Home > Credit Cards > A Student’s Guide to Credit Card Miles and Points

A Student’s Guide to Credit Card Miles and Points

As a recent graduate, I’m amazed that I have been able to qualify for some amazing credit card bonuses in the past year. In fact, just today, I got 50,000 United miles + a $50 credit (personal note: you can tell this is my screenshot because of what is in the Google search bar :P)

50,000 bonus miles on first purchase. Getting free miles > #KobeSystem. You're Welcome.

However, I attribute much of this to the fact that I’ve been responsibly using credit since I was in high school, and applied for my first ever credit card in college the day I turned 18. How can others who don’t know what the 1980s are also take advantage? Below are some of my tips:

1) Become an authorized user on your parents’ AmEx:

When I was 17, it was a very good year: my parents made me an authorized user on their Delta Skymiles Platinum American Express, which they had carried since 1999. They still carry the card, and I’m still an authorized user on the account. Whenever I look at my credit report, that’s the first account that shows up: an American Express (which creditors love to see), that has been open for 13 years with an impeccable payment record. It clearly shows that I am only an authorized user, but other parts of my credit report use that balance and credit limit elsewhere for my credit score, so I have no doubt that it helps. Of course, it only helps because my parents are very judicious users of credit, and never have a balance higher than a few hundred dollars each month (they pay off the card every few weeks).

You can become an authorized user at AmEx as early as age 16. Another reason why this is great is because American Express backdates your account start date to your first card . What does this mean? I opened my own personal American Express in September 2011 (for the signup bonus, obvi). On my credit report, this shows up as an Individual account, meaning it’s my own account that is under my name. However, the Account Opened date is 07-2007, not 09-2011. That 2007 date is the day my parents made me an authorized user and I got my first AmEx in my name. Since Age of Accounts is a part of your credit score, I’m sure that this almost-5-year-old account is really helping me out!

2) Take advantage of no-annual-fee cards with signup bonuses:

Why no annual fee? Because you want a card to keep for as long as possible, since age of accounts matters. No annual fee provides a free way to keep a card for its lifetime. Two of my favorites here are the Chase Freedom and the Citi Forward cards.

I am a huge fan of the Chase Freedom card, since it can be combined with the Sapphire Preferred and Ink Bold to use points for airline transfers. Alone, this card earns cash-back, with 1 point = 1¢. I find better value by transferring the points from the Freedom to an account that has a Sapphire Preferred or Ink Bold, since I can then transfer to United, British Airways, or Hyatt, where I routinely find 1.5¢-2¢ value per point. I also try to maximize the 5x earnings as much as possible (I watched “The Hunger Games” on April 1 instead of March 31 because it earned 71 points instead of 23 points, making the outrageous movie theater prices seem more worth it).

  • $200/$250/$300/$350 bonus cash-back for spending $500 in 3 months. The differences in bonuses depends on when you sign up for the card. The $300 offer pops up every now-and-then, so I’d jump on it if you see that offer.
    • These bonuses are given in Ultimate Rewards Currency, meaning that a $250 bonus is actually 25,000 Ultimate Rewards points. That means you can transfer the Ultimate Rewards points to a Sapphire Preferred or Ink Bold account.
  • 5x points on rotating categories each quarter, up to $1500 spending per quarter. The calendar for 2012 is below, and as you can see, the categories are for things that most people would spend a few hundreds dollars on each quarter anyway. In a future post, I’ll talk about how I maximize my Freedom earnings each quarter.

Grocery Stores, Gas Stations, Restaurants are all everyday spending items. And Best Buy/Kohl's during the holiday season can easily pay off.

