Backpack Full of SunshineA travel blog of a boy following his dream and embarking on a four year backpacking sabbatical around the world

Best Credit Cards to Maximize Rewards

Credit cards over the years have changed dramatically the way we think about money and personal finance. When utilized properly, they are simple tools to help manage your monthly cash flow, monitor your personal expenses, and lower your overall cost with cashback and other rewards. Picking the right credit card, on the other hand, could be a bit overwhelming, juggling countless offers of various rates, bonuses, fees, and cash back %. Lucky for you, BFS has done the research for ya. Whether you are a perpetually on-the-move globetrotter or an occasional vacationer who wants the best bang for your buck on those everyday spending, here are our top choices of travel cards that took us a few times round the globe. 

Capital One Venture Rewards

 

 

 

 

This is probably my personal favorite. The 2% on everything cash back makes it easy to juggle between travel and everyday spend. If you aren’t a fan of having multiple cards and cycling through them for each spend category, this is the all in one Swiss Army Knife you need for your wallet. 

Pros:

  • 50,000 signing bonus… after you spend $3,000 in the first 3 months from account opening
  • 2% cash back on every purchase
  • 10% cash back on hotel.com purchase
  • $100 application credit for Global Entry or TSA Pre
  • $0 Foreign Transaction Fees
  • $0 Annual Fees for year 1

Cons:

  • Expensive annual fees post year 1… $95 per year hereafter
  • Need excellent credit in order to qualify
  • You need to spend $3,000 in those first 3 months to make this card worthwhile
Chase Sapphire Preferred

 

 

 

 

This card comes in a close second, and is perfect for those globetrotting jet-setters. Say you are planning a one year sabbatical in Europe, where majority of your expenses are flights and hotels. Or you just really enjoy checking out a new restaurant and two, this is the card to grab to maximize travel rewards.  

Pros:

  • 50,000 signing bonus… after you spend $4,000 in the first 3 months from account opening.
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • 25% more when you redeem for travel through Chase Ultimate Rewards
  • 2% cash back per dollar on all travel and dining; 1% on all other purchases
  • 5,000 additional points (a $50 value you can easily obtainafter you add the first additional authorized user and make a purchase within 3 months of account open
  • $0 Foreign Transaction Fees
  • $0 Annual Fees for year 1

Cons:

  • Relatively low miles per dollar for everyday usage… all other purchases besides travel and dining receive 1% cash back
  • Expensive annual fees post year 1… $95 per year hereafter
  • Need excellent credit in order to qualify
  • You need to spend $4,0000 in those first 3 months to make this card worthwhile
Discover It Miles

 

 

 

 

Say if you are straight out of college and haven’t accumulated a long credit history. Or if you just don’t have that immaculate credit record for those semi-questionable decisions in those glorious late teen years (we’ve all been there), qualifying for the Chase Preferred or the Capital One Venture would be tough. Comes Discover for the rescue. With $0 annual fee and a lower application threshold, this is the best card in its class to get the most bang for your buck.

Pros:

  • 100% match for all points earned during Year 1
  • 1.5% cash back per dollar on all purchases; effectively 3% in Year 1
  • $0 Annual Fees
  • $0 Foreign Transaction Fees
  • Credit score threshold is lower than other cards for similar benefits
  • $30 annual credit for in-flight WiFi purchase

Cons:

  • Relatively low miles per dollar post year 1
  • Lower acceptance rate abroad… vendors outside of the U.S. are less likely to accept non Visa and Master cards

How things shake out….

Scenario 1 assumes a $25K annual budget, with 60% on flights, lodging, restaurants, and 40% for other purchases. This should be close to what a young professional spends annually, as well as what traveling in Europe would roughly cost for the year.

Scenario 2 assumes roughly half the spending power, probably more in line with a budget traveler’s annual expenses.

I used the 2 year average for those of us who don’t mind cycling through credit cards to minimize annual fees and maximize sign-on bonuses. (or you could cancel after the first year and use a free card in between) This should always be your preferred option, since most major credit card companies reset bonus restriction after two years, aka you can get a free $500 bonus every two years. (apply for Chase, cancel after two years, apply for Capital One, cancel after 2 years, and repeat) The 5 year average is probably more applicable for younger audience who needs to build up a credit history.

Conclusion….

Those hefty annual fees could appear daunting on first sight, but as you can see from our simple calculations, even if you spend only around 10K a year, and keep your card (and pay for those annual fees) for 4 extra years, the Venture card’s sign up bonus alone claws back your fees, not to mentioned the higher cash back %. If your credit score is high enough, go for a premium card, it’s worth the trouble.

Honorable Mention….

Southwest Rapid Reward Card

 

 

 

 

The sign up bonus and cash back % isn’t as glamorous as Capital One and Chase cards above, but here is the catch, Southwest has the MFing Holy Grail of companion passes. Once you’ve qualified, you can use it immediately for multiple flights during remainder of the calendar year in which status is earned, and the entire calendar year after. That’s potentially 2 years worth of free tickets.

To qualify for a Companion Pass, you would need to earn 110,000 qualifying points in a calendar year. That’s a whole lot of flights for us Average Joes. But here is the trick. You can apply for 2 Southwest Rapid Reward cards for an instant bonus of 80,000. And suddenly 30,000 points rest of the year becomes a lot more manageable.

So yes, if you have a significant other, and travel say more than a few times a year in North and Latin America. Forget about what I’ve just written, this is the card(s) you want to grab.

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