Three Credit Cards for the Domestic Economy Traveler
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One of my foremost pieces of advice to award travelers is to make sure you earn points and miles on every dollar you spend, and the best way to do that is by using the right rewards credit card, or in many cases, cards. Today TPG Senior Points and Miles Correspondent Jason Steele looks at credit card combinations tailored to offer the best return for domestic economy travelers.
Points and miles enthusiasts are often looking for the elusive “best credit card” for earning travel rewards, but the reality is that the combined value of several different cards is greater than the sum of each one individually, and most savvy award travelers carry more than one card. So this week, rather than look at which single card offers the greatest return, I’ll look at credit card combinations that work together to achieve particular travel goals.
In each installment of this three part series, I’ll analyze three combinations of three cards, discuss the merits and drawbacks of each (including sign-up bonuses and long-term benefits), and pick a winning combination of the cards that best complement each other. Today’s post focuses on cards for the domestic economy flyer. On Wednesday, I’ll look at card combinations for international travelers who want a business class (or first class) experience, along with lounge access and other perks. I’ll wrap up the series on Friday with card combos designed to maximize mid-level hotel stays, which are neither budget properties nor top-tier resorts.
Think of each of these combinations as a wine flight to be paired with a meal of travel, and allow me to be your credit card sommelier!
Today’s Focus: The Domestic Economy Traveler
Today’s card combinations are designed for travelers on a budget, who are willing to give up the benefits of first class in order to maximize their travel opportunities. Since many Americans schedule their vacations within the confines of the two weeks paid leave commonly offered by employers, their travel patterns favor shorter domestic flights over longer international trips. Thus, I’m looking for cards that maximize quantity over quality by offering the most domestic travel possible, and only considering elite status or other benefits when they further that primary goal.
Here’s what’s on the menu:
The Southwest Plan – This card combo includes two of the three Southwest Rapid Rewards cards from Chase: the Southwest Rapid Rewards Plus Credit Card and the Southwest Rapid Rewards Premier Credit Card, along with a Chase Ink Plus business card.
Southwest is now the largest domestic airline in the United States, and their awards are fully changeable and even refundable with no fees. The idea behind this strategy is to receive a valuable Southwest Companion Pass while enjoying the ability to earn 5x Chase Ultimate Rewards points, which transfer to Southwest Airlines (among others).
Avios Aficionado – Start with the British Airways Visa Signature Card from Chase and add the Amex EveryDay Preferred and the Chase Ink Plus, since both Chase Ultimate Rewards and Amex Membership Rewards transfer to the British Airways Avios program. These points are extremely valuable when used for domestic awards on American, US Airways, and Alaska Airlines.
British Airways’ distance based award chart offers round-trip economy class flights for as little as 9,000 points. This combination of cards also offers great sign-up bonuses while allowing you to earn more than one point per dollar everywhere.
Delta Loyalist – This plan includes the Platinum Delta SkyMiles® Credit Card from American Express, the Starwood Preferred Guest Credit Card from American Express, and the Amex EveryDay Preferred. If you live in a Delta hub like Atlanta, Detroit, Minneapolis, or Salt Lake City, it will be hard to convince you to waste your precious vacation time changing planes somewhere else, so you need a credit card combination that leverages all the non-stop service available to you.
The idea behind this combination is to earn significant miles from spending on the Everyday Preferred and SPG Amex, while getting some useful perks at the airport and a small status boost with the SkyMiles Platinum card. Even if first class upgrades aren’t your priority, earning Delta status pays off for award travelers in the form of better award availability and lower change fees on award tickets.
Why some cards didn’t make the cut
I would like to have thrown in a card combo for United Airlines fans, but it just didn’t make sense. United’s major hubs are in cities that are also well served by Southwest, American, or both. UA’s domestic network isn’t all that great (too many regional jets), and its domestic awards tend to be pricier than awards on Southwest or Avios awards on AA/US or Alaska.
I also wanted to put together something with one the new Diners Club cards, as the $100 version is the least expensive card that includes unlimited lounge access. However, there are few domestic facilities in their lounge network, and lounge access isn’t really important to budget conscious domestic travelers. Besides, with 1x rewards and no sign-up bonus, this card doesn’t have enough nutritional value to be served here.
