Episode 7

Are You Getting Paid for the Money You Spend?

credit card rewards

Wealthy people spend money. Smart wealthy people find a way to get paid for the money they spend. In this episode of Wealthy Behavior, we’re talking with Joe Waters, Jr., Certified Financial Planner and Senior Wealth Advisor with Heritage Financial, about using credit card rewards programs to maximize the power of your wealth and get some free perks along the way.

Wealthy Behavior: Are you getting paid for the money you spend?
This automated transcript may contain grammatical errors.

00:00:10 – 00:05:08
Welcome to Wealthy Behavior, talking money and wealth with Heritage Financial. The podcast that digs into topics strategies and behaviors that help busy successful people build and protect their personal wealth. I’m your host, Sammy Azzouz president of Heritage Financial, a Boston based wealth management firm working with business owners, executives and retirees for more than 25 years. Now, let’s talk about the wealthy behaviors that are key to a rich life.

Welcome to episode 7 of Wealthy Behavior talking money and wealth with Heritage Financial. I’m Sammy Azzouz president of Heritage and your host. We all use credit cards, but are we all getting paid to do it? Pretty much all the cards out there these days offer some sort of perk, mostly travel points or cash back. Many people accrue these benefits, but don’t use them or don’t know how to maximize them, so they go to waste. In today’s episode, we’re talking about how to maximize your credit card rewards with Heritage Financial’s, Joe Waters. Many of our listeners know Joe, he’s a senior wealth adviser at Heritage and has been with us for over 9 years, but you may not know that Joe is Heritage’s very own points guy. Joe has made a hobby of knowing the ins and outs of credit card rewards and maximizing those rewards for his family. In fact, he and his wife went to the 2018 Winter Olympics in South Korea thanks to this work. Today I’m picking his brain so that all of us can pick up some tips on how to make sure you get your share of the benefits that are out there. Thanks for joining Wealthy Behavior, Joe. Thanks for having me Sammy, I’m excited to be here today. Awesome, let’s do it. So Joe, this is a somewhat unique hobby if I can call it that. How did you get started with this? So my wife, Elise, has always been into travel, growing up we did some trips here and there, but not really big international trips. It was back in the fall of 2016 when I was actually planning a trip to Hawaii for our 5th anniversary and I got an offer in the mail from Chase. If I signed up for a credit card, they were going to give me a 100,000 points, and while I had no idea what that meant, it sounded pretty interesting. So I looked into it, and that’s how it all got started. Is that the best reward experience you’ve had or are there others that you would put on top of that? I mean, we’ve had a lot of good experiences over the years, but if I had to pick one, I’d say I signed up for a business credit card and a personal credit card from Southwest. And from the points that I earned on those two cards, it allowed me to get the Southwest companion pass, which basically is a buy one, get one free pass for the year that you earn it and the following year afterwards. So for 22 month period for march of 2018 to December 2019, my wife and I were able to get 40 free flights on Southwest. My lord, wow. And so we’ve worked together for a while and I’ve heard you say before that this hobby isn’t for everyone. What type of person can do well learning about what we’re talking about and applying this to get great rewards from their spending. So it’s definitely not a hobby for everybody, but I would say that if you’re a person who’s responsible with money and with credit cards, meaning that if you’re going to charge something, you’re also going to pay your bill on time or like me, I don’t always remember to pay the bills. So if you set it up on auto pay, you know, you don’t want to miss a payment and then have it negatively impact your credit. So definitely someone who pays attention to details because you can definitely get down into the weeds with this. You can also just do it very lightly and not get down into the weeds, but I’d say, you know, in order to get a lot out of it, definitely paying attention to details helps. And then lastly, just having a credit score over 700 points is definitely a help as well because that will help you get approved for most of the credit cards out there. So that’s a good explanation, Joe, and what you’re basically saying is like, look, even if you don’t want to go all the way into everything that we talk about today or all the things that you’ve done, you can still pick up incremental benefit from some of these tips and just make sure you’re credit is in good shape and your timely and responsible with whatever cards you utilize along the journey. Yeah, there’s definitely people from all walks of life that get into this benefit and some of them will only take out one card and use the one card to earn miles and points. And other people like me get a little crazy and get a lot of cards. All right, so let’s dive into it and let’s start first with travel rewards and points. When we’re talking about travel rewards, are all the points that these companies offer equal? So there’s a saying in this hobby it’s called, “your mileage may vary”. And basically what it gets down to is that everybody values things differently. So there’s different websites out there that’ll put a natural dollar value or a sense value per point, but what I always tell people is it’s whatever is important to you.

