Travel rewards have allowed me opportunities to visit countries that I've always thought to be beyond my reach. Traveling has become such an integral part of who I am that I can't imagine not traveling, not planning my next trip, not working toward the next award. Travel rewards are one of the pillars of FI and the better we get at this whole rewards thing, the better we are at FI.
I have been interested (ok, fine, obsessed) with travel rewards for a couple of years and I've made my share of mistakes. Some were just total newbie mistakes and some were just me not being diligent enough. The more I got into this hobby, the more apparent it became that I need systems. I needed to optimize the processes to make my life easier and keep better records. Let's look at the mistakes I've made and how you can learn from my experience.
Mistake #1: Missed deadline for meeting minimum spending requirement
About three years ago, my husband and I applied for Citi AAadvantage World Elite MasterCard. At that time, the sign up bonus was 30,000 AA miles and we had three months to meet minimum spend. We had spent $3,000 on my card and received the bonus but we missed the deadline on my husband's card by a just a few days. No amount of pleading with Citi Bank helped and the bonus never posted.
Lesson learned: Keep track of credit card approval dates. The clock starts when you are approved, not when you receive the actual card. Create a spreadsheet and as soon as you are approved write down the date. You can reach out to the credit card via secure message and ask them for the credit card opening date and how long you have to meet minimum spend.
Mistake #2: I closed our Starwood Preferred Guest American Express cards too early
This is actually a two-part mistake. First, I decided to close our SPG Amex cards just a few months after opening them and receiving the sign up bonus. This is a typical rookie mistake. There is no need to rush to close the credit card even if you aren't planning to keep it long term. I hadn't done the proper analysis of all the benefits of SPG Amex card and I didn't know how incredibly valuable SPG points are.
Moreover, it is never a good idea to close the credit card shortly after receiving the sign up bonus. Always wait at least a year until next year's annual fee has posted and then decide if the card's benefits are valuable enough to justify paying the fee. Sometimes the card's benefits are well worth the fee, for example, a free hotel night on the card member anniversary, airline or hotel elite benefits, free checked bags etc.
The second half of this mistake, I transferred SPG points to American Airlines without a concrete redemption in mind. I should have left the points in my SPG account until I was ready to use them. I don't know why I decided I had to transfer the points before closing the card.
Lesson learned: Don't close the card right after receiving the sign up bonus and don't move the hotel/airline points to another partner without having a redemption in mind. Hotel and airline points are now in your account, and even after you close the card you get to keep the points.
Mistake #3: Make sure all your information is current and accurate
My mistake was not checking that my husband's and mine addresses on our respective SPG accounts matched. His account was opened a long time ago and SPG had his office address on file. We had a particular redemption in mind but he didn't have enough points in his account. You can transfer SPG points between spouse's accounts but the addresses have to match. I wanted to transfer some of my points to him, but because our addresses didn't match we had to email SPG copies of our driver's licenses and wait for someone at SPG to approve the transfer. Thankfully, the availability was still there and we were able to accomplish our goals.
Lesson learned: Make sure the reward programs have your current home address and phone number. Update your information if you move.
Mistake #4: Not opening a few cards to pay for large expenses
If you've ever done any major home improvement projects, you know how expensive they can get. Three years ago we decided to remodel our rapidly aging kitchen. We had to buy new everything, new floors, cabinets, appliances, tile and a million other things that you never knew existed. We opened Chase Sapphire Preferred card to take advantage of the sign-up bonus and met the minimum spend about five minutes into the project.
I still remember the day when I paid for all the kitchen cabinets with just one card. I will probably remember that day forever. Instead of splitting this one huge purchase among several credit cards and getting multiple sign up bonuses, I only used ONE card. Splitting the purchase would have given us more mileage on our travel rewards cards. For example, you can earn 1.5 points per $1 on purchases of more than $5,000 with the Business Platinum American Express card, and that is on top of very generous sign-up bonus.
Lesson learned: Split large expenses, like college tuition, home renovation projects, down payment on a car, or a large business expense, among several cards to take advantage of different cards' benefits and multiple sign up bonuses. In short, optimize your expenses.
Mistake #5: I didn't know I could ask Chase not to count authorized user cards
Most people interested in travel rewards know about Chase's infamous 5/24 rule. You can't be approved for certain cards if you have opened more than five credit cards in the last 24 months. Being an authorized user on someone else's card counts, you don't even have to be the main cardholder. I was aware of the rule; but, I didn't know I could ask Chase to remove the cards I was an authorized user on from my credit report. I also didn't know I could ask them to simply not count the authorized user cards when they were reviewing my application. So when my application for a United Explorer Card was denied, I called the so-called reconsideration line. They informed me that I had opened more than five cards in the last two years. Sadly, I was unprepared and didn't ask them to waive the authorized user cards.
Lesson learned: Beware of the 5/24 rule. Don't be an authorized user on too many cards and know that you can ask the bank to remove the cards from your credit report. If you are denied for a card, do your research and prepare before calling the bank.
I hope you can learn from my mistakes and my experience can help you in your travel rewards journey. Remember that keeping good records and educating yourself about different card application rules is the key to success.
What were some of your biggest mistakes? Let's learn from each other!