Finally. I was tempted to include a combination of the AA/US Air cards from both Citi and Barclaycard, but I think that those booking just domestic economy class awards on these flights will almost always do better with Avios points. Besides, the benefits of these cards are largely redundant, and its hard to earn more than 1x points from them for non-airline spending.
Comparing Sign-up Bonuses and Annual Fees
The Southwest Plan: Once again, Chase is offering a 50,000 point bonus for each of the Southwest Rapid Rewards cards after spending $2,000 within three months. Once you meet the spending requirements and get the bonuses, you’ll have 104,000 of the 110,000 points needed to earn a coveted Companion Pass, which potentially doubles the value of each point. Sign up for a Chase Ink Plus at a retail branch, and you should be able to receive a sign-up bonus of 70,000 points after spending $5,000 within three months.
In total, after $15,000 of spending this plan will earn you 185,000 Rapid Rewards points and a Companion Pass. Valuing each point at 1.4 cents, the total value of these points is a whopping $5,180 of free travel through 2016 (assuming you can make use of the Companion Pass for all of your flights). Additional use of the Companion Pass with paid tickets (once the points run out) garners even more value.
These cards have annual fees of $69 each for the Rapid Rewards Plus cards, or $99 each for the Rapid Rewards Premier cards. The Chase Ink Plus has an annual fee of $95 that is not waived in the first year with the in-branch offer. That adds up to annual fees of $233-293, which is substantial, but well worth the return.
Avios Aficionado: The British Airways card from Chase currently offers a sign-up bonus of 50,000 points when you spend $2,000 in the first three months. While this is much less than the 100,000 points that have been offered in years past, it’s still respectable, especially considering the low spending requirement. The $95 annual fee is currently being waived for the first year, making it one of TPG’s top travel cards for November. I would again add a Chase Ink Plus card at a Chase branch. Finally, I would get the Amex Everyday Preferred, which also earns points that can be transferred to BA, and currently offers 15,000 Membership Rewards points after you spend $1,000 in the first 90 days. Everyday Preferred cardholders get other useful benefits like 3x points per dollar spent at supermarkets, (on up to $6,000 in purchases), and a year’s subscription to Amazon Prime, which includes free two-day shipping and access to online video content.
After spending $8,000 to earn these sign-up bonuses, you’ll have earned enough rewards to have a combined total of at least 143,500 Avios. These could be redeemed for nearly 16 round trips between cities less than 650 miles apart, or 19 one-way segments between 651-1,151 miles apart. Another bargain in domestic economy awards are flights from the west coast to Hawaii at only 25,000 miles round-trip. Based on TPG’s valuations, these sign-up bonuses are worth around $2,440, though if you maximized your redemptions, I think you could reasonably get $4,000 to $5,000 of value out of them (less for families or other groups who need several award seats or have limited flexibility, and a little more for those who save big by redeeming points for last minute award travel rather than paying exorbitant walk-up fares).
Each of these cards has an annual fee of $95, with the fee waived for the British Airways Visa in the first year. Thus, the total annual fees would be $190 in the first year, and $285 each year after that.
Delta Loyalist: The Delta SkyMiles Platinum card offers 35,000 SkyMiles (5,000 of which are MQMs) after spending $1,000 in the first three months. The SPG Amex currently offers a sign-up bonus of 25,000 Starpoints – 10,000 after the first purchase, and 15,000 more after spending $5,000 in the first six months. (It’s worth noting that Amex periodically offers an increased bonus of 30,000 Starpoints.) Again, the Amex Everyday Preferred offers 15,000 Membership Rewards points after you spend $1,000 in the first 90 days. This combo nets you 80,000 SkyMiles (including the 5,000 point bonus for transferring 20,000 points from SPG to Delta), which is worth just $960 according to TPG’s valuations. However, this combo offers a pretty good earning rate and some other perks that boost the bottom line.
The Delta Platinum card has a relatively high $195 annual fee, while the SPG Amex has an annual fee of $65 that is waived for the first year. Along with the $95 annual fee on the Everyday Preferred, this adds up to $290 in annual fees for the first year, and $355 in fees starting in year two. However, maximizing the free annual companion pass from the Delta Platinum card should offset most of that total.
Which combination offers the best sign-up bonus?
