Inspired by our recent Travel Hacking Masterclass we wanted to go through some of the most common questions about Frequent Flyer miles that we get here at Extra Pack of Peanuts.
We’ve even brought on fan favorite, Napkins, on to help!
EPoP started as a site dedicated to Frequent Flyer Miles and Travel Hacking though we’ve expanded into so much more than that. This month we want to go back to our roots a bit and focus more on the travel hacking!
We’re republishing some of our old content updated, and we’ll be releasing a new version of our Frequent Flyer Bootcamp later this month!
You’re gonna love it and the journey starts here!
Tell us if you learned something new today! Also do you want Napkins on more podcasts? Hashtag #LoveNapkins at @ExtraPackofPeanuts and let us know!!
This week’s Reader Questions focus around credit cards. Namely your top 5 credit card questions.
“I want to take a trip, what’s the best card for me to open?”
“How does opening cards affect my credit score?”
“Which cards should I keep open? Which should I close?”
“What is the long term approach to travel hacking?”
“What do I do if I have bad credit?”
Today Jason joins me as we delve in-depth into these very commonly asked questions and unravel some of the mystery surrounding your credit score, what miles you should collect, and where to start in the travel hacking game.
Every Friday we’ll be answering reader questions, so if you have any questions please send them over! You can e-mail them to Trav@ExtraPackofPeanuts.com with “Podcast Question” in the subject line and your question might get answered on the air!
One of the most important things to know before canceling a credit card is whether or not you’ll lose your points if you cancel.
There is a lot of confusion around whether your points are safe or not, and one of the worst things you can do is cancel a card, only to find out later that you’ve lost all your hard-earned points.
Luckily, knowing whether you’ll lose your points is pretty straightforward as long as you know what TYPE of credit card you have.
The 3 types of travel credit cards
There are 3 types of travel credit cards.
Airline Credit Cards
Hotel Credit Cards
Bank Reward Credit Cards
Let’s take a look at each.
Airline Credit Cards
Short answer: Will I lose my points if I close an airline credit card? NO
These cards are specifically tied to a certain airline. The bank issues you the card and you receive the points with the airline it is co-branded with.
An example is the Citi American Airlines AAdvantage Visa.
Citi is the bank that offers you the credit card. You apply for the card through Citi, you pay the bill to Citi, etc.
However, the rewards you earn are with American Airlines.
Citi and American Airlines are two separate entities. Imagine them as two separate circles.
The credit card lives in the Citi circle, whereas the AA miles live in the AA circle.
When you close the credit card, the Citi circle disappears but the AA circle is still there.
Therefore, when you cancel an airline credit card, you still have your miles!
Hotel Credit Cards
Short answer: Will I lose my points if I close a hotel credit card? NO
Hotel credit cards operate in the exact same manner as airline credit cards, and the result is the same.
You will NOT lose your points if you cancel a hotel credit card.
An example of a hotel credit card is the Chase Marriott card.
Chase is the bank that offers you the card and Marriott is where you earn your points. They are separate circles.
Bank Reward Credit Cards
Short answer: Will I lose my points if I close my bank reward credit card? YES
We’ve saved the bad news for last. Unfortunately, with bank reward credit cards, if you cancel the credit card, you WILL lose your points.
This is because the bank is the one who gives you the credit card AND the one you have points with.
Therefore, both the card and the points live in the same circle. When you close the card, that circle vanishes, and so do your points.
Examples of bank reward credit cards include the Chase Sapphire Preferred, Amex Personal Rewards Gold or Platinum, Barclays Arrival, and Citi Thank You cards.
A Few More Answers About Bank Reward Credit Cards
How do I know if my card is a bank reward credit card?
Look at what type of points you earn with the card. Does it earn you miles specifically with airlines (United, AA, Delta, USAirways, British Airways, etc) or hotels (Marriott, IHG, Starwood, Hyatt, Hilton, etc.)?