00:05:09 – 00:10:13
So if you’re looking to try and get points for a specific vacation, where you want to go to that specific place, then you may pay a little bit more in points to get that vacation. But to you, it was a value. Whereas other people might say, you know what? I’m not getting enough value. I’m spending too many points for that vacation, but if I go to this other vacation, I’ll spend a lot less points and get much more value out of it. So it just kind of depends what you’re looking to get out of things. Okay. And so are they all transferable? Are they sometimes dedicated to one outlet or another? How do you evaluate that? Yeah, so I kind of break it down into transferable points versus individual brand points. So a lot of people, I think, are familiar with, say, Delta SkyMiles or an individual airline points where you can use those points to cash in for flights on that airline or for hotel points like Marriott or Hilton or Hyatt. You earn those points and you get free nights at those hotels. But there’s also what’s called transferable points where all of the major credit card companies kind of have these programs in place. Chase has a program, American Express has a program, Citibank, Capital One. And what these transferrable points are is that you can earn points with these banks credit cards and then transfer them to travel partners. So either airlines or hotels and it allows you to really rack up a lot of points. But it gives you the flexibility to transfer to different partners depending on what kind of trip you’re looking to take. And Joe, is that transfer one to one? It depends. Sometimes these companies have different transfer rates. So you just got to look at each individual program and what the rate is. Also, they run specials every so often. So right now, Chase has a couple of different specials where you can transfer to individual partners and get a 30 or 40% bonus as well. So let me ask you kind of a more specific question along those lines. You know, I know a lot of people that have like a JetBlue card or a Delta SkyMiles card because where they go on vacation, one of those airlines is the best and easiest way to get there is that the best way to get those dedicated JetBlue points or Delta points or is transferable points from one of the cards that you mentioned just as good. Personally, I like the transferable points because I like to look for flexibility. So if for some reason the vacation to that JetBlue spot isn’t really going to work out and I have to change my plans, I like having that added flexibility, chase points actually transferred to JetBlue. So if you earn chase points, you can actually earn a lot of them quickly. And if you want to transfer them, the JetBlue you can. But if you want to have that added flexibility to transfer to other airlines or hotels, you have that ability to. Got it. So check the fine print too and understand the benefits of flexibility while you’re doing this. So I was on a flight the other day and we’ve all dealt with this, the flight attendant makes some super duper long announcement and then starts walking up the aisle, hawking credit card applications for 60,000 points, a 100,000 points, whatever it is. Most of the time, it seems to benefits come from opening a new card. Like that’s where you get your biggest bang for your buck. Is that the case? Yeah, I would agree. I mean, sign up bonuses provide the biggest amount of points in the shortest amount of time. There’s actually a website I go to, it’s called frequentmiler.com, and they actually keep track of the all time high bonuses for most major credit cards out there. So when there’s an offer that comes out on a credit card, I like to go there and see how it compares to the all time highs on those cards to know if I’m really getting a good deal on it or not. And it kind of depends, you know, if I have a specific vacation, I’m trying to accumulate points for, even if it’s not the highest value, I may still be willing to take out the offer they’re giving me because I need to get those points as quickly as I can or if I don’t really need that offer yet and I want to wait for later and see if they come out with a higher offer then I may just wait. So Joe, you’re also a certified financial planner and an adviser or wealth adviser, are people getting into a bit of trouble if they’re just going around opening a bunch of new credit cards for those mega point offers? Yeah, so while it’s true that opening a new personal credit card can temporarily impacts your credit score negatively, it’s a small and for the most part temporary effect as long as you pay off your balances, business cards, on the other hand, don’t impact your credit score at all. So a lot of people don’t know, but if you have any kind of 1099 income, if you sell stuff on eBay or if you go and consult for a company or any kind of other income that’s not on a W2, you can technically qualify for a business card.

