I explain why credit card signup bonuses rather than bonus categories, especially through multiple cards, often provide the most value.
You’re listening to the Hurdy Gurdy Travel Podcast. I’m your host, Justin Vacula with how to travel the world at next to no cost through credit card signup bonuses, perks, and rewards. This is episode three – Focus on Signup Bonuses, not Categories where I explain why credit card signup bonuses rather than bonus categories, especially through multiple cards, often provide the most value.
When considering a new credit card, I first focus on the signup bonus offered by the card. In most situations, the signup bonus provides the best return on spend when compared to spending on particular categories which generally provide only a few percent in return on spend. My aim is generally not to place a very high amount of spend on one card or even focus on one card — I’ll talk about special exceptions later in the episode – instead, I think about multiple cards so I can obtain multiple signup bonuses to get anywhere from a 15-20% return on spend, sometimes better, rather than just a few percentage points by using cards I already have. Why get only a 1-5% return on the same old same old credit card or worse, 0% using cash or debit, when you can get a return of 15-20%?
Consider: If your average monthly credit card spend is $2000, a yearly spend of $24,000, and you’re making the mistake of using a credit card you’ve had for years only giving you a 1% cashback return, you get a mere $240 at the end of the year. What if you, with a very conservative plan, get one new credit card every three months and gain multiple signup bonuses? With a hypothetical combination of the Chase Sapphire Preferred, Chase Ink Preferred, Chase Ink Cash, and Chase Ink Unlimited, you’ll get about 265,000 Ultimate Rewards points which, if cashed out at a 1% rate is $2650, Redeem the points with travel partners and you’re easily getting more than $4000 in value for more than a 16% return on spend or about a 12.5% non-taxable increase in your yearly income if you’re making $50,000 per year…and, again, this is a very conservative estimate when only considering four cards in one year and just credit card signup bonuses! In future episodes, I’ll talk about many other ways to gain thousands of dollars in value per year.
Neglecting spend towards signup bonuses and failing to signup for multiple, new credit cards, you can see, has significant opportunity costs. It was admittedly a sad moment, weeks ago, when a man I played poker with happened to be talking about how he puts “all of his expenses” on his one American Express Platinum card and gets “one free flight” every year.
At this point, I’m at 21 different credit cards and charge cards and gained more than half a million points just from reaching signup bonuses – a very conservative value of 1% on those points is $5000 towards travel and so many other benefits, statuses, free meals, shopping credits, and much more that I’m not including in this total – far more than just one flight a year. Even with just one card, the Chase Sapphire Preferred as I’ve mentioned in previous episodes, we’re getting at least $750 worth of value for travel. I asked the man why he places all of his expenses on just one card — he’s getting only one point worth about 1.5 cents per dollar spent – and he says that he doesn’t want to bother with new cards and wants to keep it simple. Surely, he does so at his peril.
I don’t want to bother with paying full price. I want to keep travel simple by paying next to nothing. I don’t want to settle for just one flight a year and, even worse, pay thousands of dollars out-of-pocket for travel or otherwise having to sit at home lamenting that travel is too expensive. I don’t want to miss out on tremendous rewards and opportunities. I want versatility, freedom, and power to travel on my terms without breaking the bank. I want to maximize my returns getting a big bang for my buck.
Let’s now return to category consideration. Increased returns on categories, in most situations, really do not move the needle for me. One of my daily driver cards, the American Express Blue Business Plus, provides two times points for every dollar spent up to $50,000 in spend per year and just one point for every dollar spent after that. Some might see that and think, wow, 2 points per dollar, I can get 100k points per year and only use that card. It’s a much better return, funny enough, than just using the Platinum card as was the case in my previous example – but hold on! I got this card for several reasons, not just the two times points: I got 10,000 points as a signup bonus; swapped referral links with a friend for an additional 20,000 points for both of us; and because the card is a great option for me when I am not working on a signup bonus because I have to wait for time to pass before I open other accounts. Please consider using my referral links at hurdygurdytravelpodcast.com, you’ll be glad you did.
