example, if you barely ever travel (and don't want to), an airline miles card is probably a bad choice. Or even if you do travel, don't pick a card that gives you miles on an airline you can't/don't fly. I see people make this mistake suprisingly often. It doesn't matter how many points it gives you if you can't use them effectively.

2. Don't dismiss cards with an annual fee out of hand, but do a little bit of napkin math to determine whether the value you'll get is greater than the fee. I have several cards with fees, but I feel that I still come out ahead.

3. Be realistic about how much you'd use any extra benefits of the card. Most people never use the concierge services. Airline lounge access is great if you travel a lot, but worthless if you don't (or if it gives you access to lounges in airports you never go to). That long list of benefits may look impressive, but it's possible that only a handful will actually be useful to you.

4. Auto-paying bills is a great way to easily earn points, but watch out because some companies will charge you a fee to do this. In my experience, the fee is usually higher than the value of any points I'd get, so it's not worth it. For stuff that doesn't charge a fee for using a credit card, go for it.

Also, keep the old card open (as long as it doesn't have some huge annual fee) to maintain your age of credit history. Just use it a couple of times a year to keep them from canceling it on you.
posted by primethyme at 10:43 AM on February 9, 2017 [1 favorite]

As far as which rewards card specifically, my parents are big airline miles cards people, which I think is stupid, since neither of them ever travel. I do cards that give a bonus cash back % option because I can always find a way to use money. Airline miles, personally, not so much.
posted by phunniemee at 10:44 AM on February 9, 2017

Duly note: for mere mortals like myself, the number of miles you get from signup bonuses vastly eclipses miles from spending. Certainly keep the old card, but if you get into the "hobby", you'll open and close a few cards/year.

I do this, and fly almost not at all. Gets me and a companion a free flight somewhere nice annually.
posted by booooooze at 10:47 AM on February 9, 2017 [3 favorites]

Yeah, airline miles cards are all about the signup bonuses unless you fly a lot. Some of them do have nice perks though; most give you a discounted companion ticket at the very least. Delta's AmEx (to pick one example I'm personally familiar with) gives you bonus miles for buying Delta filghts with the card, priority boarding, a free checked bag, and it lets you pay for all or part of any flight with your miles. If you fly Delta a lot it is probably worth the $95 a year (first year's free).

For cash rewards, I recommend the Citi Double Cash: 2% cash back on everything. Add a Chase Freedom and/or Discover it for their quarterly 5% categories (and Discover doubles your rewards for the first year).
posted by kindall at 11:02 AM on February 9, 2017

Keep the old card, don't spend on it. Or if you do, spend once a year and pay off immediately-- like, don't wait for the statement, just pay it as soon as the transaction clears.

Nthing signup bonuses > everything else. But be sure that you can reasonably spend enough on it-- my most recent was $4k in 3 months, and the airline card before that was $2k in 3 months. (Though I had plane tickets worth that much in my cart at time of application.) I've almost missed signup bonuses because I've almost forgotten to use the new card.
posted by supercres at 11:06 AM on February 9, 2017

If your old card is from a bank that offers different types of cards, you may be able to convert it to one that has rewards, and keep the card's credit history. I was able to convert my oldest card, from Citibank, to one of their dividend rewards cards, and my card number didn't even change.
posted by zsazsa at 12:00 PM on February 9, 2017 [3 favorites]

One way the system might be rigged against you is if you carry a balance and end up using a card with a higher interest rate because it offers you points or miles. If you carry a balance, the lowest interest rate including annual fees is priority over rewards that are giving you pennies for dollars. Since you travel overseas, no foreign transactions fees is also something to prioritize. There are places on the web like CreditKarma and NerdWallet that will help you find the best credit card for you and your situation. Remember that you don't usually get rewards for interest paid, only for purchases.

Once you are no longer carrying a balance, then you can look at rewards. Most places will not let you put your mortgage on credit cards, but your water bill probably will. I have a cash back card and I put all of my monthly subscriptions on there like netflix and graze. If you have any of your bills on autopay from your checking account, you could switch them over to the credit card and then switch the payment in your checking account to go to the credit card instead. If you don't use autopay now though, don't worry about it.

Chase Sapphire is one to look at.
posted by soelo at 12:04 PM on February 9, 2017 [1 favorite]

Do not get a miles card! The system is definitely rigged against you, in that you can never actually book your miles (no matter how flexible you are on dates/times, unless you are doing something unpopular, like Sweden in winter, but those tickets are cheap anyway) plus the airlines (I typo'd air-lies, heh) are constantly demanding more and more miles for both domestic and international travel and blocking out more and more blackout dates.

I highly recommend the Citibank Double Cash card - you will get 1% cash back when you spend and another 1% when you pay it off, so that's a true 2% refund on all your spending. Nothing beats cash back, and you don't have to worry about chasing down some "benefits" that the card issuer is actively preventing you from using. (But watch out for the foreign transaction fee. If you travel a lot internationally, this card is not ideal.)
posted by rada at 12:05 PM on February 9, 2017 [1 favorite]

If you're the kind of person who hasn't given their credit card thought for 15 years and has a tendency to carry a balance absolutely do not get a miles or points card. Those cards can be profitable if you pay attention to what's on offer, regularly change cards, and bay off your balance in full every month. Otherwise they are more trouble than they are worth, and potentially very expensive.

Transfer any balance you are carrying to a 0% intro card, and pay it off before the 0% rate ends. Then switch to a Citi Double Cash, which is effectively 2% off everything you buy, no muss no fuss.

