Credit Card Programs - Requesting Advice: CC Bonuses for Travel

Any help is appreciated and thank you in advance!

Background



Married, both of us are 24.
Houston, TX
Local Airports: IAH & Hobby
Credit Scores: 768 (mine) & 794 (hers), per Karma. Her score actually took us by surprise. She did have a credit card through college, but her overall credit has been relatively thin.
Current CCs: Chase College Card (May 2006), Chase Freedom (Aug. 2010), Amex Blue Cash Preferred (November 2012), wife is authorized user. Wife herself has no cards.
Current Accts.: Chase, American Express, Fidelity, Scottrade, Merrill Lynch, and ING.
Credit history: We were recently approved for a home loan (hard hit). However, we have decided to postpone a house purchase for at least another year. Also recently purchased a new car (hard hit).
Current debt: As previously stated, new car purchase. However, if this is an issue we only financed because they offered cash back incentives with o% interest. We have cash set aside to pay the car in-full. No other debt.
Financial Situation/Spending Habits: Annual salary is approximately $65k,before bonuses/options. We are both currently pursuing graduate degrees. She is full time and will finish May 2013. We are paying for her tuition out of pocket, no loans. I am part-time, employer paid via reimbursement. Naturally, we would most likely avoid convenience fees associated with paying tuition on credit card. However, given that mine is employer reimbursed, it should not be an issue and could lead to satisfying spending minimums twice a year in lump sum fashion. Living expenses total to approximately $3k/mo. Of which, ~90% can be put on credit cards.


Objective

Cheapest travel available. We don't value status, simply maximizing experiences on our current budget.

Desired destinations:


Europe, annually.
Colorado, annually.
Pacific NW, alternating biennial.
East Coast, alternating biennial.


Preliminary Prospects



Citi AA 50k x 2 (me)
Barclays US Airways (me)
Chase United Cards (each of us)
Amex HiltonHH (each of us)


Questions/Concerns



I would like to develop some type of system (rinse and repeat) to maximize bonuses given our low monthly spending. However, as is common and highly debated, I want to minimize impact on credit. I understand it will impact and that there is a wealth of information discussing the specifics and I am not excusing myself from performing my own research. However, observations specific to my situation are greatly appreciated.
I didn't see any Southwest promotions on the board. Is this typical? In the past we have generally flown Southwest.
What is the general thought process of convenience fees? It was easy to calculate the cost of paying certain items on credit (i.e. rent and car payment) that have associated fees versus the return on cash back credit cards. However, now that we are looking to move into FF returns I am wondering how you the value is weighed.


Again, thank you for any insight!

Congratulations on being so well planned out at 24. Here are some things to keep in mind:

1. As I recently discovered, it appears to be wise to avoid any applications for new credit within 12 months of obtaining a mortgage. You've already taken two recent hard pulls on your credit score. For folks with many years of credit history, this doesn't seem to be an issue but it is for first-time buyers like us.

2. Southwest products are not heavily discussed on FT because most FTers are the elite of the elite and care about first-class travel and aspirational trips. Southwest has a 50,000 point sign up bonus. This will easily be enough for two, planned in advance at non-peak times, trips within the US.

3. Offers for most of the cards you've mentioned can vary. Go find out what your minimum spend requirements are.

4. For your European trip redemptions I would think UA will be better than AA. UA's online booking engine beats AA's any day and that means you'll end up paying a $25 phone booking fee most times with AA (as well as wasting a lot more time getting those redemptions). I'm accumulating significant AA miles but planning to redeem them just once a year and am prepared to pay the fee. Some think AA is better for domestic redemption than UA - that is not my experience from ORD.

5. Convenience fees (when a % of the total) are generally not worth it unless you place a really high value on miles. Some folks get lucky and have a landlord who will accept CC without realizing how painful the fees are. Most normal people will value WN miles at $0.0167/mile, UA miles at under $0.02/mile and AA miles the same way. Of course, you can get better redemptions on UA and AA but that requires a lot of planning and it's not a good plan to count on that.

Good luck!

I'd like to say well done on providing background information. If all new posters such as yourself started out with a fraction of this information, I'm sure more would be willing to assist! :)

I'm assuming since you just had a mortgage app submitted, those are your FICO scores? If you are going for a mortgage next year, as said above I would lay low on the applications until you're finished with the process.

That said...

As far as your location, UA and SWA are going to be your best bets. Don't throw AA completely out of the picture, especially for international redemptions. Their off-peak Europe coach awards are 40k R/T, 36k really once you factor in the new 10% rebate from the Citi AA cards.

