Please note all rates are subject to change without notice and may not even be correct at time of publishing we recommend double checking.
Credit cards
Your spending is an asset you own not maximizing it would be like charging $800 for a prime apartment in Lakewood, it is simply silly. Banks are willing to spend $1,000 to be the #1 card in your pocket especially if your a business.
There is a misconception that ALL credit card companies are trying to get you hopelessly in debt with no way of paying back. While they wouldn't mind extra money their Ideal customer is someone who has enough money to pay their bills. There are cards targeting people who haven't/ couldn't pay in the past this is known as subprime lending. Generally the better cards are for people with a better credit history. A simple look at American Express’ annual report will show you that most of their revenues are not from interest. This article is just to show you what can be done to maximize what you already spend.
Types of rewards
Banks and credit card companies make billions of dollars every year from their credit card customers (chase alone had over $4 billion in card revenue in 2019). They therefore fight over every customer with incentives.You can therefore earn thousands of dollars worth of points and cash with minimum effort and a little awareness.There are 4 primary ways they go about that.
● Cash back
● Credit card points
● Airline/hotel points
● No interest periods
1. Cash back is the most straightforward method you get a percentage back. A typical example is the Td cash back card which comes with an easy opening bonus. Another advantage is that it has no foreign transaction fees (many cards charge a couple of percentage points for foreighn transactions) which is perfect if you're spending in shekels. From experience its easy to get approved even if you never had a card before if you have a td bank account. This true for many banks.
2. Credit card points are the best ways to maximize your spending. Cards from chase american express are probably your best option with city bank and capital one coming in behind. These points can be used for travel directly or cash back( besides american express) or they can be transferred to airlines or hotels.
3. Airline/points can vary in value ease of use ect. For example 30,000 hyatt points could get you a night in a $1000 a night hotel but 50,000 hilton point points will maybe get you a decent hotel.
What are the best points to get?
There are two types of points
● Credit card points
● hotel /airline loyalty program points
We will first discuss the latter:
Loyalty systems are a huge revenue driver for airlines/hotels they are leveraged to ensure loyalty to themselves and by selling their points to banks who further use them to incentives people to use their credit cards. (el al has not yet managed to understand this, maybe the new owners will change that). These deals with banks can amount to Billions (with a B) of dollars.They also offer perks like free luggage lounge access ect. Directly through their programs through status (usually achieved by flying alot and spending alot of money) and by issuing these “privileges' ' through their credit cards. When a person uses the points they “lose” revenue (the person doesn't pay for the seat/room) or they actually pay the hotel (when its a franchise location) or the partner airline. They therefore walk a thin line between trying to make their points the least valuable and keeping the loyalty/ points selling. Prior to the corona virus the big airline and hotel chains constantly devalued their points due to lack of competition and huge demand. Corona virus seems to have tapered that off a bit. That has since changed with the huge demand for travel. The airlines programs can be a bit complicated for real in depth analysis i recommend dansdeals.com and travelisfree.com (though these things constantly get changed and updated its a bit hard to stay on top of it.
There are two ways a hotel chain or airline will set up their loyalty systems
● Fixed points for category/miles flown
● Variable points charged
Fixed categories: For example marriott and hyatt have 8 categories of hotels that they charge a set amount for without the price being a factor. (This has now change with marriot switching to dynamic pricing which basically means they can charge what they want)A Lot of hotels can get very pricey in one season and very cheap another but the points cost will be the same (though marriot has peak/off peak pricing. For Airlines it's a little trickier even if an airline has set rates they will only allow a few seats to be booked at that rate this is usually called awards seats or something similar. Another difference is that airlines have alliances and you can use one points “currency” to book flights on another. For example you can use alaska points (transferable from amex and citi points) to book el al seats (these things can change) or use alaska miles to fly american. For these partner flights some airlines will also have set rates.
Variable points: Another way is variable points meaning the company will charge whatever it wants based on demand/price this is the way hilton marriot and ihg hotels set up their system. Examples of airlines that set it up like this are jet blue and delta.
The way you use points can lead to some really good deals and really bad deals for example you could book a $100 flight on an airline that charges 20,000 points for that flight based on miles flown for a value of .5 cents a point at the same time you can get a $3,500 business class seat to israel for 170,000 points a value of over 2 cents per point.
The way variable points system are set up could be confusing for example delta doesnt seem to have any rules and will charge crazy rates for high demand flights while hilton syas thei’ll never go over 95000 points for a basic room (with some exemption https://waldorfastoria3.hilton.com/en/hotels/maldives/waldorf-astoria-maldives-ithaafushi-MLEONWA/index.html)
Also even fixed systems can change thor rates or even to variable systems (like United did recently to their own flights though partner remains fixed) Therefore its best to target points you can convert at will which I will discuss in the next section.
Here are some examples. A shabbos at the waldorf in Jerusalem can be easily attained with Hilton points (please remember everything here is pre corona this has since changed as they seem never to have availability ). They can be attained by opening one or some or all of these cards or by transferring amex points to hilton(Usually you need 95,000 hilton points a night you usually must book in advance but points bookings are cancellable until 24 hours before) A night at the stunning ritz carlton herzliya will cost you 60,000 marriott points. Attainable through the american express marriott bonvoy cards or the chase bonvoy cards. I looked at August flights 2021 for United, a direct flight to Tel Aviv for 48,000 United points (one way) received either through the Chase United credit cards or transferred from Chase points . The best value from hotel points is through the hyatt loyalty program for example a night in the nyc park hyatt where raits can reach over 1,000 (pre crona) can be bought using 30,000 hyatt points which can be earned using the chase hyatt card or by transferring chase points. It is best to first target “hybrid” credit card points that can be transferred before you familiarize yourself with all the different options and due to the fact that airlines/hotels routinely devalue their points.
Credit card points
As we discussed in the prior section banks buy billions of dollars worth of points from airlines to use in their credit cards award systems. The banks distribute them in two ways.
1. By issuing credit cards unique to that program (ie:united credit card)
2. By issuing their own points with one of the options for using them is to transfer them to a loyalty program
There are currently for “currency” of points that have this feature
1. Chase ultimate rewards cards
2. Amex membership rewards cards
3. City thankyou points cards
4. Capital one points cards
Each of these points have some unique features and some that are shared between all of them.
For example chase has an exclusive contract with united and hyatt while amex has an exclusive contract with hilton.
These points can also be used to get cash back and some have enhanced features.
For example if you have a chase sapphire card or ink preferred business card you could redeem the points at a rate of 1.25/1.5 (depending on the card) cents a point for travel through chase ultimate rewards (or currently you could use points at this evaluation to redeem grocery gas station and grocery stores using sapphire i'm not sure if this is for us only stores or not.) or you can redeem them for cash at a rate of 1 cent a point. (I don't recommend selling to brokers because if you get caught which can happen if the broker is careless you will get shut down from that bank)
The advantage to these points that they have a a floor value. If you give your spending to an airline or hotel they will evaluate your points the second they deem it advantageous to do that. That is why I recommend going with chase points or even amex points. In later posts I will discuss advantages and disadvantages of each type of card