Judged by the sign-up bonuses alone, the Southwest Plan wins hands down by offering over $5,000 worth of free travel to those who maximize the Companion Pass. The Avios Aficionado offers competitive value if you live near (or often travel to) American Airlines, US Airways, or Alaska Airlines hubs, or if you mostly travel alone. The Delta Loyalist has the weakest sign-up bonuses at this time, but offers competitive earning potential for long-term spending.
Comparing Ongoing benefits
The Southwest Plan: The Southwest Rapid Rewards Premier Card card offers a ho-hum double points for Southwest purchases and one point per dollar spent elsewhere, but it does offer 6,000 points each year at the cardholder anniversary. Cardholders also receive 1,500 Tier Qualifying Points for every $10,000 in purchases, up to 15,000 per calendar year, which can help if you value elite status with Southwest.
Otherwise, the most useful ongoing benefits of this card combo come from the Ink Plus card, which offers 2x points per $1 at gas stations and hotels (for up to $50,000 in purchases annually), and an amazing 5x points per $1 at office supply stores and on cell phone, Internet, and television services (again up to $50,000 on purchases annually). Throw in an EMV smart chip, and no foreign transaction fees, and this becomes a go-to card both domestically and if you check out any of Southwest’s new international destinations in Costa Rica, Mexico and the Caribbean.
Avios Aficionado: The Amex Everyday Preferred has outstanding benefits for everyday spending. It normally offers 3x points at U.S. supermarkets on up to $6,000 of eligible spending each calendar year, and 2x points at U.S. gas stations. You get a 50% points bonus when you use the card for 30 or more transactions during a statement period, so you can boost those earning rates to 4.5x at supermarkets, 3x on gas, and 1.5x on other spending.
With the Ink Plus, you get the 5x points per $1 on office supplies and telecom services and 2x points at hotels and gas stations. Finally, you can use the British Airways Visa Signature Card for all spending outside the bonus categories at merchants that don’t take American Express, since it offers 1.25 points per $1 on all purchases.
Delta Loyalist: The Delta SkyMiles Platinum card offers 25,000 MQMs (10,000 when you spend $25,000 in a year, and another 10,000 when you spend $50,000 annually. So its possible to earn 50,000 MQMs and reach Gold Medallion status each year just with this card, albeit with $50,000 of spending. Furthermore, this card will waive the Medallion Qualifying Dollars requirement if you spend at least $25,000 on it each year. Finally, each year you renew the card, you’ll get a domestic economy companion certificate.
Neither the Starwood Preferred Guest card nor the Amex EveryDay Preferred offer significant ongoing perks, but in tandem, they earn you a solid return on your day to day spending, offering as much as 4.5 SkyMiles per dollar spent at supermarkets (when you make 30 transactions per statement period to earn the 50% points bonus).
Which combination offers the best ongoing benefits?
The ongoing benefits of the Southwest cards are fairly weak, since the annual points bonus doesn’t cover the annual fee. Likewise, the British Airways Visa offers little aside from the ability to earn 1.25 Avios per dollar. The 5x points per $1 on the Ink Plus card is valuable, but the bonus categories aren’t going to be useful to everyone.
Almost by default, that makes the Delta Loyalist combination the winner here, since the annual companion certificate that comes with the Delta Platinum Amex is the most lucrative ongoing benefit offered among any of the cards in these three combos.
Picking an overall winner
As a former Atlanta resident and Delta Medallion member, I understand the attraction of flying everywhere non-stop and being eligible for upgrades. The current SkyMiles program deserves much of the criticism it receives, but with one-way awards becoming available just weeks from now, and at least the promise of better award availability in 2015, the Delta combo may help to justify the loyalty of some Delta flyers.
But if I have to single out one card combination as the best, I choose the Southwest Plan, even if I do my best to ignore my local and personal biases. I’ve been on the Southwest Plan myself for several years now, though it helps that I live in a city with extensive Southwest service and I’m able to make use of the Companion Pass most of the time.
Nevertheless, I’m confident that anyone who travels with a companion and lives in a city served by Southwest will earn the most domestic economy award travel with the two Southwest cards and the Ink Plus. By offering awards that are flexible and fully refundable with no change fees, these three cards essentially offer most people unlimited award travel during their two weeks of vacation.
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