There are SWA 50k signup links over in the MilesBuzz forum.

Regarding convenience fees, it all depends on how you value your miles. If you are redeeming miles for a .03/point+ rate then it might make sense. SWA miles are valued at .018/point +/- to give you something to compare the transaction fee to.

Oh and welcome to FT!!

Thank you for the responses!

Congratulations on being so well planned out at 24.
We've spent the last year researching, learning, and implementing plans for our current and future finances. Now we want to play. In fact, utilizing the Priceline bidding strategy (found here on flyertalk (http://www.flyertalk.com/forum/online-travel-booking-bidding-agencies/1341415-priceline-bidding-primer.html)) we were able to book our hotels for our two year anniversary trip in downtown Austin.

1. As I recently discovered, it appears to be wise to avoid any applications for new credit within 12 months of obtaining a mortgage. You've already taken two recent hard pulls on your credit score. For folks with many years of credit history, this doesn't seem to be an issue but it is for first-time buyers like us.
Your advice is similar to that which I have found on other flyertalk threads discussing the topic. However, we did hold off on the house because we've recently started discussing pursing overseas opportunities following her graduation. This has no barring on the topic outside of the possibility that a house purchase may be a year off, or five. We're just not sure yet.

Secondly, what about getting her started on her own credit cards? I am the primary signer on the car loan and she has a solid credit score. Also, as previously stated, she has no current cards in her name.

2. Southwest products are not heavily discussed on FT because most FTers are the elite of the elite and care about first-class travel and aspirational trips. Southwest has a 50,000 point sign up bonus. This will easily be enough for two, planned in advance at non-peak times, trips within the US.
Thank you for the information. I will research it. I have also begun researching Southwest and it's companion pass. Seems like if we can reach the minimum miles to acquire the companion pass it would be great tool. However, it appears that I will need to wait till Jan 13' before actually making any moves to maximize the two year duration of the pass.

3. Offers for most of the cards you've mentioned can vary. Go find out what your minimum spend requirements are.
Agreed, I need to do more research. I think I will start with this list (http://thepointsguy.com/top-deals/).

4. For your European trip redemptions I would think UA will be better than AA. UA's online booking engine beats AA's any day and that means you'll end up paying a $25 phone booking fee most times with AA (as well as wasting a lot more time getting those redemptions). I'm accumulating significant AA miles but planning to redeem them just once a year and am prepared to pay the fee. Some think AA is better for domestic redemption than UA - that is not my experience from ORD.
I will certainly look into UA rewards and current offerings. However, like you, I am only looking at redeeming international flights once a year. So, if I only have to deal with a difficult redemption once in a year, given a better value for the miles we have accumulated. I think it may be worth it.

5. Convenience fees (when a % of the total) are generally not worth it unless you place a really high value on miles. Some folks get lucky and have a landlord who will accept CC without realizing how painful the fees are. Most normal people will value WN miles at $0.0167/mile, UA miles at under $0.02/mile and AA miles the same way. Of course, you can get better redemptions on UA and AA but that requires a lot of planning and it's not a good plan to count on that.
Noted. Our rent is a flat fee while our tuitions are percentage based. Once, and if, we have identified our line-up of cards, we will sit down to look at the cost/reward using your figures above.

I'd like to say well done on providing background information. If all new posters such as yourself started out with a fraction of this information, I'm sure more would be willing to assist!
I am selfishly requesting help at the expense of your time. The least I can do is be as thorough and transparent as possible. And again, I do appreciate the help.

Especially from you longhorn. We are natural enemies...:p

I'm assuming since you just had a mortgage app submitted, those are your FICO scores? If you are going for a mortgage next year, as said above I would lay low on the applications until you're finished with the process.
Both of the scores quoted above are based on Karma. However, I can verify their correctness relative to knowing our scores at the purchase of the above mentioned car. Regarding the mortgage application, it was simply a pre-approval process with a lender. We had defined our budget and had started looking through a family friend who is a realtor. She had suggested we get pre-approved for a loan in the event that we found a house. This approval occurred in March of this year.

As far as your location, UA and SWA are going to be your best bets. Don't throw AA completely out of the picture, especially for international redemptions. Their off-peak Europe coach awards are 40k R/T, 36k really once you factor in the new 10% rebate from the Citi AA cards.
Noted. I need to do further research into each program. However, I do appreciate your helping in narrowing the search. One of the reasons I was looking so intently in AA is the Citi-two browser trick that is mentioned constantly. Seemed like the best option to quickly amass points. Which, we are in no particular rush, but the option of would be nice.

