Since Zuzu & I have figured out how to get free luxury travel, I want to share what we’ve learned with you. Here’s my answer to reader Pat who emailed me about their credit card situation.
We live in Nashville and have 4 credit cards:
- Chase Southwest Rapid Rewards® Plus
- Disney® Visa® Card
- Costco Anywhere Visa® Card by Citi
- Hilton Honors American Express Card
We had built up alot of Rapid Rewards points on the SWA card over the years. We’ve also had the Disney card for a long time. 2 years ago, we got the Costco Visa because it’s a cash back card including 4% back on gas. Our recent trips have depleted our stash of Rapid Rewards points.
While my spouse used to travel a fair amount to Hilton hotels, that travel has scaled back so we don’t have many Hilton points.
We take advantage of all the things to get reward points and pay off our balance every month.
I feel like we’ve done a pretty good job of earning and redeeming points for airfare but your blog has made us realize that we’ve not taken advantage of free hotel travel.
From reading your eBook, it seems like we should apply for the Chase Sapphire Preferred® Card but I’m wondering about our Southwest card. Should we cancel it?
Will getting a new card hurt our credit score since we don’t carry balances?
Should I avoid credit cards that have annual fees?
These are some great questions to consider as you try to optimize your credit card mix.
I see 6 main things to consider in Pat’s situation. Let’s take them one at a time.
Closest Airport: Nashville
Since there are more Southwest flights from BNA than any other airline, Southwest points are more valuable than if there’s not a Southwest hub nearby. For example, my friend who lives in Johnson City, TN is 4 hours away from a SWA airport. He can’t easily use SWA points so he doesn’t try to earn them.
Pat can earn SWA Rapid Rewards points directly with a Southwest Credit Card or can earn Chase Ultimate Rewards points and then transfer Chase points to SWA. I recommend doing both.
Visiting the Nashville Airport? See our picks for the Best Food at BNA!
Current Credit Cards
While I wouldn’t close any cards that have a $0 annual fee, I suggest Pat stop spending on all 4 of these cards. The 1 exception is probably gas which gets 4% cash back.
If you want to travel like Zuzu & I do, 1 Reward Point is worth more than 1% cash back. On our recent travels, 1 Chase point (usually transferred to Hyatt) has been worth almost 4 cents. So we’d rather earn 1 Chase point than get 1% or 2% cash back.
But 4% cash back is hard to turn down 😉
Read How We Used 239k Points to Save $11k on our EPIC Trip to Hawaii!
Does a New Credit Card Hurt Your Credit Score
As long as you pay off ALL credit cards on time and in full, adding another 1, 2 or 3 personal cards per year will not hurt your credit score in the long run. In fact, it might help your credit score.
Immediately after getting a new credit card, my credit score often gets a 1-6 point decrease. But every time, those decreases have been temporary, usually gone within a few weeks.
From a long term perspective, getting a new credit card usually improves your Credit Utilization Ratio and that should lead to an improved credit score. My credit score is higher today than before I got my 1st credit card in Dec 2020.
Eligibility Rules for New Credit Cards
As I explain in my 14 page eBook about Free Luxury Travel, some banks have rules which can lead to an automatic denial of new credit card applications. In Pat’s case, there are 2 rules to consider.
Chase 5/24 Rule
If you’ve gotten 5 or more personal credit cards (from any bank or company) in the previous 24 months, Chase will automatically reject your application. That’s not an issue here.
Southwest Bonus Eligibility
First, if you’ve gotten a Southwest welcome Bonus in the last 24 months, you can’t get another welcome bonus on a SWA card. Second, if you currently hold a SWA card, you can’t get a new SWA bonus. This second SWA eligibility rule could be an issue in this situation.
Should I Get a Credit Card with an Annual Fee
While there is an emotional barrier to paying an annual fee for a credit card, I try to base my decisions on the math.
I’m ok with paying an annual fee as long as I’m certain that I’ll get more value from the card vs what I pay for the annual fee.
Over simplified, if there’s a card that has a $500 annual fee but you know you’ll easily get $1000 value from that card, the math says you should get that card.
Credit Card Advice
In order, I think these are the next 3 credit cards Pat should get.
Chase Sapphire Reserve® or Sapphire Preferred
If one or both of you will be traveling 6 or more trips per year, I think the Chase Sapphire Reserve is the best card to have.
