Welcome to FinanceGrabber’s Good Cash podcast, the place we reply your real-world cash questions. On this episode:
Get solutions to widespread questions that may permit you to maximize your bank card rewards factors and keep away from widespread level planning pitfalls with our Nerdy skilled suggestions.
How will you journey extra whereas spending much less? How might adjustments in airline loyalty packages have an effect on your journey plans? What are the advantages of co-branded airline or lodge bank cards versus versatile rewards playing cards? FinanceGrabber’s Sean Pyles and Erin Hurd dive deep into bank card rewards factors, addressing a spread of subjects that may resonate with anybody keen to maximise their bank card factors and journey perks. They talk about current adjustments in airline loyalty packages, together with Delta and Alaska Airways, and discover the benefits and disadvantages of co-branded airline or lodge bank cards and the advantages of utilizing versatile rewards playing cards.
Additionally they current methods for maximizing bank card sign-up bonuses whereas avoiding widespread errors that may result in fewer rewards, and provide suggestions for how one can observe and handle bank card factors and perks. Sean and Erin additionally clarify the pitfalls of carrying a stability on journey bank cards, the implications of bank card charges and surcharges at native shops, potential trade adjustments, resembling rates of interest and payment constructions, and the potential influence of the Credit score Card Competitors Act on rewards packages.
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Episode transcript
This transcript was generated from podcast audio by an AI software.
Airline factors, restaurant factors, retail factors, rental automobile factors, lodge factors, factors, factors, factors, factors, factors. Wrap all of them up in bank cards and typically it may be head spinning.
My steering is usually fairly comparable for most individuals, even when they’ve fairly completely different journey objectives, and that every one actually goes again to the concept of simply incomes versatile factors. In case you have a stash of versatile factors that are not locked into anybody journey model, you’ve got numerous choices.
Welcome to FinanceGrabber’s Good Cash Podcast. I am Sean Pyles.
That is the ultimate episode of our nerdy deep dive into your cash in 2024. Erin, we’re virtually a month in, so how is your 2024 going to this point?
Up to now, so good. I can not imagine we’re already into 2024, however all goes nicely.
It has been alright to this point. I am simply glad the times are getting longer at this level, nevertheless slowly. So, Erin, we have introduced you again onto the present as a result of you’re a nerdy factors professional. How did you come to be so fascinated about bank card factors packages and do you’ve got a level in advanced mathematical equations? As a result of typically it looks like you want one to determine how one can use all of those.
That sounds prefer it might be true, however really it is fairly the alternative. I majored in English and math was at all times my least favourite topic. I’ve at all times been a deal seeker. I am at all times on the lookout for gross sales, I am discovering coupons, I am determining how one can get extra, however how one can pay much less for it. So my husband and I’ve at all times liked to journey and I began dabbling in factors and miles a few years in the past to assist defray our journey prices in order that we might journey extra. However I actually fell down the rabbit gap with the factors and miles after we grew our household, and now we would have liked 4 seats on the airplane and in some circumstances, we’d like two lodge rooms for our household of 4. In order that’s once I actually obtained critical about incomes sufficient factors and miles in order that our household might journey extra than simply to the native campground, as a result of that is all that I might be keen to pay for.
Yeah. And once you’re wrangling children, I am positive you do not need to spend time doing math, however the excellent news is no person wants a math diploma as a result of all they must do is go to the FinanceGrabber web site, poke round with our very useful calculators, and all will likely be revealed. However let’s give everybody a rundown of issues they may need to take into consideration when managing their bank card factors. Now, would you say that the beginning of a brand new yr is an effective time for listeners to take inventory of the place they’re with their factors packages? Or is that one thing they need to be monitoring all yr spherical?
Nice query. Effectively, in an ideal world, ideally you do need to be giving your factors some consideration greater than yearly, particularly should you’re making an attempt to save lots of them as much as take an enormous journey, as a result of the quantity of factors that you will want for that journey can fluctuate. Typically it requires greater than you suppose that you will want and it may possibly take time to earn these factors after which to search out nice redemptions for them. However do not worry, it is by no means too late, so the brand new yr is a incredible time to test in if you have not been already.
