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Whether you’re just getting started as an award traveler yourself or trying to help a friend join the club, today TPG Senior Points & Miles Correspondent Nick Ewen explains which travel rewards credit cards are best for beginners.
One of the most common concerns I hear from new award travelers is that it’s a complicated hobby. To some degree, they have a point. The process of earning and redeeming rewards can be hard to navigate at times — deciding where to begin is often a challenge in and of itself (and sometimes calls for a Points Intervention!). However, there are many ways to ease yourself into the points and miles game. In this post, I’ll rank what I think are the best starter credit cards for those of you interested in getting your feet wet.
First, I want to share my overall methodology for developing these rankings. I started by searching through the multitude of credit card products out there to make a list of 10 cards that are ideally suited for those just getting into the hobby (I personally have recommended most of these to a friend or family member at some point). I then rated each card across five key categories on a scale from 1 to 3. These are the categories, along with the rating scale I used for each one.
1. Annual fee — When I first started earning points and miles, I stayed away from cards with annual fees like they carried the plague, and I’m sure many of you feel the same way. However, I soon realized I was missing out on some valuable products with annual fees that were totally justified by the benefits that came with them. My list below includes a mixture of cards both with and without annual fees; I awarded more points for those with lower (or no) fees:
- No annual fee = 3
- Annual fee below $60 = 2
- Annual fee above $60 = 1
- Add 0.5 bonus points if the annual fee is waived for the first year
2. Value of points — You typically can’t compare points across programs using simple numerical analysis without considering their value. Two points in one currency might be worth five points in another. That’s one of the main reasons for TPG’s monthly valuations, which help you look at the dollar value of each program’s currency. To rate point values, I used the following scale:
- Points worth 2 cents or higher = 3
- Points worth 1.5 – 2 cents = 2
- Points worth less than 1.5 cents = 1
3. Sign-up bonus
Another key factor to consider is a card’s sign-up bonus. While these bonuses only apply in year one, they still offer a compelling reason to choose one card over another, especially when you have a limited-time offer (like the current sign-up bonus on the Wyndham Rewards Visa). I also used TPG’s most recent valuations to calculate the overall value of each card’s initial sign-up bonus, and to rate bonuses as follows:
- Value of $750 or more = 3
- Value of $500 – $750 = 2
- Value of less than $500 = 1
4. Earning points
The sign-up bonus gives you an initial bounty of points or miles, but you’ll want a card that offers solid earning opportunities throughout the year. This may come in the form of a good earning rate on all purchases, or bonus points earned for purchases in certain categories. Here’s how I quantified earning potential:
- Extensive bonus categories and/or high everyday earning = 3
- Some bonus categories and/or decent everyday earning = 2
- Few/no bonus categories and low everyday earning = 1
5. Other benefits
This final category is rather broad to include all manner of extra benefits that aren’t accounted for elsewhere. This includes items such as purchase protection, damage and collision waiver on rental cars and even free night hotel certificates. I decided to call out no foreign transaction fees as a separate item, since that can offer you some valuable savings when traveling outside the US.
- Many perks (including no foreign transaction fees) = 3
- Some perks (with foreign transaction fees) = 2
- Limited perks = 1
I chose to leave all airline co-branded cards off the list, simply because I believe that geography plays such a large role in these products. For example, I would never recommend that a Chicago resident open a Delta American Express as his/her primary card, just like I wouldn’t encourage a friend in Atlanta to do the same with a United card.
However, I did include some hotel credit cards, since each chain’s nationwide (and global) footprint tends to be much more widespread. Where you live shouldn’t impact the value you can get out of hotel points like it does with airline miles.
Here’s a table that breaks down my ratings (with cards in alphabetical order):
|Annual Fee||Value of Points||Sign-up Bonus||Earning Points||Other Benefits||TOTALS|
|Capital One Venture Rewards Credit Card||2.5||1||1||3||3||10.5|
|Chase Sapphire Preferred Card||1.5||3||3||3||3||13.5|
|Citi Double Cash Card||3||1||1||2||2||9|
|Citi Hilton HHonors Reserve Card||1||1||2||2||3||9|
|Citi ThankYou Premier Card||1.5||2||3||3||3||12.5|
|Starwood Preferred Guest Credit Card from American Express||1.5||3||2||2||3||11.5|
More importantly, here’s how the cards ranked according to my scoring system:
1. Chase Sapphire Preferred (13.5)
2. Citi ThankYou Premier (12.5)
3. Starwood Preferred Guest American Express (11.5)
4. Amex Everyday (11)
5. Capital One Venture Rewards (10.5)
6. Bank AmeriCard Travel Rewards (10)
7. Barclaycard Arrival Plus (9.5)
8 (tie). Citi Double Cash and Citi Hilton Reserve (9)
10. Chase Freedom (8)
What Didn’t Surprise Me
This list has both expected and unexpected results. For starters, I wasn’t surprised at all that Chase Sapphire Preferred came out on top. This has been my go-to card for a number of years and for a variety of reasons, including the double points offered on travel and dining purchases and no foreign transaction fees. Opening the card and using it exclusively for just one year can open up some great redemption options.
