Why care about points?
How using credit cards for your day-to-day spending could save you hundreds of dollars.
For a long time, I never cared about credit card points. My credit card always had them, but I never knew how to use them. Over a dozen years, I might have redeemed some for a few gift cards, but it seemed like too much work to find and redeem them, so I just let the points accumulate. On the one hand, my strategy was certainly less than optimized. But on the other, at least I was earning some points. If I had just used my debit card I would have been earning nothing.
What’s the difference between a zero-point approach, a basic approach, and a (lazily) optimized approach?
Let’s do some (relatively) lazy math. The median household income in 2021 was $70,784. That is roughly the same as the median household income of Rhode Island. And after taxes, that median Rhode Islander household’s net income is $53,064. Assume they follow the 50-30-20 rule and conservatively assume that 80% of their necessities cannot generate points, that means 40% of their money, or $21,225, will be spent via plastic.
If they use debit cards, that spend will net a return of 0 points, worth $0.
If they use a card generating just 1 point per dollar spent (or 1% cash back), they will net a return of 21,225 points, probably worth (depending on the program and how the points are used) about $200.
$200 isn’t a ton, but it’s real money. And by choosing a card earning 2 points per dollar, that number jumps to $400. If this person is a renter paying $650 per month, with the no-annual-fee BILT Mastercard (referral link), they can earn another $100 in rewards without paying a dime. That brings us to $500. But let’s say $5,000 of that spending is on dining. With the BILT card or another card offering 3x on dining, that’s another 5,000 points, bringing you up to $550.
$550 can buy you a pretty nice weekend getaway. And that’s without factoring any bonuses you might receive for signing up for these cards. For example, both the American Express Gold Card and Chase Sapphire Preferred offer 60,000 bonus points for signing up. (My referral link offers 90k on the Gold Card at time of writing.) The Amex has a $250 annual fee and the Chase a $99 fee, but the Amex is offset by $240 in potential statement credits and Uber cash, while the Chase card offers a $50 statement credit for hotel stays. Those 60,000 points are good for roughly $600 in travel, bringing you up to $1,200. That’s without changing any spending habits and without taking any of the lazy steps we suggest here to send that number even higher.
If their normal spending is higher, the rewards will be even greater. For example, take someone who typically spends $30,000 on credit cards, $10,000 of that on restaurants and groceries, and pays another $15,000 annually in rent. By adding the Amex Gold card, the Delta Amex Gold card, and the BILT card, they could earn at least 75,000 points just for their normal spending (40k for dining on the Amex Gold, 20k from any card on the other spend, plus 15k in rent from Bilt). The first year, they could also add up to 90,000 points from the Amex Gold welcome bonus and 70,000 from the Delta card bonus, for a total of 235,000 points, 220,000 of those redeemable on Delta. Depending on their home airport, in year one they could easily accrue enough points to fly to Europe three times (or bring two friends).
(And Delta points are widely panned as among the least valuable. I’ve seen flights to Europe for as low as 45,000 Amex-based points, but this example flight had the benefit of only taking 3 minutes to find.)
And our hypothetical person here could also add free Delta points by shopping through Rakuten, eating out via Delta’s dining program, taking Lyft, booking Airbnb’s, and more. Again, based only on their preexisting spending.
In my case, with the Amex Gold card, BILT card, and American Airlines Aviator card I got two tickets to Alaska, one ticket from California to New York, and four tickets to Japan for $250–and I got $200 of that refunded (and could have gotten $240 if I was on top of things). And had points left over. So it is definitely worth taking some time to develop a thoughtful credit card and points strategy, even–especially!--a lazy one.