Credit Cards: Rewards Versus Benefits

I got a survey a few days ago asking me about the benefits of my Delta Reserve Credit Card, and it got me thinking about a subject that I already spend too much time thinking about: credit cards that I own that I would never actually use. This post is going to be best for novices, but it’s been on my mind.

credit card

This is Willie Nelson, and he has not approved this post.                                                        Photo Credit: Creative Commons

For the sake of this post (and I have no idea where I’m going with it), use these definitions. A benefit is something that you get for having the card, e.g., lounge access, a free first checked bag, rental car insurance, etc.* A reward is something you get only when you use the card, such as a mile for every dollar that you spend.

So, Do I Need Benefits Or Rewards?

credit card

Photo Credit: Creative Commons

There are not a lot of cards that earn top-tier scores in both. The few that do are usually issued by Chase, including just about anything with the word “sapphire.**” Some cards have occasionally strong rewards, such as Discover, which offers a 5% rebate category every quarter, but only middling rewards the rest of the year (maxing out at 1.5%). Others, such as just about any American Express card, offer excellent benefits but lousy rewards (although they’ve been getting better as the competition runs away from them).

Clearly, the answer is that you need at least one of each category, and there’s no such thing as the “best” card, no matter what you read, here or anywhere else. For example, the Delta Reserve credit card works best for me, since I’m a frequent flyer on the airline, like the lounge access it offers and will use the companion pass that comes with it. It’s not a cheap card, but after all the benefits, I easily end up “making” money (which, of course, means “spending less”). I also have a Marriott card, since that’s my primary hotel program.If you don’t travel particularly often, though, a card with no/a low annual fee that simply offers a free checked bag is probably enough.

On the other hand, just because you have a card doesn’t mean that you have to use it, and here’s where the rewards come in. The Delta Reserve card, which costs $450 per year, offers some seriously lousy rewards. You get one mile per dollar spent, two per dollar on Delta tickets. There are also some bonuses if you spend a lot each year, but why would you do that, other than to achieve elite status?*** Delta miles are worth so little that I don’t even use my Delta card on Delta. I don’t mind playing the game where I use different cards at different vendors, based on what they earn, but if you do, the best card may be the Citi Double Cash Card, which just pays a flat 2% rebate on everything.

The Ultimate Do-Nothing Card

As far as I’m concerned, the ultimate “do-nothing” card is the IHG Rewards Club card, the program for the upscale InterContinental Hotels (as well as others). It’s free for the first year and $49 per year after that but, starting with your first anniversary, you get a free night at virtually any property each year, just for having the card. Need a night at the $600 per night InterContinental in Paris? How about New York? Tokyo? No problem. My wife and I each have one so, for under $100 per year, we can have a weekend at a hotel that we wouldn’t even consider paying for. By the way, while I think you should have this card for the obvious benefit, I don’t think you should get it now. The current bonus to open it is 60,000 points. Simply wait a bit, since they occasionally offer 80,000.

The Bottom Line

Understand your bonuses and understand your rewards. We all throw out the little folders that come with the cards, but that propaganda is often the key to your maximizing the card’s value.


* I know that there are some benefits that you get only when you use the card (e.g., You need to use your airline credit card to get that free checked bag.), but I’d still consider the bag a benefit, not a reward.

**Historically, I have not been a big fan of the Sapphire cards, but the company has done a good job of maintaining, or even raising benefits, while its competitors have cut them. Winning by not losing.

***That’s not to say that I never use this card, but I don’t use it for the value of the miles. Rather, I spend money on it to earn miles toward elite status. There are a few cards that will give you points toward status based on your spending, and this is one of the better ones. Having said that, I spend only what I need to and not a penny more.


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