Effectively, we’re going to give everybody a head begin by looking at what we will anticipate from 2024 in Level Land. However earlier than we get began, a reminder that we at all times need to hear what you suppose, too, listeners. To share your concepts, questions, considerations round bank card factors, or the rest, depart us a voicemail or textual content the Nerd hotline at (901) 730-6373. That is (901) 730-NERD, or e-mail a voice memo to [email protected]. Stick with us. We’re again in a second with the longer term yr in bank card factors.
So Erin, let’s begin with a glance again finally yr in Level Land and see if there are some classes that we will study from 2023 to take into this yr. And earlier than we get too deep into the dialog, I need to flag that we’re going to point out some firms which can be FinanceGrabber companions, however that doesn’t affect the way in which that we speak about them. So, Erin, on this dialog, we’re principally going to concentrate on maximizing bank card factors, however I need to briefly contact on the truth that at the very least two of the key airways, Delta and Alaska, modified their level reward techniques towards the tip of final yr. What did that imply for flyers and have been there any sort of larger messages about level techniques that got here out of that?
Yeah, these have been massive headlines within the journey world. Now, they have been fairly completely different in scope. Delta modified the necessities to earn elite standing in future years, this would possibly not really take impact simply but, however additionally they put limits on a number of the advantages that bank card holders can use, like airport lounge entry.
Now Alaska, then again, made massive adjustments to its award chart and an award chart is what determines the variety of miles you may have to pay for a ticket. However these are each examples of a much bigger takeaway that we see again and again, and that’s that you need to by no means have all of your proverbial eggs or factors in a single basket. So what I imply by that’s that even should you fly a sure airline actually because that is what serves your house airport, having solely a bank card that earns factors or miles for that one model actually limits your choices. The reality is that, sadly, journey loyalty packages change or get devalued comparatively usually and typically with little to no discover. So which means should you’ve racked up a pleasant chunk of say, Alaska miles for an upcoming journey, however they instantly change their award chart, as they simply did, and determine that the flight you need to e book will now price double the miles, you are fairly hamstrung if all you’ve got obtained is a piece of Alaska miles.
Yeah, having a number of completely different playing cards from completely different manufacturers is a method of getting bank card greenback price averaging in a method, the place you are spreading your danger throughout completely different sorts of merchandise. So, that’s one strategy to offset the ups and downs of what these firms are doing. However I can see these adjustments making some people cautious of utilizing these playing cards which can be co-branded with an airline or lodge. Do you continue to suppose they’re worthwhile given current adjustments?
I do. For vacationers, carrying a co-branded airline or lodge bank card, it may be actually helpful for sure perks. A number of the airline playing cards, for instance, will provide you with free checked luggage for you and typically, relying on the cardboard, as much as eight touring companions each time you fly. So, that may add as much as an enormous worth should you’re flying comparatively usually, even should you’re flying a pair instances a yr and also you’re checking a bag, that may make it price it. And particularly since you’ll earn, usually, a welcome bonus once you open up the cardboard.
However I counsel leaning extra on what we name versatile rewards bank cards, and so they may give you much more choices in your journey, plus they usually earn extra rewards on on a regular basis purchases.
Are you able to inform us what you imply by versatile factors? How do they work and the way do you earn them?
Oh, positive. Because the time period suggests, they’re versatile. So, there’s a variety of bank cards which have their very own journey factors. As a substitute of incomes Delta miles or Alaska miles or Marriott factors, for instance, there are a number of Chase playing cards that earn factors known as Final Rewards. There are lots of completely different American Categorical playing cards that earn one thing known as Membership Rewards. There’s Metropolis Thank You factors, ect. And the great thing about these versatile factors is that they can be utilized to e book every kind of journey, not only a Delta flight or not simply an Alaska flight.
So usually, these bank card issuers have their very own journey portal and you’ll e book your journey there and pay straight along with your factors and you do not have to contain any money. And plenty of of those packages additionally permit you to switch these factors to sure airline and lodge journey companions, normally at a one-to-one ratio, which is nice as a result of usually you will get extra worth out of your factors once you switch them to the airline or the lodge and e book straight. However actually, the most important profit is simply having a lot extra flexibility. So as a substitute of being locked right into a Delta flight, such as you in all probability can be should you solely had a Delta miles incomes bank card, versatile factors simply offer you plenty of choices.
Okay. Effectively let’s get to playing cards. First, something from final yr stand out to you? Any program adjustments you noticed that have been price taking note of or new methods to make use of them?
