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- Earning sign-up bonuses is the fastest way to earn credit card points and frequent flyer miles.
- You can use points from cards like the Chase Sapphire Preferred or the Platinum Card from American Express for virtually free travel, upgrades, cash back, gift cards, or more.
- While you might be worried about harming your credit score, you don’t have to be. Read on to see why.
Earning rewards points for normal everyday spending on your credit card is great, but did you know that if you want to earn a bunch of points or cash back quickly — whether you have a big trip in mind, or you just want to be ready for the next one — the fastest, most effective way to earn credit card rewards quickly is by opening a new credit or charge card and earning a sign-up bonus?
Credit card providers like Chase and American Express offer huge sign-up bonuses as a way to attract customers. As a savvy consumer, though, this is something you can take advantage of. If you’re interested in earning travel rewards, such as transferable credit card points, even a single sign-up bonus can be enough for a business class flight, or a round-trip flight to Europe. Once you earn a couple of bonuses, on top of the rewards you earn from normal spending, you’ll be ready to travel in style and potentially for less than a cup of coffee.
“But won’t that hurt my credit score?”
Nope! In fact, after you open a couple of cards, chances are you’ll see your credit score improve.
That’s because of how credit scores are calculated. Your credit score is based on your credit profile, which is a history of your use of credit, including accounts held, past borrowing, and payment history. The score is just a numerical representation of that information — it’s calculated based on a series of secretive algorithms and formulas.
It’s made up of a few components, including your history of on-time payments, how much outstanding revolving debt you have proportionate to your total credit line (as well as the number of accounts you have), the average length or age of your credit history, how often you’ve requested new credit recently, and different types of credit you have, like mortgages, car loans, and credit cards (having more types is better).
Having a higher number of accounts adds positive marks to your credit score in two ways.
First, simply having more accounts is a plus — the logic is that it shows you have a history of responsibly using and managing multiple accounts. Second, the more accounts you have, the higher your overall credit line is. If you pay your statement in full each month, the amount of that credit line that you’re using will be less — proportionately, your credit use compared to your total available credit line will be low. Beyond that, as you continue to hold the accounts, your track record of never being late or missing a payment will boost your payment history.
There are two ways that opening a new card can negatively affect your score — however, these effects are generally short-term and minor. Ten percent of your score is based on the number of times you request new credit and open a new account — each time you apply for an open a card, this will take a negative hit. This is a safeguard to prevent people from being able to open a ton of credit at once and quickly rack up out-of-control debt. The negative effect to your numerical score typically vanishes within a couple of months — the request for credit is scrubbed from your credit profile altogether within two years.
The second negative impact is because 15% of your score is based on the average age of all of your credit accounts — higher is better. This is a similar safeguard against people quickly adding on debt. When you open a new account, it will be zero months old, which lowers your average age of accounts. Obviously, this effect is negated as the card account gets a bit older.
In my experience, and that of several friends of mine, those negative effects are the worst after opening your second card within a year. However, within three months, my score was back where it started, and a few months later my score was higher than it had been before. I saw less of an impact any time I opened a card going forward. Keep in mind, of course, that this is just an anecdote from my own experience.
“If I open more credit cards, I’ll end up in debt.”
Not true — as long as you use them responsibly.
Whether you end up in debt is entirely up to you. If you want to avoid it, simply spend within your means, and pay off your credit card in full each month. You won’t have to pay a penny in interest — with virtually every mainstream credit card, interest isn’t charged on any purchases until after the due date for that month’s statement — and since you’re paying the card off in full, you won’t lose track of how much you’re spending and you can make sure you’re only spending money you have.
To put it another way, think about your credit card as if it’s a debit card. The two big advantages are that you’ll earn more, and better, rewards with a credit card than with a debit card, and credit cards have more purchase and fraud protections than debit cards, making them safer to use. You can read more about using your credit card like a debit card by visiting this article and scrolling down.
While credit card debt is something you generally want to avoid, there are occasionally good reasons to use it — again, the key word is “responsibly.” You can read more about making debt work for you — instead of the other way around — here.
“How can I be sure I’m not hurting my credit score?”
The best way to make sure your credit profile and score are healthy is by keeping an eye on it. Both Chase and American Express offer tools to help you check your credit score, while websites like Credit Sesame let you check it for free, although you can also subscribe to paid plans to monitor your credit.
Regardless of earning credit card points, this is something you should be doing anyway to make sure you aren’t the victim of identity theft. If you watch your credit, you can catch suspicious activity and report it before it becomes too big of a problem.