It was the 1st credit card I got when we started to earn points for free travel and it’s still the card that I use the most. While the Sapphire Reserve has a high $550 annual fee, I’ve easily gotten > $1000 value from this card every year.
If you don’t want to get the Sapphire Reserve, then the Chase Sapphire Preferred is the way to go for your next card.
Both Sapphire cards earn Chase Ultimate Rewards points which can be transferred (at a 1:1 ratio) to either Southwest or Hyatt.
Put as much of your normal spending on this new card as possible and make sure you hit the Minimum Spending Requirement to earn the welcome Bonus.
Since you already like to fly Southwest, I recommend that you get a new Southwest credit card after you’ve hit the welcome bonus on your new Chase Sapphire card.
Chase Southwest Rapid Rewards® Priority Credit Card
Here’s a good annual fee example with some simple math. The 3 different SouthWest Airlines (SWA) cards have annual fees of $69, $99 & $149.
While the Chase SWA Priority card has the highest annual fee at $149, it’s actually the least expensive if you fly SWA at least 2-3 times a year. Not only does it come with a $75 SWA credit (making the effective annual fee just $74) it also gives you 4 free EarlyBird credits which is worth $60-100.
Although I don’t think that it makes sense to put much ongoing spend on a SWA card, getting the Welcome Bonus (it’s sometime 50k points, worth $700 of free travel!) makes sense for anyone who lives near a major SWA airport like Nashville.
If you got the SWA card less than 24 months ago, I’d have the other one of you apply for a SWA card.
As I said earlier, you can’t get a welcome Bonus on a SWA card while you have a SWA card & it has to be more than 24 months since you last got a welcome bonus on a SWA card. Either way, I would cancel the current SWA card (which should get a pro-rated refund of the annual fee) and focus on using the new SWA card once you get it.
This is a good example of how couples can work together to maximize credit card points and miles.
The World of Hyatt Credit Card
After you’ve got the new Sapphire card & the new SWA card, I’d suggest getting the Chase Hyatt Visa credit card.
While the Hilton card is fine if your main goal is a standard hotel room in some random city, the Hyatt card is a much better choice if you want to travel bougie to luxury resorts like Zuzu & I do.
The Welcome Bonus for this card seems to fluctuate between 20k-60k Hyatt points. But even with a lower Welcome Bonus, I think the Hyatt credit card is worth it because it gives extra Hyatt points for spend at Hyatt properties. Plus you get automatic Discoverist status & a free night at a Category 1-4 Hyatt hotel like the Hyatt Centric Waikiki Beach!
How Fast Should You Get New Credit Cards
Best practice is to get one card at a time and make sure that you hit the Welcome Bonus, then get another card when you’re comfortable doing that.
Most people should not get a second credit card within 90 days.
While Zuzu & I got about 10 new business and personal cards in the past year, find the number that’s comfortable for you.
If you think getting 2 new cards a year will stress you out, it’s fine to get only 1 new card in a year. And 1 new card can lead to a nice vacation that you otherwise would not have been able to afford!
Got a Business?
One last thing, if you or your spouse has a business, I think the best offer (across all credit cards) is the Chase Ink Business Unlimited® or the Chase Ink Business Cash® card. No annual fee and it usually has an attractive Welcome Bonus.
Credit Cards I Recommend
Here are the different credit cards that I’ve recommended in this article. If you apply for a card after clicking my link, I’ll get a refer-a-friend bonus or commission! I promise to use that bonus to take Zuzu on another fantastic & free vacation!
- Chase Sapphire Reserve
- Chase Chase Sapphire Preferred
- Southwest Rapid Rewards
- Hyatt Visa Card
- Chase Business Ink Card
Free Reward Travel & Credit Card Advice
Got a question about credit cards, points & miles or free luxury travel? Download my free “Guide to Free Luxury Travel” eBook and then drop me an email!
Your responses seem pretty on-point. When I try to help people on credit cards my first question after how good or bad someone’s credit is is what people want to do with points and miles. If they want economy flights to Europe, a Barclays AA card can do a lot of good, for example so there’s a lot of YMMV.
Thanks and I agree, YMMV… everybody’s different. Pat’s goals are free luxury hotels & free Southwest flights. Definitely makes sense to start with those Chase cards while she’s under the 5/24 rule.