Yeah. Effectively, the excellent news is that we’re nonetheless seeing some fairly juicy bonuses provided for brand spanking new card holders who join a card and meet sure spending necessities within the first few months. And we’re excited that these appear to be sticking round. Years in the past, it was once {that a} bank card welcome bonus of round 30,000 or 40,000 factors was actually beneficiant, however over time these numbers have crept up and up, and it grew to become not unusual to see bonuses of 60,000 factors or 80,000 factors and even 100,000 factors provided to new cardholders.
Now, that development continued all through COVID, even when individuals weren’t touring as a lot, the banks stored providing massive bonuses to maintain journey bank cards fascinating. And we have been questioning, all this time, if we would begin to see the bonuses begin to shrink again down as individuals return to journey, as inflation and recession fears crept in. However the excellent news is we have now not seen that occur to this point. Proper now, there are a number of six determine welcome bonuses on the market for numerous journey bank cards and welcome bonuses are an necessary a part of the journey bank card technique for lots of people.
Now, I do not open bank cards only for the welcome bonus. I do not advise doing that, however I additionally know that I am going to earn extra rewards from that bonus than I in all probability will from a yr or extra of standard spending on that card. So it is undoubtedly an element.
Yeah. And these signup bonuses are sometimes people’ greatest likelihood at getting an enormous quantity of factors since factors can take a very long time to accrue by way of every day purchases alone. And we have additionally seen new methods to make use of rewards, proper? What is the newest on that entrance?
So far as new methods to make use of rewards, we have seen a gentle stream of choices evolving to make use of your factors to pay for merchandise at numerous shops. At Amazon, for instance, once you try, you will have observed you’ve got the choice to pay utilizing a number of completely different sorts of factors, bank card factors. It makes it very easy and it may possibly really feel such as you’re getting stuff at no cost should you’re utilizing factors as a substitute of truly charging your card or paying money. However actually watch out as a result of the draw back is that you simply’re usually getting poor worth in your factors once you use them this manner. You are paying for comfort and so they’re betting on individuals not likely understanding or questioning the worth of the factors.
So for instance, should you use Chase Final Rewards at Amazon to take a look at, they’re price 0.8 cents every, however those self same factors might be price as much as 1.5 cents every once you use them to e book journey by way of Chase, relying on which card you’ve got, or usually much more than 1.5 cents every should you switch them to journey companions.
Wow, that breakdown is absolutely eye opening. I’ve seen that at Amazon checkout and I have been slightly tempted to make use of my factors in that context, however after that, I undoubtedly will not be doing so. So, thanks for that. So Erin, I feel some of the widespread questions individuals have is how one can know which card and level program isn’t solely greatest at school, however greatest for them and their particular scenario. So, should you’re seeking to maximize factors, how do you determine which card to get within the first place?
Yeah, it is an amazing query and there are such a lot of choices, and I do know it may be actually overwhelming for individuals who aren’t immersed in bank cards all day lengthy like we’re right here at FinanceGrabber. And it could seem to be there are lots of various factors, perhaps you suppose it should be completely different if you wish to use factors for journey, which airways are most handy for you? What type of journey do you take pleasure in? What sort of journeys are you planning for? However actually my steering is usually fairly comparable for most individuals, even when they’ve fairly completely different journey objectives. And that every one actually goes again to the concept of simply incomes versatile factors. In case you have a stash of versatile factors that are not locked into anybody journey model, you’ve got numerous choices.
So I additionally encourage individuals who actually need to get probably the most from their factors to not get scared off by bank card annual charges. I do know it may possibly appear foolish to pay a payment simply to have a card, I hear resistance from individuals, and I get it, however the rewards and the perks that you simply get from the playing cards that cost annual charges usually far outweigh the payment itself. In numerous instances, you get what you pay for, and sure, there are many wonderful no-fee playing cards on the market, however should you actually need to up your factors sport and take it to the subsequent degree, it is actually price contemplating the extra premium playing cards that do cost a payment.