If no, then it is a bank reward credit card. The major bank reward credit cards are ones that earn you Chase Ultimate Rewards points, Amex Membership Rewards points, Citi Thank You points, or Barclays Arrival points.
What should I do if I want to cancel a bank reward credit card but I still have points in the account?
First, ask yourself whether you should cancel the card or not.
If you decide that yes, you want to cancel the card, you have four options (in order of most to least preferable):
1. Transfer points
If they are Chase or Amex points, you can transfer them to a partner before closing the card.
For example, you could transfer your Chase points to United. Since they have been transferred, they now live in a separate circle and are safe.
In addition, Chase allows you to combine your points between accounts, meaning you can send them to another one of your accounts or to a family member’s account (check out my video tutorial on how to easily do this).
So if you have a Chase Sapphire Preferred card and a Chase Ink Bold card, you have two Chase accounts.
If you want to close the Chase Ink Bold card, you can transfer your Ink Bold points to your Chase Sapphire Preferred account. Once you transfer the points to the CSP, they are safe and you can then close the Ink Bold card.
Note: Citi Thank You and Barclays Arrival points can not be transferred, so you’ll need to look at option #2.
2. Use the points
If you can’t or don’t want to transfer your points, you can use your points “as cash” to purchase a ticket or offset the cost of a travel expense.
If you have no trips coming up to use your points on, then you can use your points to buy gift cards OR help pay off part of your credit card bill.
3. Downgrade the card and keep your points
Sometimes, the card will have a lower version that has no annual fee. If you downgrade your card instead of canceling it, most of the time you’ll be able to keep your points.
Just be aware that sometimes when you downgrade, you might lose perks.
For example, if you downgrade from the Chase Sapphire Preferred to the Chase Sapphire, you’ll keep your Chase points, but they become “limited” Chase points instead of “premium” Chase points (read about the differences here).
4. Cancel the card and lose your points
Obviously, this should be a last resort, and only done if you have a small amount of points in that account.
For example, I have 700 “straggler” Amex points in an account. They are worth $7, but it’s not enough to transfer to any partners or even cash out for a gift card (you need 1,000 minimum).
At some point, I’ll close that card and lose those points.
Final Word(s)
Before you cancel a credit card, make sure you know whether you’ll lose your points or not.
If you have an airline or hotel credit card, you can cancel a credit card and you WILL NOT lose your points.
If you have a bank reward credit card, you will lose your points if you cancel the credit card, so make sure you use them or transfer them before canceling the card.
What do you do with your points when you are canceling a credit card? Have you ever lost points by mistakenly canceling a card? Let us know in the comments below!
Welcome to the 2nd episode of the Extra Pack of Peanuts Travel Podcast!
In this episode, Trav answers some of the most frequently asked questions about frequent flyer miles so that you can start understanding them, earning them and traveling for free.
He also discusses why airline alliances are so important and the awesome power they hold, as well as the two types of award charts and how to maximize each.
If you’re someone who is somewhat or completely new to frequent flyer miles this podcast is tailor-made for you.
It will help cut through all the confusion that you may have and answer some of the more basic questions about frequent flyer miles (and many of the questions that I didn’t know when I first started out).
If you are a veteran, don’t worry, there are also some tips and tricks available for you as well, as I’ll then talk about airline alliances, why they are so great for the consumer, and then discuss which award charts work best when.
In this session you’ll discover:
The basic concept of frequent flyer miles.
A brief history of frequent flyer miles and how they’ve grown in the last 20 years.
Why airlines continue to offer frequent flyer miles.
What the term “mile” really means.
How an airline alliance works and the three major alliances.
The difference between a zone-based and distance-based award chart.
The best ways to maximize each type of award chart.
A big thanks to everyone who has checked out this episode of the podcast.
If you haven’t already done so, I would love it if you took a minute to leave a quick rating and review of the podcast on iTunes by clicking on the link below! It is extremely important to help the show grow!