There are SWA 50k signup links over in the MilesBuzz forum.
Noted. Will research the offer (http://www.flyertalk.com/forum/milesbuzz/1225967-active-southwest-airlines-card-50-000-bonus-points.html).

Regarding convenience fees, it all depends on how you value your miles. If you are redeeming miles for a .03/point+ rate then it might make sense. SWA miles are valued at .018/point +/- to give you something to compare the transaction fee to.
As mentioned above, I need to sit down with my wife and put pen to paper with the various options.

Moving forward we need to:

Define if we are in the position to even begin acquiring multiple credit cards. If we are in the position, which of us should apply.
Define spending limitations, specifically large sum items and impact of convenience fees.
Explore Southwest's current offerings.
Explore UA's current offerings.


Did I miss anything?

Again, thanks!

You will be in a much better position to do 2-4 cards right now when compared to your wife. Since she only has had one credit card on her own, some companies may shy away from offering her new credit. Have you made her an AU on all of your cards? That would help significantly. Did she just cancel the card? Or was it closed for inactivity?

Please note that adding someone as an Authorized User does nothing to help their credit score. Authorized User apps can be done easily over the phone and don't ask for a SS#.

To help your wife bolster her credit what you need to do is add her as a "Co-Applicant" to your oldest credit card. If approved, she will automatically inherit the entire history of that card and that will work to her benefit assuming it has a 100% clean record.

Another technique to bolster both of your credit scores is to get the smallest possible personal installment loan you can from your primary bank. There will be some interest costs associated with it but it will bolster your score in the long run and might be especially useful if you have a mortgage application coming up in 2 years.

Actually, being an authorized user does help with credit score, and is on your credit report. All of the accounts on which I am an authorized user appear on my credit report. However, banks and lenders do not consider AU cards as your own account in terms of credit history, so your wife will still have a limited history, making it difficult for her to acquire a lot of credit in a short period of time.

You are in a good position credit wise, and a lot of the advice above is sound. I would not have your wife apply for more than one card right now, but I would have her get her own card as soon as possible. Adding her as AU on all of your cards likely won't help, but having her sign as a joint account holder (I believe what smilinganddialing meant by "co-applicant," though it's not the right term) to a card of yours with good history likely will.

Please note that adding someone as an Authorized User does nothing to help their credit score. Authorized User apps can be done easily over the phone and don't ask for a SS#.

To help your wife bolster her credit what you need to do is add her as a "Co-Applicant" to your oldest credit card. If approved, she will automatically inherit the entire history of that card and that will work to her benefit assuming it has a 100% clean record.

Another technique to bolster both of your credit scores is to get the smallest possible personal installment loan you can from your primary bank. There will be some interest costs associated with it but it will bolster your score in the long run and might be especially useful if you have a mortgage application coming up in 2 years.

Sorry but you are wrong here. Most banks report AUs whether they ask for a SSN or not. They have many ways of matching up people from addresses to phone numbers. I know for a fact Chase, Amex, Citi, etc report AUs and they are included in FICO scores.

Sorry but you are wrong here. Most banks report AUs whether they ask for a SSN or not. They have many ways of matching up people from addresses to phone numbers. I know for a fact Chase, Amex, Citi, etc report AUs and they are included in FICO scores.

Yep, lenders are able to match authorized users using address, etc., and is included in credit scores. But when lenders are considering your application, they will want to know about your history of accounts in your name. The first card that Chase denied me for was due to the fact that I already had $7k of credit (2 cards) with them, higher than than any other lender, and both accounts were under a year old. Even though I was an AU on several of my parents' cards thst had credit lines of tens of thousands of dollars, Chase didn't care about that. But it definitely boosted my credit score.

2. Southwest products are not heavily discussed on FT because most FTers are the elite of the elite and care about first-class travel and aspirational trips. Southwest has a 50,000 point sign up bonus. This will easily be enough for two, planned in advance at non-peak times, trips within the US.
That's one big reason but the other is that there is little opportunity for arbitrage. Southwest points are a fixed value cash equivalent (roughly $0.0167 - $0.017 each, depending on how taxes are calculated) and tied to the retail cash price of the ticket. Thus, if you want to travel somewhere in peak times, you'll pay much higher prices.

Most legacy miles programs are a fixed cost currency. If there's availability, it's the same "price" in miles all the time. Thus, there is much more opportunity to get disproportionate value in your redemption, international or premium or otherwise.