  • Maximize earnings with Chase Checking Account
    • 10% bonus on all base spending
    • 10 points/per transaction
    • These make using the Freedom for small transactions highly worth it. My favorite is using the Freedom for parking in the City of Los Angeles, where the parking meters take credit card. Let’s say that I spend 25¢ four times in a week, totaling $1 on my Chase Freedom. That means I earn 1 base point, 0.1 from the 10% bonus, and 40 points (!!) from 4 transactions, totaling 41.1 points/dollar! Unreal!
  • Your Chase Freedom points are transferable to ANY other Ultimate Rewards Account. That means that if you are a student, you can earn points on your Freedom card, and transfer the points to your parents’ Sapphire Preferred or Ink Bold accounts. From there you can transfer to points to ANY United, British, Hyatt, or other transfer partners program, since the names between accounts do not have to match. As long as you can trust the person you’re transferring points to, this effectively makes the Freedom a free and potent miles-earning credit card.

My first personal credit card at age 18 was the Citi mtvU Visa, which was recently discontinued by Citi and merged into the Citi Forward. This card earns ThankYou Points, which are usually redeemable at about 1¢ per points for gift cards and travel. (There are some rumors about being able to transfer to British Airways and Singapore Airlines very soon, but that hasn’t yet been confirmed).

  • 10,000 bonus ThankYou Points for spending $650 in 3 months (9,000) and signing up for paperless statements (1,000) – equivalent to $100
  • 100 bonus ThankYou Points each month for staying under your limit and paying on time -$12/year
  • 5x ThankYou Points on purchases at restaurants, bookstores, movie theaters, and music/movie rentals. The best part is that Amazon.com qualifies as a bookstore, so you earn some bank while shopping there.

Overall, I’d choose the Freedom over the Forward, but both cards are great for students who are just starting out. However, the Forward card seems easier to get for students.

3) Charge everything on your credit card (BUT BE DISCIPLINED – PAY IN FULL EACH MONTH!):

When I opened my first Citi card, the credit limit was a whopping $800. I’ll be honest, I had more spending power with my debit card, since my checking account had a higher balance. However, I still used the card for everyday purchases, especially at restaurants, bookstore, and Amazon.com, where I earned 5x points. I kept my credit utilization under 25%, meaning my balance never rose over $200 at any given moment. After a few months of disciplined spending, Citi decided to raise my credit limit to $1600 without me even asking. Even though my credit limit doubled, my spending didn’t. I still stayed disciplined and paid my credit card every 2 weeks (on payday). After a while, Citi raised my limit to $2600, then again to $5100 (even during the financial crisis!). None of these required a second credit pull, but I eventually got a credit limit above $5000, which is the exact amount you need for a Visa Signature card (which is most of what miles earning cards are).

4) After a while, start applying for the big cards:

Now don’t go crazy, since this is a marathon more than a sprint. In my first year, I got 5 new credit cards – the Chase British Airways (100,000 miles), Chase Sapphire Preferred (50,000 points), Citi AA Visa (75,000 miles), Barclays US Airways Mastercard (40,000 miles on first purchase + Grand Slam Hit), and American Express Delta Skypesosmiles Platinum (40,000 miles including 15,000 MQMs). For people who have been doing this longer, this is not that much, but it was a lot of new cards for me. My credit scores initially went down less than 10 points per bureau with 5 new cards, before shooting back up by 20 points.

As for what I’ll do with these cards … I will be trading in the credit line on the Chase BA card later this month for another Chase card, to avoid the annual fee. It was a great card to use for the time I had it. The Chase Sapphire Preferred will cost me $95 next year, but my parents will help me with that annual fee since we’re using my card as the “middleman” of our UR points, i.e., they will use their Chase Freedoms and funnel points through my Sapphire Preferred account. I plan on calling Citi to waive the annual fee on my AA card (which should be easy, since I recently got a sweet retention bonus from them earlier this year). The Barclays card costs $89/year, but gives 10,000 bonus US Airways miles each year, which means I’m buying miles that I value at 1.4 cents each for 0.89 cents each, a value in my book. Lastly, I will be changing my AmEx to a no fee card later this year, but will keep my account open date of 2007.

Categories: Credit Cards
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