Hi there, it's Ernest from Trip Astute. In this video, we're reviewing our top
points and miles mistakes that people make, particularly those new to the hobby.
(light chiming music)
Collecting points and miles is a fun but complex hobby. There are so many rules
and they always seem to change as the issuers offer new points programs and
products. However, there are a couple mistakes that seem to be pretty common,
especially for those who are just starting out in the hobby.
In fact, I'm probably guilty of several of these mistakes. So today, we're gonna
cover our top eight mistakes and what you should do instead. Number 1: Not
knowing your credit score or history. One of the most important aspects of whether
you can get a specific credit card is your credit score and history. Sites like
Credit Karma and Credit Sesame can help you get your score and history for free,
as well as tell you how many cards you applied for in the past and when. Also,
Credit Karma can tell you the odds for getting an approval for a card based on
your credit factors. For example, the Chase Sapphire Reserve and the American
Express Platinum are both premium cards, so they tend to require a strong credit
score and history in order to get an approval. Knowing your odds before applying
can be super helpful when determining which cards to pursue. Number 2: Not
understanding your travel needs and goals. This is really important when
developing your strategy for points and miles. Many cards have specific bonus
categories, so it's important to understand whether they match up with
your general spending. Also, your travel preferences and goals can greatly
influence which card is best for you. For example, if you prefer staying at
Starwood Hotels, then you probably are best served with an American Express
card like the Amex SPG. If you prefer to stay at an Airbnb or boutique hotel, you
might be better off using a flat rate travel rewards card like the Barclaycard
Arrival Plus or the Capital One Venture card. Number 3: Avoiding
annual fee cards. I can't tell you how many people I know who have told me that
they wanted to get the Chase Sapphire Reserve, but opted for the Preferred
instead because they couldn't stomach the $450 annual fee. However, when I broke
down the cost and factored in the annual travel credit of $300 and the Global
Entry fee credit, it actually made sense to get the Reserve card. While you shouldn't
pay for a card that has an annual fee where you don't feel like you're getting
the full value, I always recommend evaluating the big picture to see if it
makes sense. For more information, check out our credit card annual fee video.
Number 4: Not understanding the issuers' rules. I hear a lot of stories of folks
who apply for a credit card then try to apply for another card the next week, only
to get denied for too many credit inquiries. There are some basic rules on
what you should and shouldn't do, and we've covered them in our "Tips and
Tricks When Applying for a Credit Card" video. Keep in mind too that each issuer
has specific rules, so you want to be careful and strategic when planning your
applications. Number 5: Not challenging an issuer's decision. Even those of us
that have been doing this for years get rejected for new cards. In fact, I would
argue that the longer that you've been involved in this hobby, the more likely
you are to have too much available credit, so issuers may be hesitant
to give you a new card. If you do get rejected, don't hesitate to call the
reconsideration line and ask whether there are any options. We've covered some
of these tactics in the "Tips and Tricks" video mentioned earlier. Number 6: Not
calculating the value per point when we're deeming rewards. How and if you
redeem points is often dependent on the value that you get. Sometimes I'll opt to
pay rather than redeem if I don't feel like I'm getting a decent cents per
point value. For some basic guidelines, check out The Points Guy's monthly
valuation of points and miles currencies. He does a great job of explaining how
much he thinks each point is worth, which should give you an idea of how much you
should expect to get when booking a trip. I usually will divide the dollar value
by the equivalent number of points needed in order to get the cost per
point value. This can help inform whether I want to transfer the points to a
travel partner or book through a travel portal. Number 7: Being too aggressive
with your spending. If you get a new credit card, you want to be careful not
to spend too much too soon. Remember that the issuers get
nervous when they see risky spending patterns, especially if you don't have a
long credit history or you haven't used a lot of credit in the past. One of the
easiest ways to get flagged for high risk is to max out a new credit card.
Also, the flip side is to make sure you're not spending too much that you can't
even pay off your bill. The points hobby is only lucrative if you don't carry a
balance and you're able to pay off your bills. Any interest that you'll have to
pay will definitely negate the points earned. Number 8: Not developing a
relationship with the issuer. I hear about a lot of folks who cancel their
credit cards as soon as they meet their minimum spend and earn their opening
bonus. This is a really bad idea, especially since you're basically
showing the issuer that you were just trying to churn the card in order to get
the bonus. A more long-term and strategic way of thinking is that you want to
build a relationship with these issuers so you're able to get new cards and
products from them in the future. For example, I have a ton of Chase credit
cards, and I decided to move my personal and business checking in order to help
further that relationship. When I recently applied for the Ink Business
Preferred card, it was a lot easier to get an approval since I had a history of
doing business with the bank. And those are our top mistakes that beginners make
when entering the point and miles hobby. Do you have any extra tips or suggestions,
especially for those of you who've been doing this for awhile? if so, please share
them below in the comment section. Also, let us know if you have any questions. If
you're looking for some of the latest credit card offers, check out our page on
our website. I've included a link below and also on-screen. If you enjoyed this
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