Thanks again for all the support, and if you have an idea for an episode or something you want to see discussed, please leave it in the comments below.
The first question I usually get asked when I begin regaling (or annoying) people with my tales of traveling around the world for free is “Are you rich?”. As soon as the chuckle escapes my lips, the person immediately follows up with “Well, is your wife rich?”.
Again, I chuckle, and then begin explaining that I use frequent flyer miles to travel. Question three is usually “how many freakin’ credit cards do you have?”.
As I enter my second full-fledged year in the the frequent flyer mile game, and prepare for my summer App-o-rama, I figured now was as good a time as any to take stock of the cards I have.
I’ll reveal which cards I prefer to use to maximize my points, and then ultimately decide which ones are worth keeping based on the anniversary bonus they offer and the annual fee they charge.
Hopefully, this will help prove useful for the many of you out there who are facing many of the same decisions of closing or keeping open accounts and also deciding which cards you should add to your stable.
I’ll list the cards in chronological order of the date I got them.
Without giving away the answer, I will tell you to settle in and get comfortable, because the number is quite large.
Sooo….how many cards do I have?
1. Citi/AAdvantage Visa
See Best Current Deals page for further breakdown of this card, how to get both the Citi/AA Visa and Amex at the same time, which I highly recommend doing, and the application links for these cards
Signup bonus: 75k when I got it, 50k now
Date approved: July 29, 2011
What I use it for: Nothing after meeting the minimum spend and getting the signup bonus.
Annual fee: $85
Anniversary bonus: Nothing
Odds of keeping it open after 1 year: 25%. If I call in to cancel and they over me a great retention bonus (7,000 AA miles or more, an $85 statement credit, etc) than I’ll keep it open. If not, thanks for the signup bonus but this card is history!
2. Alaska Airlines Visa
Signup bonus: 40k when I got it, 25k now
Date approved: August 8, 2011
What I use it for: Nothing after making the first purchase and getting the signup bonus.
Annual fee: $75 (not waived the first year)
Anniversary bonus: $99 companion pass.
Odds of keeping it open after 1 year: 0%. If I made good use of the companion pass than this card might be worth keeping open. However, I didn’t use the companion pass this past year, so I’m assuming I won’t make use of it this upcoming year either. Plus, you can “churn” this card and get the signup bonus again, so if I’m going to pay the fee, I might as well get the extra 25,000 as a bonus again!
3. Chase Sapphire Preferred
Signup bonus: 50k when I got it, 40k now
Date approved: August 22, 2011
What I use it for: Almost all my everyday spending. I especially focus on using it for travel and dining, which earns me 2x. Since I live abroad, I use this card all the time because it has no foreign transaction fee.
Annual fee: $95 (waived the first year)
Anniversary bonus: 7% bonus on all points earned, including the signup bonus.
Odds of keeping it open after 1 year: 100%. This is my favorite card and my go-to for almost all of my spending. I love that it has no foreign transaction fee and also that it gives me 2x for travel and dining. I almost always transfer my Chase UR points to United miles, which I love. The 7% bonus is nice too, although I wouldn’t consider just that enough to keep the card open. I’ll keep it open because I love the everyday earning potential!
What I use it for: Occasionally, and sporadically, for groceries because it offers 2x on groceries and gas. However, I don’t even usually use it for airfare, which it offers 3x on, because I’d rather the 2x Chase points (for travel by using the Sapphire) than the 3x Amex points.
Annual fee: $175 (waived the first year)
Anniversary bonus: None.
Odds of keeping it open after 1 year: 0%. The 3x on airfare and 2x on gas and groceries could be lucrative for some people but I don’t really put much value Amex points because they don’t offer good transfer partners. I’d rather use my Sapphire for 2x on travel and my Ink Bold for 2x on gas and build up a nice point balance through Chase and then transfer those points to United. The $175 is too high a fee to justify the extra points I’d get for spending on groceries.