Some think AA is better for domestic redemption than UA - that is not my experience from ORD.
Me neither. UA has been FAR easier to redeem than AA for domestic trips for me. Not even close. Some of that is probably because most of my trips start at SFO - but I don't think that accounts for all of it. UA also has more domestic destinations than AA.

Your advice is similar to that which I have found on other flyertalk threads discussing the topic. However, we did hold off on the house because we've recently started discussing pursing overseas opportunities following her graduation. This has no barring on the topic outside of the possibility that a house purchase may be a year off, or five. We're just not sure yet.
I think the concern is more related to the next time you try to buy the house. Conventional wisdom around here is to stop applying for credit cards at least a full year before you go looking for a mortgage. So if you might be buying a house in a year, now would be the time to stop...

Secondly, what about getting her started on her own credit cards? I am the primary signer on the car loan and she has a solid credit score. Also, as previously stated, she has no current cards in her name.
You could simply try to apply for whichever she wants most and see how it goes. If that doesn't work out, there are plenty of decent cards that have lower credit standards. The Citi Forward, for example. You can usually find a 10k ThankYouPoint signup bonus and it pays 5% back at restaurants, movies, Amazon, and iTunes. Since it's also marketed to college students and has no annual fee, it tends to be an easier approval. It would be an excellent idea for her to have a few no annual fee cards she keeps anyway, to offset the travel cards she doesn't.

One thing to consider is not cashing out points on your chase freedom card. by keeping the points on your chase freedom card you can later get the sapphire prefered card and transfer the chase freedom pts to the sapphire prefered card and then onto united, you can alwasy later change the freedom pts to cash as a back up plan if you dont get/want the sapphire prefered card.

She went temporarily Dave Ramsey on me before we got married and closed out her sole credit card account.

She is now authorized on each of my credit card accounts. She is also on board for getting her own credit card.

I think moving forward, we will be at least adding one credit card to her name and possibly one more for me. Mainly to build her credit... and we still want to dabble in the points game.

After some research and taking a look at our location and upcoming trips, I think Southwest would be our best option (despite the comments above). Mainly, Hobby is the closest airport to us, Southwest services the two main domestic areas we like to visit (CO and West Coast), we each have primarily flown Southwest in the past, and we have RR points already built-up. Nothing significant, but at least some.

The fact that we are currently not in a position to play the bonus points game leaves us with making one bonus take us as far as possible. And, please correct me if I am wrong, but the companion pass would be a tool that would effectively double our points.

However, this is still a preliminary plan, and I am open to any critiques. Again, thank you for the responses.

My sincere apologies everyone. I am indeed incorrect.

That being said, please note that adding my wife to my Chase Freedom card has not helped her at all in the sense that (a) I called Chase and spoke to 3 different reps who informed me, correctly or incorrectly, that the records from this card do not report to her credit score and (b) she doesn't seem to have a credit score at any of the 3 bureaus.

She moved to the US a few months before we got married and I have been doing what I can to help her establish her credit but it's not been easy.

Thanks for the polite corrections longhorn11 and Apieinthesky.

As for WN miles, I agree that they are of fixed value but the high availability of award seats on WN (even vs. UA) means that there are times when those points are extremely valuable for last minute travel (a quick glance at ORD/MDW - LAS on early December weekends will show you that unless I want to cry all the way to Vegas on Spirit, WN is the only reasonable redemption with AA and UA both wanting 50,000 miles - UA just for Y with AA giving F on one leg). And I can forget using my DL miles - no point in taking a one-stop to any major US city from Chicago when you can go direct.

First, when my wife got US residency about 8 months ago, one of the first things I did was add her SSN to the Amex account of mine on which she was an AU. Within a month she had a 750 credit score. Amex may be different than other issuers in how they handle AU's. Despite the fact that she doesn't even have a job in the USA (although she has one abroad) she has gotten about 4-5 rewards cards in the past 7 months.

Second, I differ somewhat from others in that I don't worry about apps and credit score. Perhaps it's because mine is fairly high (790-810) and it really isn't going to get much higher, but a hard pull really doesn't ding you that much, and what the heck else is your score there for?

I would just go for an all-of-the-above strategy, limited only by what you can make the minimum spend on. In my case for example, so far this year we've gotten two Sapphire Preferreds, two Hyatts, two USAirs, one Hawaiian, one United, and two Citi/AA (both mine). Within a few months I plan to cancel my wife's Hyatt and get her a United and the two Citi's, putting off the Citi mostly so I can push some of the minimum spend into 2013.

