"I always wonder why birds choose to stay in the same place when they can fly anywhere on the earth, then I ask myself the same question." - Harun Yahya

March 28, 2015

How to Spend Your Money Wisely

Photo courtesy of 401kcalculator.org at Flickr

Spending money. The great American pastime. Who would have thought that you could be doing it wrong still?

Recently, credit cards have been getting a bad rap thanks to people that use them incorrectly. They don't pay off their balances, they pay tons of interest, they go into debt, and the next thing you know, it's all the credit card's fault (to be fair, their interest rates are out of control). Well, I'm here to tell you that credit cards aren't so bad! I personally think they're great because if you funnel all your costs through them appropriately and pay off your balance each month, you get free stuff! And who doesn't love free stuff?? Now, how much free stuff is completely dependent on how you redeem the monopoly money they give you in points but in this post we will only discuss how to get the most funny money for your lifestyle by going through a few of the best credit cards available below.

Before I get started, I'm pretty much assuming that you have some sort of credit standing and it's not the worst thing ever. It never hurts to apply for these cards (it is a hard pull on your credit which if done too much can have an effect on credit score so don't go too crazy) but I will say that some require "excellent" credit. Now onto the cards...

Chase Sapphire Preferred
If you have read the first two posts then you probably know by now that I love the Chase Sapphire card, so I will start with that first. If you are a new card member, you can get 40,000 bonus points if you spend $4k in 3 months on the card from account opening. This obviously equates to about $1.33k on the card per month at first, which shouldn't be very hard to achieve, especially if you live in NYC and put all your expenses on it for those 3 months. However, the bonus categories help you out a ton as well as can be seen below.


2x points on Dining and Travel
1x points on everything else

Upon reading this, you probably think that you don't "dine out" that often and you don't travel too much either so maybe it isn't worth getting because it doesn't apply to many everyday things you purchase. This is where many are mistaken as Travel consists of subway/bus cards, taxis, car rental, air travel, UBER, etc. Literally anything that gets you from point A to point B is considered Travel (including parking). But the best part is the Dining as this includes restaurants, Seamless/Grubhub, fast food and bars (bars are not in the fine print but their definition is very loose for restaurants). That last part is pretty important because in your 20's if you like going out, bars are a pretty decent portion of your expenses whether that be on a date or out with friends. That means 2x points on all that money spent which can be very helpful down the road once you have to redeem these points. You also get no foreign transaction fees and the $95 annual fee is waived the first year.

As a note, if you also happen to have a Chase Freedom card (no annual fee), you can get 5% cash back on their rotating bonus categories each quarter. So use Sapphire for dining and travel and Freedom for all the other random bonus categories. Then you have the option to convert that 5% cash back into points, ultimately making it 5x points rewards and further maximizing your purchases to get lots of points and therefore get more free travel.

AMEX EveryDay Preferred
The AMEX EveryDay Preferred card is more targeted to people outside of large cities who use their cars often and also shop at grocery stores a lot as well. This card will get you the following:

3x points at supermarkets (only up to $6k in spend a year, 1x after that)
2x points on gas
1x points on everything else

This alone doesn't seem that great but then if you add in the fact that if you swipe your card 30 times in a billing period, you get 50% more points for that period, then you realize that's really technically a 4.5x, 3x, 1.5x bonus structure which really is pretty great considering the membership rewards options you have to redeem your points with.

This also carries a 15k point bonus when you spend $1k in the first 3 months which is always helpful. The annual fee is only $95. The bigger downside to this card for the avid traveler is that foreign transaction fees are not waived so you still would get hit with a fee on every transaction while abroad. If I actually cooked and had a car though, I think this would be my go to card at least up until the $6k limit at supermarkets.

Citi ThankYou Premier Card
This Citi ThankYou Premier Card has recently come on my radar because of the revamped point and annual fee structure coming in April. If you like what Sapphire has to offer but prefer the categories to be switched around a little bit then this could be the card for you as they are incredibly comparable when it comes to earning and redeeming points. The bonus category structure for this card after the revamping is as follows:

3x points on travel including gas
2x points on dining out and entertainment
1x points on everything else

Now, I'm not entirely sure how these categories are defined as I do not have the card but because they are seemingly trying to compete with Sapphire, I would assume that they have pretty relaxed definitions around each one of these. If you own a car however, this card could be perfect for you as the 3x on travel + gas is pretty lucrative. It all ultimately comes down to how you spend your money and now that the annual fee is down to $95 (on par with Sapphire and also waived the first year) and the Citi ThankYou redemption center has increased its airline transfer partners, I could see myself possibly opening up this card in the near future just for that extra little multiplier on travel expenses and the 50k bonus point offer doesn't hurt either.

AMEX Premier Rewards Gold Card
This AMEX Gold Rewards card is eerily similar to the AMEX EveryDay Preferred card in my mind but has some additional bonus benefits to it as seen below.

3x points on flights booked directly with airlines
2x points on gas
2x points on supermarket purchases
1x points on everything else

Now, in my personal opinion, you can get most of these bonus categories for similar point values on other cards and you don't get hit with the larger annual fee this card carries ($175). If you spend a ton at supermarkets and on flights then maybe I could see this card being useful but basically I only see this card as being useful if you spend way more than $6k at supermarkets a year. The AMEX EveryDay Preferred card has effectively a 4.5x supermarket bonus (up to the $6k limit) and a 3x gas bonus assuming you take advantage of all the benefits that card has to offer and you only pay a $95 annual fee. This card also has foreign transaction fees so if you get 3x points on those flights and they are international, do not book in a foreign currency and do not bring your card along or else you are minimizing your point value even more by being charged more. There is also no point bonus for signing up for this card.

Starwood Preferred Guest Credit Card
The SPG Card is when this analysis gets tougher and tougher when not looking at redemption values because it only receives 1x points on everything, which I have clearly stated is a bad point value to earn on purchases when compared to other cards. The kicker here is that SPG points are worth more when redeemed than most other CC points. Upon spending $5k in 6 months, you can achieve up to 25k bonus points on this card which helps greatly as well. You also have the annual fee waived for the first year and it's only $65 after that. You also get 5k bonus points when you transfer 20k points to a participating airline.

I personally think this card can be useful if you don't really care to rotate cards on every purchase and you just want the highest value points. The issue is that despite the high value of each point from this card, you are still not quite surpassing the value that the bonus categories from the other cards can get you if you use those cards wisely. Basically, on a 1 point vs. 1 point basis, the SPG card wins but because I can get 2x, 3x, or 5x points with other cards if I rotate based on what I'm purchasing, it is more valuable in the end to rotate cards as I get way more points that are of marginally lower value.

Other Travel Cards Worth Mentioning
Other Cards that are a bit easier to get and don't have as high or any annual fee include Capital One Venture, Bank of America Travel Rewards, and the Barclaycard Arrival Plus. These all have either 1.5x or 2x points on ALL purchases which isn't too shabby but the biggest issue is that they do not have as large of (if any) bonuses for redeeming on travel and they do not have airline transfer partners which can prove to be very beneficial in a lot of cases. This means you basically are forced to redeem 1 point per 1 cent which as I've stated before, normally means the credit card company wins.

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