As long as you know what you’re doing. “Dave Ramsey gave us bad advice!” That’s the first thing I told my wife when I realized all we missed out on from living off our debit cards. Like many of you reading this, we’ve always done the best we can to live responsibly, stay away from debt, and save and invest wisely. We thought that meant staying away from credit cards entirely, but man was that a mistake. As we watched friend-after-friend fly all over the country and take big trips during the year, we knew there was something we had to be missing out on. As it turns out, responsibly using credit cards is one of the biggest life hacks that we had never taken advantage of. The following is an EASY guide to everything we’ve learned over the past few years. If this is new to you like it was new to us, I promise it will turn your world upside down. If you sign up for any card mentioned in this post, please use the links provided throughout this page! I’ve linked to the best deals I could find, and you’ll help my family earn even more points for our next vacation 🙂
Credit Cards Actually Save Me Money?! So, back to Dave Ramsey. Let me say this up front… His financial advice has been a huge blessing to our lives and our marriage. His simple advice for saving, investing, and more has absolutely set us up for success and helped us sleep easy at night. However, because of his stances on credit cards, we also missed out on years of bonuses and consumer protections that debit cards just don’t provide. Let me say this up front (since it’s where all the anti-credit card sentiment lies): DO NOT SPEND MONEY YOU DON’T HAVE. Don’t EVER carry a balance on a credit card. It’s financially stupid, and will ruin your financial life. HOWEVER… If you budget and spend responsibly, paying off your statements in full every month with money you already have set aside, credit cards are absolutely the way to go. It’s not even close. Here’s why:
- You’re liable for less fraud. You can look up more on this on Google, but I was shocked to discover how much greater the fraud protections are for purchases with a credit card vs using a debit card.
- You can get automatic insurance, free extended warranties, and more. Use the right card (like the ones I mention below) and you’ll get extra extended warranties, theft protection, and even extensive travel insurance, all for free.
- You can easily earn 3-5% cash back on many purchases. Debit card cash back programs exist, but they’re pathetic. You can earn thousands of dollars in bonuses every quarter! More on this below. Basically, once you choose the right card, all you have to do is swipe that card instead of your debit card at the register, then pay it off once a month with three clicks. Change that one aspect of your wallet, and a whole world of stupid easy freebies is opened up to you.
Here’s where to start…
Choosing the Right Card and Rewards Program
TL;DR – Start with the Chase Sapphire Preferred card and use Chase’s Ultimate Rewards program. Capital One and AMEX have some great programs, but no rewards program is quite as valuable as Chase’s Ultimate Rewards (UR) points. They’re easy to redeem, transfer with a ton of partners, and can be crazy valuable if you play your cards right. We’ll talk more about that in a second. Now, you can use UR points for cash back and all sorts of other things, but by far their most valuable use is for travel, which is what the rest of the post is going to be built around.
Your First Card (and 60,000 points) – The Chase Sapphire Preferred
The Chase Sapphire Preferred is a brainlessly simple first step into the travel rewards game. Here’s what it gets you:
- Access to the Chase travel portal with 5x points back
- 25% points bonus if you use your points to book travel through the Chase portal
- 3x points for all dining
- 2x points on travel
- 3x points on online groceries
- 3x points on streaming services
- Travel insurance built-in: trip delay/cancellation, lost luggage, rental car insurance, etc
- 60,000 pts right out the gate as a sign up bonus (sometimes up to 80,000)
- $50 off one hotel stay every year
- …plus a bunch of other random perks that change throughout the year.
This card does have an annual fee ($95/yr), but you effectively knock $50 off of that with the hotel credit and the massive points bonus.
What Makes This Card So Special?
Three things: the huge signup bonus, all the travel benefits, and access to point transfer partners. First off, the Sapphire Preferred has a consistently high sign up bonus of at least 60,000 ultimate rewards points. As long as you can spend $4,000 through the card in 3 months (surprisingly easy), you’ll get those points deposited to your account. That’s worth $600 cash back (but don’t do that), $750 on the Chase travel portal (thanks to the 25% bonus), or $1800 with the right travel partner (more on that in a second). Second, as mentioned above, all of the included travel perks and benefits stack up quick. You basically never have to buy travel insurance or rental car insurance again, which might be worth the cost of admission in and of itself. Finally, the Chase Sapphire cards give you access to Chase’s travel portal (the best rates out there, plus a 25% point bonus when you use UR points), and more importantly, a huge list of transfer partners. Rather than lock yourself into a rewards card that only lets you spend at one hotel chain or store, this lets you transfer points to a huge list of partners and airlines that’s super useful. (That’s a benefit you don’t get if you only have one of the other lower-tier Chase cards mentioned below.).
The Biggest Points Hack: World of Hyatt
If you want the absolute best bang for your buck, you’ll definitely want to use your UR points along with the free World of Hyatt program. Simply put, you just sign up for a World of Hyatt account (free), transfer your points to that account through the Chase portal, then use your points to book any Hyatt hotel for any time through their site. While you can use your 60,000 points for $750 in travel using Chase’s portal, World of Hyatt offers an insane multiplier for the value of your points if you book through them. Looking at a fancy hotel in Nashville, for example, I could almost book one night at the $650/night Grand Hyatt with my 60,000 points as cash back, and that still doesn’t include daily resort fees. However, If I easily transfer those same points over to the free World of Hyatt program, I can book 3 FULL NIGHTS at the Grand Hyatt (no resort fees!) with my same 60,000 points. It’s pretty wild. Of course, you can also book a week at a “normal” Hyatt hotel too, or whatever you want. For instance, most Hyatt Places can be found for about 9,500 points/night if you book a few months in advance. It’s one of the most ludicrous travel hacks out there.
You Next Two Cards (Plus 40,000 More Points)
Once those bonus points roll in, believe me, you’re going to want more points. The next two cards to get come with super easy bonuses, and unlock the easiest way to earn UR points through your regular weekly spending. The next cards you want to pick up are the Chase Freedom Unlimited, and the Chase Freedom Flex. The order you get them is up to you, but these cards typically each come with a 20,000 point sign up bonus (for spending just $500 in 3 months) and give you some special superpowers for earning points. The Freedom Unlimited gets you 1.5x points on every purchase, and the Freedom Flex will allow you to earn 5x points on certain categories that change every quarter (gas, groceries, online shopping, etc). They both offer 3x points on dining, and neither have an annual fee. Here’s why you want these cards next: Not only will you earn a…
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