5. Barclays USAirways Mastercard #1
Signup bonus: 40k
Date approved: September 25, 2011
What I use it for: Nothing after the first purchase to get my signup bonus and once every 6 months to adhere to the terms and conditions.
Annual fee: $89 (waived the first year)
Anniversary bonus: 10k USAirway miles
Odds of keeping it open after 1 year: 100%. The 10k USAirways miles are worth over $89 for me so this is a no-brainer. I’ll whip it out every 6 months and use it once just to make sure I’m abiding by the terms and conditions, but other than that, it’ll collect dust on the shelf.
6. American Express Hilton HHonors
Signup bonus: 60k when I applied, 40k now
Date approved: November 9, 2011
What I use it for: Nothing after meeting the minimum spend and getting the signup bonus.
Annual fee: $0
Anniversary bonus: None.
Odds of keeping it open after 1 year: 75%. Normally, this would be 100%, as it never really makes sense to close a card with no annual fee. However, it is being reported that some people have had success getting this card and the signup bonus again after closing their original card. If that is the case, I may close this card so that I’m eligible to get the bonus again. If not, then I’ll just leave it open indefinitely.
7. Chase Marriott Rewards Premier Visa
If you apply for this card, the application page will show a 50k signup bonus. Many people have reported that Chase will honor the 70k offer if you ask them to “bump the bonus” through a secure message after applying.
Signup bonus: 70k + 1 free night in a category 1-4
Date approved: November 9, 2011
What I use it for: Nothing after making the first purchase and getting the signup bonus.
Annual fee: $85 (waived for the first year)
Anniversary bonus: 1 free night at a category 1-5 each year.
Odds of keeping it open after 1 year: 65%. This one will be a tough decision. If used right, the one free night can easily be worth up to $150, which more than makes up for the annual fee. However, I usually prefer to stay at locally run boutique hotels and hostels when I go on vacation. If I needed to “go out of my way” to use the free night, then it wouldn’t be worth it.
Odds are that I’ll keep this open, not only for the free night but also because keeping cards open helps your credit score and having this card open will give me more leverage with Chase when trying to get other Chase credit cards…Ok, basically I just talked myself in to keeping it open!
8. Chase Ink Bold Business (old version)
Signup bonus: 50k
Date approved: November 9, 2011
What I use it for: Nothing after making the minimum spend and earning the signup bonus.
Annual fee: $95 (waived for the first year)
Anniversary bonus: None.
Odds of keeping it open after 1 year: 0%. Now that I have the new Chase Ink Bold card (which is much better), there is no point at all for me to keep this card open.
9. Citi Thank You Premier
Signup bonus: 50k
Date approved: November 9, 2011
What I use it for: Nothing after making the minimum spend and earning the signup bonus.
Annual fee: $125 (waived for the first year)
Anniversary bonus: 1% on all Citi TY points earned through purchases (does not include the signup bonus)
Odds of keeping it open after 1 year: 0%. There are a few reasons I won’t be keeping this card open; the $125 is super high for a card of this (low) caliber, the anniversary bonus is of little value since I don’t put any spend on this card, and Citi TY points are not that valuable compared to Chase UR points.
Lastly, I had to fight tooth and nail with Citi not only to get this card, but also for them to credit me with the signup bonus (think 10+ emails and even snail mail letters) so needless to say, I’m not a fan of their company or their customer service.
10. Barclays USAirways Mastercard #2
This is the exact same card as #4.
Signup bonus: 40k
Date approved: April 3, 2012
What I use it for: Nothing after the first purchase to get my signup bonus and once every 6 months to adhere to the terms and conditions.
Annual fee: $89 (waived the first year)
Anniversary bonus: 10k USAirway miles
Odds of keeping it open after 1 year: 100%. The 10k USAirways miles are worth over $89 for me so this is a no-brainer. I’ll whip it out every 6 months and use it once just to make sure I’m abiding by the terms and conditions, but other than that, it’ll collect dust on the shelf.
