My 2012 Points Strategy: Taking Credit Card Inventory

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This is an installment in the My 2012 Points Strategy Series. Posts include: Taking Credit Card Inventory, Future Credit Card Applications, Airline Elite Status, Hotel Elite Status. This week I'll be highlighting my strategy for 2012 as it relates to all things points and miles including my credit card strategy as well as airline and hotel loyalty plans. As I highlighted last week, I ended up getting over 600,000 miles and points from credit card sign-up bonuses last year. Along with my actual spend and various bonuses and promotions, it was by far my #1 source of miles and points. With applications and approvals my score dropped about 16 points, but increased by more than that because I pay off my balances every month (the biggest factor of a solid credit score) and I pay them all on time. There is no magic number on how many credit cards you can get, but I know I am by no means pushing the limit. I have points-obsessed friends with more cards than they can fit in a ziploc bag (you know who you are) who still have strong scores. Most people think that opening credit cards will hurt your score irreparably, but as long as you have good credit and are financially responsible, the effects are negligible and the benefits (free travel) are well worth it - at least for me. The first thing I recommend doing is laying out all of your current, active credit cards and label them keep, cancel or to be decided. While canceling a credit card can temporarily impact your credit score by decreasing the amount of available credit you have, it can make sense in certain situations (check out this post for more info). Here is my current list of keep/cancel/TBD. Tomorrow I'll highlight which cards I have on my "must get" list for 2012 and my thought process behind when I'm going to apply for each. Keep: Sapphire Preferred: My #1 card when I'm not working on hitting a spend threshold on other cards. Key benefits: double points on travel (and you don't have to book it through Chase and it even includes taxis, subways and parking) and dining. 7% annual bonus on all points earned each year (including the sign-up bonus!). No foreign transaction fees and it's either a Visa Signature or World Mastercard, so it's accepted globally in many places. $95 annual fee, but free for the first year. American Express Premier Rewards Gold: In my opinion this is the best Amex card. It gives 3 points per dollar on airfare (4x if booked through Amex travel), 2 on gas and groceries and 1 on everything else. There are foreign transaction fees, so I never use it abroad or for purchases from foreign companies. You also get 15,000 bonus points for spending $30,000 per calendar year. I like my Amex points because Amex runs transfer bonuses, like the current 30% to British Airways. I think Chase Ultimate Rewards points are more valuable because they are good hotel options as well, but I don't like to put all of my points in one basket. Chase Ink Bold with Ultimate Rewards. This is the business version of the Sapphire Preferred and it gives me 5 points per dollar at office supply store purchases, cellular/landline phone service, and cable service and 2 points per dollar on gas, hotels and motels. These points can be combined with my Sapphire points, so it's a nice combination, since this card is a charge card which allows me to spend more monthly versus the Sapphire Preferred which is a credit card. Cancel: Citi American Airlines cards. The 75,000 point bonuses were great, but these cards don't do anything for me, even though I am flying American more these days. American decided to stop counting credit card miles towards million miler status in December of 2011, so why would I want to bank 1 mile per dollar to only AA, when I can bank to Chase and Amex and have tons of transfer partners and earn much more than 1 mile per dollar on certain categories? Before canceling, I'm going to try to downgrade one of these cards to the Citi Forward card, which has no annual fee and gives 5 points per dollar on dining (they can't be transferred to any airlines, but 5% cash back is good). I probably won't even use the card because I'd rather have 2.14 Chase Sapphire Preferred points per dollar spent on dining (which I can then transfer to United/British Airways/Hyatt) to book expensive flights and hotels. To Be Decided: American Express Platinum card. I go back and forth on this one and will actually be writing a dedicated blog post on the subject, because I know many of you are in the same boat. I got the card with a 100,000 point sign-up bonus (no longer available), so it was a no-brainer. However, after the first year when those bonus points are realized and some perks like the Global Entry credit are exhausted, it becomes much more of a difficult decision to renew. My biggest gripe is that I only earn 1 point per dollar on all purchases. On the upside it does get my lounge access to my two primary carriers, American and Delta, which I especially need since I am dropping from Delta Diamond Medallion to Platinum on March 1 so I'll lose the SkyClub access. More to come on this decision. Chase British Airways Visa: I got it for the 100,000 sign-up bonus last May (like many of you) and haven't used it much since. However, I am toying with the idea of trying to spend $30,000 to get the companion ticket, which can be very valuable (although comes with high taxes and fees). Additionally, British Airways recently "revitalized" their frequent flyer program and some of the best redemptions were gutted, though there still is immense value in the new Avios program, which I touched on in this post, but will be writing about in more detail soon. Stay tuned. Update: The current sign-up bonus offer for the British Airways Visa Signature Card is 50,000 Avios after you spend $3,000 in the first 3 months of account opening.