Step 0: Pay Off Your Credit Card Balance
Before you sign up for credit cards, make sure this hobby/plan is right for you. If you’re not paying off your credit balance every month, work on doing that first and come back later 🙂 If it doesn’t matter to you how much things cost, this is probably not right for you. It does take some effort
Step 1: Dream Big and Decide Your Goals
Do you want to go to Europe? Hawaii? Stay in Luxury hotels around the US? I think it’s better to have a goal trip in mind when you sign up for a card so you know what you’re aiming for and are not getting cards with bonuses that you won’t use.
Step 2: Pick a Credit Card and Sign Up
Once you’ve researched and found which card would be the best for your goals, go to the website to sign up. I recommend the Chase Sapphire Preferred first.
Step 3: Get your Sign-Up Bonus
The sign-up bonus is where the most bang for your buck is. These have a minimum spend requirement. Write that date and goal down. Put it on your calendar, and don’t mess it up! Have a plan to spend a couple thousand in the next few months on things you can put on a credit card (generally almost anything not rent/loans. Include bills you can one time pay and big purchases, medical bills, taxes if you owe, etc) Read more on minimum spend here
Step 4: Sign up for any partner airlines/hotels/perks
Make sure you’re signed up for airline and hotel loyalty programs when you get ready to transfer your earned points. Remember to keep track of all your numbers. (We use Google Sheets) If your card comes with other memberships (peloton, door dash, global entry, car rental companies, etc),sign up for those as well!
Step 5: Earning Points
After you get your sign-up bonus, you will still earn points for your spending. Watch the categories for bonuses. For example, on the Chase Sapphire Reserve (3x restaurants), if you spend $500 a month at restaurants, on your next statement, you’ll get 1500 points that add up to be redeemed just like the initial bonus.
Step 6: Spending/Transferring points
Again, there’s lots of ways to get value from your points. People are obsessed with finding first class and luxury stays. Our favorite things to do is to transfer Chase Points to Southwest or United for flights and Hyatt for hotels. Read more about using Chase points here. As an example, if you have 80,000 bonus points from Chase Sapphire Preferred, you can get a round trip United flight to Hawaii for 45,000 points and have 35,000 for a 3 night stay at a Hyatt in Waikiki. Once you’ve transferred your points, go to the individual airline/hotel website, and choose use miles/points. Prepare to be flexible with your dates. Try to have an idea of how much cash value you’re getting by using your points instead of cash. However, try not to obsess.
Step 7: Keep the Card or Not?
After the first year of having the card (and paying the annual fee), decide if the regular bonus category points and travel benefits are still worth it. You may want to downgrade/cancel or keep the card. You’ll have to call into the card company for this. Most credit cards have no annual fee card options which come with fewer benefits. You might still earn points in different categories or in different ways. We downgraded my first Chase Reserve to a Chase Unlimited that gets 1.5% on everything so we try to use this card for non travel and non restaurant purchases.