Ultimate Rewards points are also among the most flexible and valuable loyalty program currencies out there. TPG pegs them at 2.1 cents apiece for good reason. You can transfer them to a variety of loyalty programs (including Hyatt, Southwest and British Airways) or redeem them directly for travel, earning points and/or miles plus elite status credit like you would on regular paid itineraries. You can even combine points from multiple household accounts to help you stockpile rewards more quickly.
Sapphire Preferred is usually near the top of my list of recommendations for friends and family (I actually just had my sister apply for one last week). It does come with a $95 annual fee, though it’s waived for the first year. While it takes a little time to learn the ins and outs of the program to redeem your Ultimate Rewards points for maximum value, once you’ve turned them into luxurious travel experiences like a free stay at the Park Hyatt New York, you’ll be hooked.
The next three entries on the list also aren’t surprising to me, as each one of these cards offers some tremendous value. The Citi ThankYou Premier is currently offering a sign-up bonus of 40,000 ThankYou Points after making $3,000 in purchases within the first three months of account opening, and the program’s addition of transfer partners has given cardholders several new ways to redeem ThankYou points for maximum value. You can get a lot out of holding this card for just one year.
The Amex Everyday and SPG Amex are also solid products, mainly because they earn such valuable points. TPG values Membership Rewards points at 2 cents apiece and Starpoints at a whopping 2.4 cents apiece (tops on his list), so while the bonus categories aren’t overly exciting, the standard earning rate can still open up some lucrative redemption options (and TPG actually recommends the SPG Amex for purchases that don’t fall into any bonus spending category on another card). For more information, check out Richard Kerr’s posts on redeeming Membership Rewards points for maximum value and redeeming Starpoints for maximum value.
What Did Surprise Me
What really jumped out to me is the collection of cards at the bottom of the list. The low score for Chase Freedom isn’t too surprising, since it’s most useful when paired with another card that earns Ultimate Rewards points. However, the Barclaycard Arrival Plus and Citi Hilton Reserve are two cards that I use regularly. Why were they rated so low?
The biggest problem for both cards is that the redemption options are limited and not nearly as valuable as those offered by other cards on the list. The Citi Hilton Reserve probably has the most valuable array of “other benefits” (including automatic Hilton HHonors Gold Status and a free night certificate when you spend $10,000 in a calendar year). Unfortunately, Hilton points took a huge hit after 2013’s devaluation, so this card isn’t nearly as lucrative as it once was.
The Arrival Plus suffers from a slightly different fate. Sure, it offers double miles on all purchases and a solid return of up to 2.27% (at least for the moment), but this is only when you redeem your miles to cover travel expenses. There are many other redemption options, but most of them offer much lower rates of return. This lack of flexibility and relatively low value of Arrival points really hurt this card’s overall performance.
Diving headfirst into award travel can seem daunting, but if you’re reading this post, you’ve already taken the important first step of trying to figure out the best way to get started! This analysis is one way of identifying the best starter cards, but it doesn’t paint the full picture:
- You may live in a hub city and prefer a co-branded airline card to the ones listed above.
- You may have a very specific redemption in mind, and would rather open a card to help achieve your goal.
- You may get a targeted offer in the mail that gives you a better sign-up bonus than whatever is publicly available.
- You may simply want cash back and don’t want to deal with the hassle of redeeming points (in which case you should check out Jason Steele’s post on top cards for cash back and statement credits).
However, if you’re thinking about getting into the points and miles hobby and don’t know which card you should open first, then the analysis above will help you decide. You might value certain features more than others, so feel free to adjust the scoring system to suit your needs!
What card would you recommend to someone who is new to award travel? Even after the introduction of the Chase Sapphire Reserve, the Chase Sapphire Preferred is still a fantastic choice if you want to avoid the Reserve’s $450 annual fee, earn 2x on all travel & dining and earn a 50,000 point sign up bonus.
Even after the introduction of the Chase Sapphire Reserve, the Chase Sapphire Preferred is still a fantastic choice if you want to avoid the Reserve’s $450 annual fee, earn 2x on all travel & dining and earn a 50,000 point sign up bonus.