If I made the mistake of, say, signing up for a card offering 5% cashback on gas with no signup bonus or a very small one, I’m really not coming out much ahead when considering the Blue Business Plus. If I spend a modest $200 a month on gas for one year, I get $120 back when getting 5% cashback. If I put all of this spending on the Blue Business Plus for some reason, I get $72 back as I value American Express Membership Rewards points at 1.5%. When comparing the Blue Business Plus and a 5% cashback gas card, the difference is $48 in value in one year and not only that, but the opportunity cost of missing out on a signup bonus, a hard inquiry, and a possible strike against Chase’s 5/24 rule I mentioned in episode one. You could have easily made a thousand dollar mistake by signing up for a Sam’s Club Mastercard early on in the credit card journey. I’m here to help you not make these mistakes.
If you’re still not convinced about the folly of focusing on categories, you can look for a credit card which offers both a high signup bonus, good benefits, and a nice category. Consider the American Express Business Gold Card with a 50,000 point signup bonus through using a referral link which can also grant someone up to 20,000 points and a 4x point bonus on gas and dining. This can, since it’s an American Express Business card, will not count against 5/24, has a really nice signup bonus, and gives you the ability to refer others for a 20,000 point bonus. With this card, for example, you have the best of many worlds. I wouldn’t suggest this card as your first card, but it’s a solid choice.
And now for exceptions, of course exceptions! I promised. Categories can make a big difference if you are a big spender, someone who can easily reach multiple signup bonuses, and has multiple cards. I enjoy 5x Chase Ultimate Rewards points up to 25,000 in spend per year at office supply stores using my Chase Ink Cash card and even then, I didn’t get the card just for its 5x category! Chase Ink Cash has a wonderful 50,000 point signup bonus, a 0% introductory APR period when can be leveraged to fund other pursuits, no annual fee, and some other benefits. The American Express personal Gold Card has 4x points per year at grocery stores for up to $25,000 in spend and once again a great signup bonus and many valuable benefits.
Once you have multiple cards and are waiting for time in between opening new accounts – you’ll likely run into the dreaded ‘too many recent inquiries’ and declines if you apply for too many cards in a short amount of time, you can look through your credit card inventory to determine which card you should use to maximize spend. I’ll talk more about when to sign up for cards and strategies for avoiding declines or ‘too many recent inquiries’ in upcoming episodes.
If the year has just started, and I’m not working on a signup bonus at the moment, I’ll use my Chase Ink Cash at office supply stores since, of my portfolio, it has the highest return on spend. I’ll use my Amex personal Gold card at grocery stores. I’ll use my American Express Hilton Aspire card if I’m at a Hilton Hotel. I’ll use my Chase Sapphire Preferred card for travel purchases. If something doesn’t fall into a bonus category, I’ll use my Blue Business Plus card since it has the highest return for me on non-bonused spending. It’s like a role-playing game in real life, really, I use the proper equipment for the task at hand, min-max bonuses, use the right tool for the right job. There’s your level of nerdiness for the day, embrace it. Put on that +5% gold pieces ring at Office Max and Staples.
When I am working towards a signup bonus and engaging in spend outside bonus categories, I use the new card. I don’t want to give up bonus category multipliers and am fine to rotate cards because when I sign up for new cards, and because I have lots and lots of spend to engage in, I know I’ll reach the signup bonus without overspending or overextending. Start with a careful plan and don’t go out buying useless items just to get bonuses! I use the wonderful Evernote app to keep track of my spending and have notes on which card has which category. There’s a bit of organization and memorization required, but it comes to me easy and I started with just one card and built up. I’m happy to juggle my equipment to get wonderful returns.
Your primary focus when considering credit cards should, in most cases, be on signup bonuses. Categories can be a nice boon, but neglecting other factors and especially limiting yourself to just one card can cause you to leave thousands of dollars in value on the table. Be smart, be strategic, be a savvy consumer and, most of all, have a great time in your upcoming travel redemptions! I’m here to help you on your journey to navigate the credit card scene and experience success. Don’t fly solo and don’t make mistakes early on in your credit card adventure! Reach out!
Thanks for listening and stay tuned for more content!
Visit my website at HurdyGurdyTravelPodcast.com where you can read episode transcripts, complete a free credit card questionnaire to receive tailored recommendations, view helpful resources, listen to past episodes, and contact me. Support my work through Patreon, Paypal, the Cash App, and referral links by visiting the donate tab on my website. Subscribe on YouTube; like on Facebook; follow on Twitter; and follow on Instagram.
Visit my other podcast project at stoicsolutionspodcast.com where you can find practical wisdom for everyday life inspired by the ancient philosophers of Greece and Rome.
Thanks to generous patrons and fans of this podcast who help support my work. Have a great day.