“Okay, I’m on board. Which card should I open?”
There are a ton of great cards that offer lucrative bonuses, so there’s plenty for just about anyone to choose from.
If you’re new to credit card rewards, the most recommended card — and my favorite starter card — is the Chase Sapphire Preferred. When you open an account, you can earn 50,000 Chase Ultimate Rewards points (that can be used a ton of ways) when you spend $4,000 in the first three months. Those points are worth anywhere from $500–$625 when you use them for cash back or to book travel through Chase, and they can be worth far more when you transfer them to frequent flyer partners. The card has a ton of benefits, and earns 2x points per dollar spent on all travel and dining. Its annual fee, which is $95, is waived the first year.
If you spend a lot on travel and dining, or you travel a lot, you should consider the Chase Sapphire Reserve instead. This card earns the same sign-up bonus (50,000 points when you spend $4,000 in the first three months), but offers 3x points on every dollar spent on dining and travel. It also comes with airport lounge access and a number of other benefits, but has a $450 annual fee, which isn’t waived — although it’s offset by a $300 travel credit you get each calendar year. If you travel even relatively often, though, you can easily get more value than the annual fee costs.
If you’re not sure which Sapphire card to open, take a look at this article.
A great option to pair with either Sapphire card is the Chase Freedom Unlimited. This card offers $150 cash back after spending $500 in the first three months, and earns 1.5% cash back on all purchases. However, you can use the cash back as “points” instead (1¢ = 1 point) and pool the points from all your Chase cards. The card also comes with a 0% introductory APR on purchases and balance transfers for the first 15 months. After the introductory APR offer, a variable APR of 16.24%-24.99% applies. If you have a major purchase coming up and want to take some time paying for it, this is a great way to use debt without having to pay interest. The Freedom Unlimited doesn’t have an annual fee.
If you have a small business, then you can’t do much better than the Chase Ink Business Preferred. This card offers a whopping 80,000 bonus points after you spend $5,000 in purchases within the first three months. Best of all, you can combine those with the points from your personal Case cards — making this a great way to boost your stash of points. You don’t even need a true brick-and-mortar business to qualify — freelancers, eBay resellers, and anyone who works on their own or has a side gig can qualify.
The card also earns 3x points per dollar on the first $150,000 your business spends on combined purchases each cardmember year in several categories, including travel, shipping, internet/cable/phone, and advertising on social media sites or with search engines, such as Google Ads. Purchases after you reach $150,000, or in any other category, earn 1x point per dollar.
David Slotnick/Business Insider
Moving away from Chase, the Amex Platinum is a must-have for frequent travelers or anyone who is good at maximizing benefits and getting big value. I’ve personally gotten more than $2,000 of value from the card this year — one thing that certainly helps offset the fee the first year: the Amex Platinum Card comes with a welcome offer of 60,000 Membership Rewards points after you spend $5,000 on purchases in the first three months after account opening.
The card also earns a whopping 5x points on airfare purchased directly through the airline, as well as flights and prepaid hotels reserved through Amex Travel. It earns one point for every dollar spent elsewhere.
There are plenty of other credit cards offering big sign-up bonuses and benefits, although the above are Insider Picks’ favorites available right now. If you already have the above, take a look around the internet to see what other offers you can find.
Earning sign-up bonuses is the fastest way to earn points that you can use for virtually free travel, upgrades, cash, or any of a few other ways. I’ve personally enjoyed a number of flights using my points, including flights in business class and international trips in first class, both of which cost nothing besides taxes and fees (which were less than $40 each time).
While it’s smart to be worried about your credit score and financial health, if you’re smart and use credit cards responsibly, you have nothing to fear. Even if you see temporary dips in your credit score, your new cards will actually help boost your score over time — I’ve held a number of cards and collected a bunch of sign-up bonuses, and my score is better than it’s ever been.
If you open a new card, just remember to spend within your means and you’ll be all set.
Click here to learn more about the Chase Sapphire Preferred card from Insider Picks’ partner: The Points Guy.
Click here to learn more about the Chase Sapphire Reserve card from Insider Picks’ partner: The Points Guy.
Click here to learn more about the Chase Freedom Unlimited card from Insider Picks’ partner: The Points Guy.
Click here to learn more about the Chase Ink Business Preferred card from Insider Picks’ partner: The Points Guy.
Click here to learn more about the Platinum Card from American Express from Insider Picks’ partner: The Points Guy
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