00:10:14 – 00:15:04
So that’s another way that people can actually accumulate more points without it impacting your credit score. What I would tell people is that there’s actually 6 factors out there, which affect your credit score, their payment history, utilization, derogatory marks, like collections, tax liens, bankruptcies, that sort of thing. The average age of all of your credit accounts, the number of total accounts, and then lastly, the amount of hard inquiries or credit checks that companies have run on you in the past two years. So as you kind of get approved for more credit, your total accounts will go up, which is a good thing. And also your utilization will go down because if you’re paying off all of your bills, you’re getting more credit, but you have less of it being utilized. So it’s actually helping your ratios and your credit score all at the same time. The only factor which is kind of affect negatively by opening a new card is it does lower your average credit age for all of your accounts. So if you open up a lot of new accounts right away, that’s going to dramatically decrease your average age of credit, but thankfully that factor doesn’t have a huge impact compared to some of the other factors. Now, do you close these cards ever or do you keep them open and, you know, I don’t know if it’s true or not, but I was under the impression that it’s not really a great idea to cancel cards and it impacts some of the credit history stuff that you were just talking about. So it really kind of depends. I always like to look and see if the card is charging me a fee. If it’s charging me an annual fee, then I want to make sure that the benefit I’m receiving from that card justifies paying the annual fee. So I look at all the different perks of the cards that they offer. And I try and figure out, am I going to get enough from those perks to justify paying that fee? If I’m not, then I want to look at, well, is the credit card company going to offer me any kind of a retention offer to keep their card. So what a lot of people do is when you get charged the annual fee, you have 30 days to pay that fee. Within that 30-day period, if you call up the credit card company directly, you can ask them or tell them that you’re considering canceling their card because you don’t want to pay the annual fee and you’re not getting enough value out of that card. You can ask them if they have any kind of retention offers available. And if they do have a retention offer, sometimes you can either get that fee completely waived or partially reduced or sometimes they offer you points if you spend a certain amount of money within the next couple of months. So there’s definitely different ways that you can approach that. Joe, this is great. I’ve already jotted down like four things I am going to work on with my wife this weekend. So I think you’ve hit this a few times. It’s key to be able to keep track of all of this. And so do you have any tips for folks as to how you’ve been able to just stay on top of your cards? Yeah, so me and my wife actually have 26 credit cards, both personal and business between the two of us. And my two year old daughter also has one as well because we got some extra points for her too. Of course. I created a spreadsheet which keeps track of every single card. The benefits of all those cards, the annual fees, the due dates for each fee, the date that we applied for each card, and also any kind of hotel free night certificates that we get, any kind of airline, buy one, get one free certificates, and also any retention offers, I like to kind of have all that information in one place. So if I need to figure out something quickly, I know exactly where to go and have it all organized. I would not like to see that spreadsheet, but I kind of am going to want to see that spreadsheet done. It sounds like a pretty daunting document. So for someone getting started, what are the best travel point cards and resources that they can check out? Obviously besides our podcast here today. Yeah, so I mean, it’s easy to get lost with all the different credit cards that are out there right now. But if you’re just getting your feet wet in this hobby, I’d definitely point into a few different cards. One of them is the chase sapphire preferred card. I like this card because it provides really good flexibility and value. The sign up bonus is worth at least $600 just on its own. And the points that you earn on this card can be used in their travel portal to book travel directly through Chase, or you can transfer it to all the different travel partners that Chase has.