The value of air miles is much less than it used to be. Introductory travel card offers can be lucrative, but routine use will not get you international travel. The Double Cash is much simpler and equally if not more rewarding approach for most people.

Never carry a balance on the Citi Double Cash or any other reward card.
posted by caek at 1:00 PM on February 9, 2017 [1 favorite]

I fly a fair amount, almost exclusively on Delta because I'm closest to ATL and it's like I don't have a choice, even. I got a Delta Amex Sky miles card for the perks like free checked bags - near as I can tell I might get a free flight to Albuquerque if I live long enough and I'm flexible when I want to go.

For rewards I haven't been able to beat the Citi Double Cash card. I have started using it for most everyday purchases, pay it off weekly, and get a noticable amount of cash back that I can just plow back into the the account (i.e. use it to reduce the balance).
posted by randomkeystrike at 3:43 PM on February 9, 2017

I love my Chase Sapphire card. It's not limited to any particular airline. You just apply the points you have towards whatever you want, including flights but also hotels, etc. I try to get as many of my expenses on it as I can and it adds up enough that I've gotten several hundred dollars of free travel off it every year I've had it. I never carry a balance. I'm not sure what they get out of me beyond the modest yearly fee, but I've gotten a lot out of them.
posted by fingersandtoes at 3:45 PM on February 9, 2017

If you are currently carrying a balance and paying interest on your balance, do not get any kind of Rewards credit card (miles, points, cash back etc) until you have fully paid off your balances. Otherwise, you are essentially buying miles/points at the rate of your existing card's interest rate, which is well below the value of those miles (see exception below *1).

IF you can pay off your balance within a relatively short time such as 12-15 months, I'd second what caek said above and get a 0% balance transfer card such as Chase Slate and transfer your balance there (I suggest Chase Slate specifically because this card is one of the few that offers 0% interest and 0 Balance Transfer fee as well). Then, work to pay that off quickly before the 0% promotional rate period ends.

(*1 - exception) If you can get a credit card with a large sign-up bonus such as 50,000 miles/points, the initial minimum spending you put on to get that bonus it is usually small compared to the miles you get, so the math for RoI is better here. But after that, I would keep 0 balance on the rewards card and focus on paying off your existing card with the interest-bearing balance.

Depending on your financial situation and credit score, you may be able to employ both the strategies in parallel -- i.e. get a 0% balance transfer card AND a high-signup-bonus Rewards card at the same time. This could be a way to keep yourself motivated to pay off that 0% balance quickly while still earning the sign up bonus on the rewards card. But think carefully about your financial situation before taking the plunge as it can lead to a bad outcome if you don't/cannot stick to the plan.

Bottom line, never carry a balance on a Rewards card.
posted by thewildgreen at 11:03 PM on February 9, 2017 [1 favorite]

To be honest, it depends on your spending and travel patterns.

Are you a big spender (>$10K a year in credit card spending), AND do you pay off your balance each month? If so, then airline/ hotel/ cashback cards will be an excellent choice. My partner and I fit this pattern and we have flown on several major 10hr++ flights on business class and stayed in 4* hotels for very little money.

If you're not a big spender, BUT you do pay off your balance each month, then a cashback card is probably better for you. Airline/ hotel cards generally require a large amount of points before you are able to redeem them. The hassle of getting an airline/ hotel card outweighs its benefits if you're not accumulating very many points, in my opinion.

If you don't pay off your balance each month, don't get a rewards card. Get a card with the lowest interest rate possible.
posted by moiraine at 1:09 AM on February 10, 2017

I used to have a United-related card, and I dumped it for the Chase Sapphire card.

An airline miles card is only useful if you travel a LOT -- and that's because of the travel perks that come with it (priority boarding, lounge access, etc.) not because of the miles you accrue with your spending.

Even if you accrue a million "miles" on your card, it will never confer upon you elite status, i.e. gold/platinum, as that is reserved for people who actually travel and pay for tickets, and without status, you can almost never upgrade regardless of how many miles you have in your bank.

And with the amount of miles required for an average domestic flight increasing pretty regularly (just tried to book a round trip from DC to Miami on miles -- I currently have 66k on American and couldn't find a ticket under 70k miles round trip that didn't leave at 3 am), the supposed "free" travel benefits are almost never worth it unless you spend tens or hundreds of thousands each year on your card.

The Chase Sapphire card is a much better deal, as an earlier poster mentioned. You can use the points toward any type of travel (plane ticket, hotel), can easily mix/match with cash, and I've found that they have a surprisingly wide array of options available with few restrictions. The annual fee is worth it for us.
posted by GorgeousPorridge at 5:57 AM on February 10, 2017

I'm moderately happy with my Southwest card, but I also use that as nearly my sole method of purchasing, and can rack up a lot of miles on it. I've found that the introductory bonus they give you (50,000) was enough for a roundtrip to Portland from Baltimore. If you know someone who has a Southwest card, then they can hook you up with that bonus. I've had one problem with miles, where I was 100 or so short, which would cost me some hundreds of dollars to purchase, and it ended up being cheaper just to buy the ticket in cash. Obviously Southwest is only worthwhile if you fly within the US or their handful of other locales.
posted by codacorolla at 9:41 AM on February 10, 2017

For reference, it's been about a year of accumulating points from near 0. I have 29,000 throughout that period, and a trip to Portland from Baltimore in June with their cheapest fare (although it doesn't really matter too much with SW) is about that amount. So, in my experience, I get about one free flight per year.
posted by codacorolla at 9:47 AM on February 10, 2017

« Older Transcranial magnetic stimulation for autism?   |   How to be useful during a brief (post-birth)... Newer »
This thread is closed to new comments.