When using ‘wrong’ credit card is the right thing to do

Oct 5, 2019

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Opening and using travel rewards credit cards can help quickly boost your stockpiles of points and miles across a variety of loyalty currencies. While some travelers prefer to focus on just one or two cards, I prefer a wallet chock-full of plastic — including airline cards, hotel cards and my personal favorite: transferable-point cards. For every purchase I make, I strive to select the best one.

Except for those times when I deliberately choose what many would describe as the “wrong” one — but for a good reason.

Here are some examples of when the seemingly sub-optimal credit card is actually a better choice.

When you’re pursuing a welcome bonus

(Photo courtesy of the Miami Curio Collection by Hilton)
If you’re working toward a welcome bonus, you want to make sure you spend enough to earn it. (Photo courtesy of the Miami Curio Collection by Hilton)

One of the quickest jolts to your loyalty program account balances can come through welcome bonuses on top credit cards. If you’ve just opened a new card, you almost certainly have to spend a set amount of money in a defined amount of time to take home that massive haul of points or miles (unless you open a card with a bonus after a single purchase). If you’re worried about falling short of that spending threshold, it’s absolutely worth it to swipe the new card, even if the earning rate is lower than another card in your wallet.

As an example, in June I was targeted for an upgrade offer to the Hilton Honors Aspire Card from American Express (which matched the current welcome bonus of 150,000 points after you spend $4,000 on the card within your first three months of card membership). I wasn’t too worried about spending that amount, but I wanted to make sure of it. As a result, I shifted some non-bonus-category spending from my Chase Freedom Unlimited to the card.

Here’s why that might appear to be a bad idea based on TPG’s most recent valuations:

  • Hilton Aspire: 3 points/$ x 0.6 cents per point = 1.8 cents (or a 1.8% return)
  • Freedom Unlimited: 1.5 points/$ x 2 cents per point = 3 cents (or a 3% return)

Sacrificing 1.2 cents in value seems like a pretty poor decision — until you factor in the welcome bonus.

Think of it this way. If I spend exactly $4,000 before the three-month window ended (and all those purchases were at merchants that wouldn’t otherwise earn a bonus), I’m not just earning three Hilton points per dollar spent. I need to consider that every dollar gets me that much closer to the 150,000-point haul. And when you allocate those 150,000 points across the $4,000, you get 37.5 points per dollar.

In other words, for every non-bonus-category dollar I spent on the Hilton Aspire (up to $4,000), I effectively took home 40.5 points. That boosts my return to 24.3% — over eight times as lucrative as the Freedom Unlimited.

When you’re booking a United flight

A United Express Airlines airplane heads to a runway at Newark Liberty Airport in front of the skyline of lower Manhattan on March 23, 2018 (Photo by Gary Hershorn/Getty Images)
You need to use your United credit card to buy your ticket if you want to use the free-checked-bag benefit. (Photo by Gary Hershorn/Getty Images)

There are many reasons to carry airline cobranded cards in your wallet — from waived checked bag fees to companion tickets to in-flight discounts. However, one carrier has a slightly-more-restrictive policy when it comes to accessing these benefits: United. In order to enjoy a free checked bag on a domestic, United-operated flight by holding a card like the United Explorer Card, you actually need to purchase the ticket with that card:

“The primary cardmember and one companion traveling on the same reservation will each receive their first standard checked bag free — calculated as a $30 value for the first checked bag, each way, per person — on United-operated flights when purchasing tickets with their United Explorer Card.”

That isn’t a terrible value proposition, since it awards two United miles per dollar spent on these purchases. However, I also have the Chase Sapphire Reserve in my wallet, and this card gives three Ultimate Rewards points per dollar spent on a variety of travel purchases. I can also transfer those points directly to United, so by using my Sapphire Reserve, I could be effectively earning 3 United miles for every dollar I spend. Seems like a much better option, right?

Not so fast, because doing so will likely prevent me from checking my bag for free.

Let’s put this in a concrete example and say that I’m booking a round-trip flight from my home in Florida to Chicago-O’Hare (ORD). The total price of the ticket is $400, so here’s a snapshot of how much I’d earn by swiping the two cards above:

  • United Explorer Card: 2x miles x $400 = 800 miles (worth $10.40)
  • Sapphire Reserve: 3x points x $400 = 1,200 points (worth $24)

However, if I need to check a bag on the flight, using the Sapphire Reserve is the wrong choice, since I’m now on the hook for that additional $30 fee each way. Suddenly, that extra $13.60 worth of points is costing me $60 out of pocket. No thanks!