Yeah, I, for a very long time, was actually against annual charges on bank cards as a result of I simply did not need to pay for entry to a bank card and the fee-free choice appeared to be enough for me. However I lately really acquired a journey bank card that does have an annual payment as a result of I checked out all the perks that it was going to supply me after which in contrast that to how a lot the cardboard prices on an annual foundation. And the perks, by far, outweighed the price. So that you’re actually getting one thing that is price greater than you are paying an annual payment should you make it price it. You do must do a bit of labor to be sure you’re benefiting from all the advantages that these playing cards give you.
So Erin, since you might be deep within the factors world, I might love to listen to how you’ve got approached this thought course of previously. Are you the sort to be selective with playing cards in your pockets, or do you’ve got a small assortment of playing cards at your disposal?
Effectively, each. So personally, I’m selective, however I’ve additionally collected a pretty big portfolio of playing cards over time. Our household does journey so much, and so we make fairly full use of the credit and the perks that the playing cards give us, however I additionally reevaluate each yr to ensure each card nonetheless is sensible for me and for our household. And I actually suggest that individuals go slowly and have a technique. It is very easy to get excited by the large welcome bonuses and folks might be tempted to open plenty of playing cards unexpectedly, however please simply decelerate. Remember that every bank card issuer has their very own set of guardrails. They will not prolong extreme quantities of credit score to anybody particular person, and so they need to just be sure you’re going to be a great long-term buyer.
One issuer, for instance, will not approve you for a brand new bank card should you’ve opened greater than 5 playing cards throughout any card issuer previously 24 months. So I actually wish to hammer dwelling that it is a long-term sport and it pays to have a technique. Do not simply go opening playing cards willy-nilly and not using a plan.
After which with the playing cards that you simply use, how do you retain observe of the factors and perks that you’ve and the charges related to them? Do you’ve got a spreadsheet? Are you utilizing a pocket book? What’s your course of for that?
Yeah, I’ve a easy spreadsheet. As a bank cards Nerd, I am additionally fairly engrossed in all of it day lengthy. FinanceGrabber has numerous sources to maintain everybody updated, we cowl all of the information. So you may at all times test FinanceGrabber, however I like to recommend only a easy spreadsheet, being attentive to what playing cards you’ve got, once you opened it, what signup bonus you earned when, after which simply what classes that bonus is on.
So one other tip is to be sure you can meet the minimal spending necessities once you do open a brand new bank card. With a view to earn the bonus, you may usually have to spend anyplace between $1,000 and $5,000 or much more on that card within the first three to 6 months. Ensure you have a plan to fulfill these spending necessities with out spending any extra money than you propose to or would in any other case.
Yeah, and one massive factor to be careful for is bonus classes. You may search for particular spending areas, say journey or groceries or gasoline, and get extra factors for these than for different purchases. Stroll us by way of how to ensure we’re utilizing every card in probably the most environment friendly strategy to rack up these factors and rewards.
Yeah, that is an amazing level. And truthfully, that is one more reason why many brand-specific playing cards, like a Delta card, in all probability will not be your greatest wager as a result of they have an inclination to supply solely 1x rewards on most on a regular basis spending classes, besides purchases on their model. So should you actually need to ramp up your factors incomes, do not simply blindly use one card for each buy. I like carrying just a few playing cards that may work collectively to earn probably the most rewards throughout many various classes. So you can use one card for groceries, however have a distinct card for eating places.
Now, the excellent news is lots of the main bank card issuers provide a number of playing cards which have synergy. All of them earn the identical bucket of versatile factors for you, however one card is healthier for some classes and one other is healthier for various sorts of purchases. Now, within the present notes, we’ll embrace our articles about some three-card combos you may have that may actually aid you ramp up your rewards.
However I do know there’s lots of people on the market who do not need to futz with having numerous playing cards, and that’s fully nice, however I might ask you to at the very least take into account two playing cards. That method, if the most important spending in your price range is on grocery shops, say, you can select a card that earns good bonus rewards at grocery shops, after which you can use one other card that earns a flat 2% on all different purchases, and you will be good to go.
If you’re pondering of which card to make use of or which card to take out, it actually helps to know your self and the place you are spending probably the most sum of money. So the cardboard helps you earn factors on these classes that you simply’re spending on.
So Erin, what are some widespread errors that individuals make when making an attempt to maximise their factors? Are you able to run down just a few of these for us?
Completely. I feel one of many issues I see so much are that individuals do not actually perceive the worth of their factors. And please don’t really feel badly if that is you, as a result of it’s a fairly advanced state of affairs. Not all factors are created equal.
