Bad Advice from Good Bloggers

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Which is a better use of a five dollar bill: burning it or cutting it into confetti? Between burning it or cutting it, one probably is better. But if you asked me that question, I would answer: its best use is spending it or saving it or donating it. How is this relevant to collecting miles?

There is one clearly superior way to earn miles from your spending: Open up cards that have a big sign up bonus, meet the minimum spend required to unlock that bonus, repeat.

Let’s look at some of the recent cards I’ve opened to see what effective rebate I’ve gotten from this method:

• American Airlines Citi Visa: 75,000 AA miles after $1,500 in spending, no first year fee. I’ll have a personal valuation of AA miles in the next week, but for now let’s conservatively value them at 1.5 cents per mile. That’s an $1,125 rebate in the form of AA miles on my first $1,500 in spending or a 75% rebate!
• American Airlines Citi Amex: 75,000 AA miles after $4,000 in spending, no first year fee. An $1,125 rebate on my first $4,000 in spending or a 28.1% rebate!
• Amex Platinum Card: 50,000 Membership Rewards Points after $1,000 in spending, $450 annual fee. I value one MR point at 2.55 cents, so this card has a $1,275 or 87.9% rebate on the first $1,450- $1,000 spending plus $450 fee. Of course, I actually got another $500+ in value from this card in the form of a $200 United gift card, $200 AA gift card, $100 Global Entry, and lounge access at most airports- all for free!

And the list could go on and on. The takeaway is that sign up bonuses are huge rebates, from 28% (pretty sweet) to over 100% in some cases (free money).

So that should be the message of everyone talking about the subject of miles. Open up cards that have a big sign up bonus, meet the minimum spend required to unlock that bonus, repeat.

And yet, a ton of virtual ink is spilled on the subject of which card to use for daily spending. Answering this question, which is frequently posed by miles collectors, means answering whether it is better to burn or cut up a five dollar bill. Sure, when not clearing bonuses, maybe the Chase Sapphire Preferred or SPG Amex earns an extra 1 or 2% rebate over the other in certain situations. But why consider a tiny difference in rebate like 1 or 2% when clearing bonuses is a big double or triple digit percentage rebate?

I can only think of two reasons:

1) Your spending dwarfs the amount you need to meet the minimum spending required to unlock every attractive bonus. In this case, you should probably be using cash back cards anyways for the extra spending.

2) You have an important loan application coming up, so you don’t want the inquiries on your credit score that come from credit card applications.

If the above describes you, check out these thorough and factually accurate articles by The Points Guy and the Frugal Travel Guy on the subject of maximizing mileage earn by methods other than clearing bonuses. I just wish both articles took the underlying question and first answered: Well, you should really be clearing bonuses, but if for some reason you can’t…

In fairness, The Points Guy does say this, but then he lets by the equally shaky: “However, many people who find a card they like want to stick with it.” Why stick with a card other than the fact that it gives you the best deal? And which card gives you the best deal? The one on which you’re clearing a huge sign up bonus!

Not starting their answers with clear advice that clearing bonuses should be by far your main maximization strategy is kind of like answering the question I posed to start this post by saying, “Burn the five dollar bill. I think that would be more fun.”