The Three Classifications of Credit Cards

This is the first installment of the series "Getting Started With Hotel Points and Airline Miles.  In general there are three types of credit cards that you should apply for.

1. The first type of card that I routinely apply for is for the sign up bonus itself.  The best of these types of cards will generally be offering a value of between $1500-$2500 in sign up incentives.  The incentives may be in the form of airline miles, hotel points, free hotel nights, or cash to be used toward travel. This class of card is ONLY to be used until the minimum spend requirement is met.  After you have met the minimum spend, you will hold that card until just before the annual fee is due. At that point you will either cancel the card, or downgrade the card for a no fee version with the same issuing bank.  Maintaining the account can help your credit score as it increases the average length of your credit accounts. There are many cards out there that you can cancel, wait a specific period of time (12-36 months typically), then sign up again and get the bonus again! 
2. The next category of card to own is strictly for the benefits that the card has to offer.  These types of cards have benefits that range from elite status with an airline or hotel chain, airline lounge access,  free or inexpensive companion passes, waived baggage fees or free hotel nights. Depending on the types of benefits, the annual fee on this type of card could range from $95 to $895. This type of card you will keep for the long term because of the status or benefits it provides you.  You would not place any new spending on this type card after meeting the minimum spending requirement. In some cases you may put specific hotel or airline spend on these cards. 
3. The last category of credit cards are the ones that you keep for everyday spending.  I generally carry 4-6 different cards in my wallet for everyday use.  I have one card that is used for all restaurant and travel expenses (4X points), one for office supplies (5X points) and one for gas stations (3X points), and a 2X card for everything else that is non bonus category spending.

Now it is time for you to decide how you spend YOUR money, and what bonus categories fit YOUR spending needs.  In my dental practice, I used to spend a lot of money on internet advertising.  I had a card that paid 4X points on all social media advertising. How do you pay your biggest expenses?

Which airline cards you choose may be decided by the closest airport, or by which airline travels to the destinations that you frequent.  I live in the Philadelphia area.  We have access to all the major airlines.  I have the Citibank American Airlines Executive card as part of my long term inventory.  We frequently visit Aruba. American flies nonstop from Philadelphia to Oranjestad.  American generally has good award availability to South America, Europe (mostly connecting through London or Spain), and the Far East. The Citi Executive card gives me free access in Philadelphia to the brand new Admirals Club. Now that our children are out of the house, we travel the World extensively.  We both recently acquired the new Bank of America Atmos card.  It comes 100K Alaska miles and a $121 companion ticket good for Alaska Airlines, The companion ticket is good for the same class of ticket that you purchase with cash or miles. It can even be used for a first class ticket! We have enough miles for two free business class tickets just for meeting a minimum spending requirement. Now that is what I call leveraging your sign up bonus! 

If you like what you've read, please click the +1, then join others and follow me by adding your name to our subsciption list at the top of this page.

About THE POINTS DOCTOR™

THE POINTS DOCTOR is Bruce J. Wilderman DDS of Artistic Expressions Dentistry. Dr. Wilderman has a practice limited to Cosmetic Dentistry, serving patients of the Philadelphia Area since 1986. He and wife of 40 years have enjoyed traveling the world in first class since 2012 for little or no money with the points and miles they have earned from the credit card companies. Dr. Wilderman with his 10+ years of experience in the field of miles and points would love to teach you how to do the same. You may reach him at ThePointsDoctor@gmail.com.