What I use it for: Nothing after the first purchase to get my signup bonus. However, if I were to purchase United tickets, I would use this card to get the 3x on United purchases.
Annual fee: $95 (waived the first year)
Anniversary bonus: 2 free United Club lounge passes each year.
Odds of keeping it open after 1 year: 60%. I’m completely on the fence about this one. The lounge passes are nice (and $100 retail value) but I debate how much I actually value them. Sure, its nice to have lounge access for a day, but I normally wouldn’t pay $50 for that privilege.
However, the card does also offer a free checked bag ($50 value) on United flights and like the Marriott above, gives me leverage with Chase when I go to apply for other cards. Those two reasons will probably be enough to push it over to the “keep” side, but I’m glad I have a while to decide!
12. Chase Southwest Rapids Reward Business card
Signup bonus: 50k
Date approved: April 3, 2012
What I use it for: Nothing after the first purchase to get my signup bonus.
Odds of keeping it open after 1 year: 60%. I know I sound like a broken record, but I’m slightly leaning towards keeping this open just to have leverage with Chase. The 3,000 points aren’t enough to justify the annual fee (although it’s close), so what I’ll most likely do is keep this card open for the time being.
When I go to apply for other Chase cards, they may say I have too many accounts open with them, and that time, I’ll happily give up my Southwest account in order to get a new card and the signup bonus.
13. Chase Ink Bold Business (new card)
This card is no longer available. The Ink Plus is still available.
Signup bonus: 50k
Date approved: April 23, 2012
What I use it for: Cable, cellphone, and internet bill (5x points), gas (2x) and gift cards from office supply stores (5x) that help me earn a TON of Chase UR points. I also flip-flop the Ink Bold and the Sapphire Preferred for everyday spend items that don’t fall in those categories.
Annual fee: $95 (waived the first year)
Anniversary bonus: None.
Odds of keeping it open after 1 year: 100%. I absolutely LOVE this card. The fact that I can buy gift cards at office supply stores for all types of products and get 5x for them is amazing and keeps the points continually rolling in.
The only downside to this card is the high minimum spend in the beginning (although there are tons of ways to make it easier than you think), so now that I’ve hit that, I’ll keep using the awesome earning power of this card for years to come!
Recap
As do I! If it’s a good bonus, I’m there!
If you’ve been tallying the cards up mentally, you’ll see that I currently have a total of 13 cards. Many people ask me how I manage to have all those cards and not get confused, but if you break it down, you’ll see that I have:
2 that I use for everyday spending (Chase Sapphire Preferred and Chase Ink Bold)
1 that I pull out very occasionally (Amex Personal Rewards Gold)
10 that basically go unused after making the minimum spend
In reality, I’m not juggling 13 cards, but really only 2. Most of the time I’ll carry one of them and my wife will have the other. Pretty simple.
People also always ask me how I keep track of all of them and how I know when to cancel them.
I employ a simple system that even a caveman could understand; I use a really basic Excel spreadsheet (feel free to EPoP Credit Card Tracking Template) which lists when I need to cancel each card.
Additionally, if you do App-o-Ramas it is easier to keep track of your cancellation dates because a bunch of the cards fall on the same day! Yet another perk of the AoR!
Lastly, here is the breakdown of which cards I will and won’t keep after the 1st year and pay the annual fee for:
4 On the Fence- Chase Southwest, Chase United Explorer, Chase Marriott, Amex Hilton
5 Definitely Closing- Citi Thank You Premier, Chase Ink Bold (old), Amex PRG, Citi/AA Visa, Alaska Airlines Visa
As you can see, having a large amount of open accounts doesn’t have to be scary or difficult to manage. Pick a few cards that you prefer to use for everyday spending and then supplement them with cards that you’ll use for the signup bonus and then close after a year.
That way, it only takes a tiny bit of brain power and small amount of organization to keep you on top over everything.
Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.