I rarely pay convenience fees but I did find that I can use my CC to pay my rent for $19.95 and pay up to $3000. So this is a good value purely for the points, and even better when it makes the spend requirement. (Can't use it on Amex though.)

I would just get all the cards you can, bank all the miles, keep them active when necessary by trivial transactions once every 12-18 months, then go back and reapply in a couple of years. I don't worry which airlines I am getting them on, although I'm not a big fan of WN. And I don't do hotel cards, because I'm a big Priceline fan (I wrote the Priceline primer the OP referred to) and I don't think hotel points are a good value compared to prices you can pay on Priceline.

SAnd, please correct me if I am wrong, but the companion pass would be a tool that would effectively double our points.
One of you flies free, regardless if the first booking is points or cash. You need to earn 110k qualifying points to earn it. So your best bet would be a 50k personal card and a 50k business card, then 10k more from somewhere - CC spending would be easiest.

I also realized that, right now, there IS a fixed cost redemption option on Southwest. Remember the old style of Southwest award? Where you earned 1 "credit" per flight you took and 16 credits could be turned into a round trip award anywhere in the system?

Turns out you can still convert Southwest points to Airtran credit back to an old-style Southwest award. It's 19200 points for a round trip award anywhere Southwest flies, using that conversion. Thus, if the cash price of the ticket is above about $325, it's cheaper to do the conversion than to book using points directly. The only catch is that the old-style awards are capacity controlled, so you'd have to verify availability before doing the conversion. (There's a thread in the Southwest forum to ask someone to search for you.)

And I don't do hotel cards, because I'm a big Priceline fan (I wrote the Priceline primer the OP referred to) and I don't think hotel points are a good value compared to prices you can pay on Priceline.
I used to agree with you but don't anymore. If I value a hotel night at $85 - a fair comparison to an average 4* rate on priceline - then there are two hotel cards that are worthwhile:

Priority Club - the signup bonus is conservatively worth about $375 plus you net a $36 profit on the annual fee (free night anywhere). It also gives automatic Platinum status which turns into free upgrades on a fairly consistent basis. And PC availability is GREAT even in busy situations - my last redemption was 1 cent per point compared to retail.

Marriott - signup is about $400, annual fee is breakeven, and Silver status has a little bit of value (especially the ultimate reservation guarantee)

(Hilton might also be. The right three cards net about $600 and Gold status (free breakfast, upgrades))

Honestly, I would go with the Chase Sapphire Preferred as my recomendation as it allows more flexibility in this situation. It will allow you to use the Ultimate Rewards points to transfer to both UA and WNs programs so that you can redeem on those airlines. When reward space may not be availaible or for cheap domestic flights it allows you to book travel on any airline using the points (I do this when the fares are cheap) and still earn your frequent flyer miles on the airline. Yes, there is an annual fee, but it seems worth it in this case and it's only $85.

Plus since you have the Freedom and a Chase bank account, that will turn your current Freedom points into Ultimate Rewards and you get the Chase account 10% bonus and 10 bonus points per transaction. Seems like the best way to go for flexibility and allows you to use both airlines in Houston.

Most people do not understand it, but Southwest is 2 programs in one, depending on whether:

1. You can get a Companion Pass
2. You can't.

In the latter case, points are worth roughly 1/60 of a dollar, as pointed out above. Easy to figure the return and the cost of obtaining.

In the former, the sky is the limit on the return, since you can bring someone along for free every time you fly, for up to 2 years. For me and many folks I know, that's thousands of dollars. For many (most?) young folks, free trips beat upgrades, and I think you should take a serious look at that.

I concur with your thinking that you should wait until Jan 13 for serious activity, so the CP would have almost 2 years' validity.

Try to get (or have your wife get) one of the WN cards in January so you get about half of what you need for CP. It would be useful, of course, to spend then everything you can on it as fast as possible. I mean everything: rent, insurance, utilities, gasoline, groceries, etc. Watch for promos (rental cars, Teleflora, etc.). Look for cheap Hyatts in your area if they repeat that quintuple bonus deal. Watch the WN forum here.

Try to accumulate points in the meantime that can be transferred to WN at the time of your choosing. Wyndham, Choice, Marriott, Hyatt, Chase Ultimate Rewards (through Hyatt/Marriott only), etc. After reviewing your options, you may decide it is better to wait for Jan. 2014 depending on your capacity for spend.

See whether your parents/relatives would allow you to put spend on your CCs and reimburse you.