When you want added protection

My hand-written boarding passes hint at the problems that led to an expected overnight in Lima. Fortunately, trip delay coverage saved the day.
My hand-written boarding passes are a physical manifestation of the problems that led to an expected overnight in Lima. Fortunately, trip delay coverage saved the day.

We focus a lot of time on travel rewards here at The Points Guy, but some of the less-obvious benefits can come to your rescue when things go wrong. This is why you should always think about things like trip cancellation/interruption coverage, baggage delay insurance or trip delay protection whenever you’re deciding which credit card to use on your next trip.

As an example, The Platinum Card® from American Express offers an incredible 5x points on flights purchased directly with the airline — a return of 10%. This seems like a much better option than the Chase Sapphire Reserve‘s 3x points (6% return). However, selecting the Amex Platinum won’t currently include any of the above perks.

(Note that this is changing as of January 1, 2020, when the Amex Platinum adds new travel protection for flights purchased on or after that date.)

I encountered this very situation earlier this year on a flight back from Chile. I had transferred Chase points to Singapore’s KrisFlyer program to book one-way, business-class flights on Avianca from Santiago (SCL) to Lima (LIM) to Miami (MIA) — before KrisFlyer’s Star Alliance partner award chart devaluation. Unfortunately, Avianca’s check-in systems were down in Lima, so the agents were writing out boarding passes and bag tags by hand (see above picture). They then held the flight for everyone to board, so we were 90 minutes late, missed our connecting flight and were rebooked for the following morning.

However, because I had paid for the taxes and fees on the award tickets with my Sapphire Reserve, I knew we were covered for up to $500 per ticket in “reasonable expenses” thanks to the trip delay protection on the card. I booked a room at the JW Marriott for me, my wife and my daughter and submitted a claim to Chase’s Card Benefit Services when we got home. After providing documentation, I was reimbursed for the hotel plus our Uber rides from the airport to the hotel and back — a total of $383.26.

Had I swiped my Amex Platinum for the taxes and fees, I would’ve earned some extra points but would’ve been left with two (less-desirable) options after missing the connection: 1) Ask Avianca to provide a hotel, which almost certainly wouldn’t have been as nice as the JW Marriott, or 2) Book a hotel and arrange transportation entirely out of my own pocket.

When you’re using an offer

Hands holding credit card and coffee to go. Photo by Popartic/Getty Images
Don’t forget about offers and discounts when shopping, as they might lead you to choose a different credit card. (Photo by Popartic/Getty Images)

A final time when you’d want to swipe a less-obvious card is when you’re using a discount or promotion — like Chase Offers or Amex Offers. In many cases, the bonus points or dollars off you’d enjoy with these offers will more than make up for any points or miles you missed out on by using the “wrong” card for the purchase.

As an example, last month we saw an Amex Offer for 20% cash back (up to $50) on your cell phone bill. This appeared on one staffer’s Business Platinum® Card from American Express, a card that typically offers just one Membership Rewards point per dollar spent on these purchases. A better option would be a card like the Ink Business Cash Credit Card, which awards 5% cash back (or 5x Ultimate Rewards points if you have the right combination of cards) on up to $25,000 in combined, yearly purchases at office supply stores and on telecommunications purchases.

Here’s how this normally breaks down for a $200 cell phone bill:

  • Business Platinum: $200 x 1 point/$ = 200 points (worth $4)
  • Ink Cash: $200 x 5% = $10 (or 1,000 Ultimate Rewards points, worth $20)

However, when you factor in the Amex Offer, you’d enjoy another $40 off by swiping your Business Platinum card, making this a much better option.

Bottom line

As you can see, there are a number of scenarios where the “wrong” card is actually right for a given purchase. It may appear that you’re sacrificing some points — or you may actually get fewer points — but in many cases, it’s worth it. Whether you’re working toward a welcome bonus or trying to ensure you’re protected on your next trip, it’s critical to carefully consider all aspects of a credit card before deciding which one to swipe.

Featured photo by golubovy / Getty Images.

2018 TPG Award Winner: Mid-Tier Card of the Year
Chase Sapphire Preferred® Card

WELCOME OFFER: 60,000 Points

TPG'S BONUS VALUATION*: $1,200

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

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More Things to Know
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
Intro APR on Purchases
N/A
Regular APR
17.74% - 24.74% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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