I don’t want to derail the investment advice thread too much, so I thought I would start a new thread about credit cards.
Cash back is great, and I have the Fidelity card, but the real juice is the sign-up bonus. For example, I’ve signed up for the BofA Alaska Airlines Visa probably 15 times and canceled the card 13 times (helps that I have a business). Once you meet the minimum spend (which is typically the hard part) you receive enough miles to fly anywhere in Alaska flies including Hawaii, and depending on the size of the sign-up bonus, maybe even roundtrip to Europe on a partner airline. It also comes with a $100 annual companion fare. There is an annual fee, but it is still a great deal. When it gets close to annual renewal time, I simply cancel. When I’m in a position to meet the minimum spend again (like not trying to meet the minimum spend on another card) I simply re-apply and they always approve it.
Probably even better are the Chase rewards cards which come with amazing flexibility. For example, last spring my wife and I flew to Hawaii (for free, on Alaska) and spent 18 days on Maui, all but four of which were at $800/night Hyatt resorts. All for the cost of a couple hundred bucks in annual fees.
Unlike BofA, Chase throttles their sign-up bonus by making you wait a few years before getting it again, so plan wisely. But their IHG card is keeper, in my opinion. It has a $75 annual fee, which also gives an annual free night. That’s worth more than $75 right there. It used to be the free night was at any IHG property, so my wife and I spent the night at the Amstel International in Amsterdam, which is the fanciest hotel I’ve ever stayed at, or probably ever will stay at. Except maybe the Hyatt Hana Maui, that was pretty nice too. IHG has throttled that back to lower tier properties, but it is still a good deal.
Philosophically, points and miles don’t earn interest and will possibly be devalued in the future. So no reason to horde them. Use 'em if you got 'em. There are always more just around the corner.
Q: Does this hurt your credit score?
A: The effect on your credit score (at least on my credit score) is imperceptible.
Q: Is this ethical?
A: In my opinion yes. Credit card companies know exactly what credit cards I’ve signed up for and how long I used them. And they still trip all over themselves to give me more cards. If they are cool with it, I’m cool with it.