Credit Card Rewards: Before You Apply, Ask Yourself These Questions

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There used to be a time when only the true “Road Warriors”, or careerists who traveled non-stop, collected rewards and were able to use them for personal travel.  While that still helps accumulate points quickly, that isn’t the only way to get free travel “stuff” anymore.  Now there are many credit cards that provide outstanding discounts that can make that family vacation a reality.  Before you pick the right one, here are a couple questions to consider.

1. Is it more important for you to accumulate airline miles, or hotel points?  
2. Do you tend to fly to your vacations, or drive?
3. Do you like to stay in 4 star “resort style” properties, or are 3 star properties that may not have the fancy pool, but offer free breakfast okay?
4. Are there any big life events in your future?  Perhaps, a wedding, anniversary, or a family reunion that you would really like to splurge on, but you could use some serious rewards to help defray the costs.  If so, where will they take place?  
5. On the flip side, are there any big life events that you would like to use a rewards card for to rack up a bunch of points at once?  College or home remodels come to mind.

After determining which is most important, hotel or airline points, pick a card that works for you.  Here are a couple of important things to consider.

1. What is the Annual Percentage Rate (APR) of the card you are applying for?  Many cards offer an introductory rate, then balloon the APR.  Of course, try and pay your bills monthly.  If you cannot (stuff happens), make sure your rate is under 15.9%.
2. What is the annual fee for the card?  Nine times out of ten, the card company will waive the first year’s fees.  After that it can be $50 to $500 per year, whether you use it or not.
3. What is the maximum credit limit on the card?
4. What additional benefits does the card have?  Here are some benefits to look out for…

• Free travel insurance
• Free checked bags on your airline
• Travel discounts including rental cars, meals, tickets and shopping.
• Automatic Upgrades

I have been a frequent business traveler for many years, so I feel like I have a pretty good handle on how to make my money work for my family.  In fact, cannot remember the last time I took a vacation when I didn’t get a deep discount, a free flight, or a free room.  Here are two pieces of advice this “Road Warrior” can give you, regardless of the card or cards you pick.

1. Pick an airline that is convenient to your location, and goes to many of the places you would want to go.  I live in Chicago, so that is pretty easy.  That said, if you live in smaller metro areas, pick one that considers your home airport a regional hub.  This way, you will have far more choices on where and when to go.  Once you figure it out, sign up for that rewards program, whether you get their card or not.
2. Pick 2 hotel chains that suit you.  Many chains these days have 3, 4, and 5 star properties which would likely cover all of your future needs.  Sign up for 2 programs because the chain may not have availability in whatever towns you frequent, or just want to visit on a one-off visit.  While many airline program miles expire, hotel points almost never do.  Again, sign up for these two and try to stay loyal to one or both.

Next time, we will rate some of the best credit card programs.  Happy traveling!