The excellent news is FinanceGrabber has a full breakdown of baseline values in your factors, and it reveals you ways you need to anticipate to redeem them. Seek the advice of that information earlier than you redeem your factors and it will assist offer you a intestine test to see, is that this a great use of my factors or is that this a poor worth? I feel it helps to think about factors like a foreign money, proper? So there are lots of completely different sorts of factors and so they all do have some sort of worth, and that worth is equal to an sum of money. And when you begin pondering of them like a foreign money, and never simply one thing that you simply get at no cost, you may be apt to spend them extra correctly.
And we must also point out that carrying a stability on a bank card that provides factors, particularly journey bank cards, could be a actually expensive mistake. Bank card rates of interest are actually excessive proper now, and paying curiosity in your stability can negate any profit that you simply get from the factors that you simply earn.
Sure, that’s the primary rule on this sport. The curiosity that you will pay on balances that are not paid in full each month will far outweigh the rewards that you will earn. Now, should you want a breather on curiosity, there are lots of playing cards in the marketplace that supply a 0% intro APR interval, and so they additionally earn rewards. One other reminder is that it additionally not often is sensible to pay extra with a purpose to use your bank cards. Like typically at native shops or eating places, you will have to pay a surcharge with a purpose to use that bank card, and the truth is that that surcharge that you will pay normally outweighs the reward that you will earn.
That is an amazing level and one thing that I’m responsible of, as a result of I simply need the comfort of utilizing my bank card and getting these factors. However such as you mentioned, it negates the purpose of doing that within the first place. So, I am taking that with me into 2024.
So Erin, should you might look into your plastic bank card crystal ball, is there something you suppose is price anticipating this yr particularly in addition to attainable adjustments in rates of interest?
Yeah, we have seen a number of playing cards increase their annual charges, creep up the charges in change for including extra perks and advantages to the playing cards. And I feel that is a development we might see proceed. However simply watch out as a result of oftentimes these perks require some hoops. As an example, some provide credit in direction of sure purchases, however these credit are doled out month-to-month or quarterly, and so they’re use it or lose it in that brief timeframe. So simply be sure you’re looking on the worth you personally obtain from a card annually when it is up for renewal and never simply its potential worth on paper. If you’re not utilizing the perks, then it could not make sense for you any longer, even when it nonetheless is sensible for others.
Erin, I additionally need to ask you concerning the Credit score Card Competitors Act, which has been making headlines for over a yr at this level, nevertheless it looks like we would lastly see some motion on this laws that would change how we use factors. Are you able to give us a rundown on that and what it would imply for level fanatics?
Yeah. So, the Credit score Card Competitors Act is certainly one thing we’re retaining shut tabs on right here at FinanceGrabber. For many who aren’t acquainted, that is proposed laws that would actually have an effect on the rewards you earn out of your bank cards.
See, retailers pay transaction charges as a value of doing enterprise for accepting bank cards. They’re known as interchange charges, and that is the place numerous the cash comes from that fund the bank card rewards. So if bank card issuers get much less cash from these charges, they could be compelled to chop again on the rewards that they provide to shoppers. So, we might be having a reasonably completely different dialog about bank cards this time subsequent yr if it passes.
We’ll all be retaining shut eyes on this, and folk listening, we’ll let you recognize what occurs as there’s any updates on this. Effectively, Erin Hurd, thanks a lot for becoming a member of us and attending to the purpose.
Thanks, Sean. And that is all we have now for this episode. Do you’ve got a cash query of your personal? Flip to the Nerds and name or textual content us your questions at (901) 730-6373, that is (901) 730-NERD. It’s also possible to e-mail us at [email protected] and in addition go to nerdwallet.com/podcast for more information on this episode. And bear in mind to comply with, fee, and overview us wherever you are getting this podcast.
This episode was produced by Tess Vigeland and Erin. I helped with modifying. Kenley Younger helped with reality checking. Kaely Monaghan blended our audio. And an enormous thanks to FinanceGrabber’s editors for all their assist.
And this is our temporary disclaimer. We’re not monetary or funding advisors. This nerdy data is offered for common training and leisure functions and will not apply to your particular circumstances.
And with that mentioned, till subsequent time, flip to the Nerds.