Unless you’re a Luddite who invests in tulips and pays in cash, you’ve got a credit card or two in your wallet.
Is it working as hard as you are?
Is it buying you round-trip tickets to Honolulu?
It could be. It should be. And if it’s not, it’s time to make a change. Here are a few of the most common mistakes you might be making with your rewards-bearing credit card
1. Not having one — well, maybe
Rewards cards generally charge higher APRs. If you carry a balance, steer clear — you may well pay more in interest charges than you’ll get back in rewards. Do the math and pick a course. Make a decision based on your last six months of behavior, not on your best-case scenario, as we flawed humans so rarely achieve them, especially in terms of personal spending. Sky-high fees aren’t worth a couple thousand points sitting unused in your Starwood account.
2. Do more math
Figure out your annual spending and the rewards you’ll earn; even if you pay your balance in full every month, you’ll want to consider other fees — primarily the annual one — before signing up. For example, the popular Chase Sapphire Preferred will get you for $95 every year after the first one.
3. Picking the wrong one
There’s a world of choice here. Anecdotally, we’d judge that the most recommended one — though not the one we have in our own wallets — is Chase Sapphire Preferred, named by Money magazine as the best card for travel rewards and by experts like Brian “The Points Guy” Kelly as a favorite. Some of the stats: Spend $4,000 on the card within three months of activation and you’ll get 50,000 bonus points, transferrable at a 1:1 rate to participating programs (which include BA, Virgin Atlantic, Southwest, Singapore, United, IHG, Marriott, etc.). You’ll also earn double points for travel and eating out.
3A. If you were wondering, we like Citibank’s AAdvantage Platinum offerings, because it’s dead-simple if you’re content to convert chiefly to AA.
4. Foreign transaction fees
If you’re signing up for the card to reap travel benefits, don’t squander them with fees on all of your foreign transactions. Side note: Whatever you do, turn down the “offer” to transact your purchase in dollars, rather than the local currency, aka Dynamic Currency Conversion. It’ll just add on another layer of fees, and if you can’t do the math in your head, fire up xe.com on that iPhone and have the internet do it for you. (And if you’re worried about data charges, it’s time to consider T Mobile, which allows free data in 140 countries — but that’s another story.)