00:15:05 – 00:20:05
And the fee for this card is only $95, which is pretty good. If you don’t want to start with a card that charges you a fee, chase also has a freedom unlimited card, which gives you three times points for every dollar you spend on dining and drugstore purchases, and you also get one and a half points on all of the purchases without any fee whatsoever. Lastly, the other card I would suggest is maybe looking at the AmEx platinum card. There’s a big sign up bonus with lots of travel benefits included on this card. It gives you for instance, for example, gold status at Hilton and Marriott properties. It does come with a big annual fee of $695. Though, if you’re a Heritage client and you have more than $250,000 in your brokerage account, you can get a $100 credit on the annual fee. If you have a $1 million or more in your brokerage account with Heritage, you can also get a $200 credit a year on this card. That’s pretty good. Any blogs or information sources that you would recommend, Joe? Yeah, so there’s a lot of different blogs out there. I would say don’t sign up for too many of them because getting too much information gets a little overwhelming. But some of the blogs that I would suggest are definitely going to travelfreely.net. It’s a great site totally dedicated to beginners of miles and points. They have an incredible lineup of articles that you can read through. And it really just helps you get started in miles and points. For the more advanced users, I would suggest maybe checking out frequentmiler.net. And they post a lot of content on a daily basis. They’re coming out with three to four different articles a day. And they have lots of really handy information. It’s actually how I find out about a lot of the travel deals that are out there, so I’d suggest that as another great website for people to use. Lastly, it’s kind of cliche, but there’s a website out there called the Points Guy, and they have a lot of different articles on points and miles and travel deals and that’s another good resource that I use as well. Great. So that’s a lot on points and some resources, which I think will be extremely helpful for folks who are interested in learning more. Cash back is also another perk. Can you explain a little bit how that works? And maybe what some of the best cards are for cash back? Yeah, so cash back is pretty much what it sounds like. There’s a number of credit cards out there. Where you get a specific percentage of your total purchase back in cash and you can also get different category bonuses with cash back, but let’s say you go out and you spend a $100 on a card that gives you 2% cash back. You get $2 back. And I know, I know, it doesn’t sound like it’s a lot, but over time, every $2 adds up. And eventually by the end of the year, you can rake in a lot of cash. You’re right, right. It’s very straightforward cash back as cash back and it can add up over time. Any resources or blogs you’d recommend to learn more about cash back or thoughts on how to maximize the cash back value that you get? Yeah, so whenever I make a purchase online, there’s a website I use called cashbackmonitor.com and it’s really helpful because it allows you to get the maximum benefit out of every purchase that you make online. So cashback monitor actually monitors the leading cash back website offers out there and travel point offers for most major retail websites. So it allows you to actually stack multiple rewards on top of one another to get even more value on every purchase that you make. So Joe, a lot of credit cards have perks beyond just cash or points like travel insurance or other types of coverage is a benefit like this legit and do you look for those extra type of benefits when you’re reviewing cards? Absolutely. I mean, travel benefits like trip delay, trip cancellation and trip interruption insurance are a big deal and can actually be well worth paying an annual fee for. In fact, for listeners who might not have heard episode two of our wealthy behavior podcast, there was a personal risk manager by the name of Jack Faer, who talked about having a safety plan in place when traveling. Part of that safety plan included trip cancellation and medical evacuation coverage. So in addition to buying an insurance policy for these coverages, listeners might be surprised to hear that some of these benefits are also offered by some credit cards out there. Now, I have to say it’s really important that you read the terms and conditions for every credit card because they vary greatly between different cards.

00:20:06 – 00:25:11
This is an area where you really want to make sure that you completely understand the benefits that every card offers and what the terms and conditions are that you have to abide by in order for coverage to kick in, it also might be advantageous to go out and buy a travel insurance policy, depending on your needs and concerns. So I’d say it’s really just up to the individual when it comes to this space. How comfortable they are with actually getting an insurance policy or just using the benefits that they’re credit cards already offer. One example I can give is my in laws got stuck in Nashville earlier this year trying to visit my sister in law and Dallas. Their flight got canceled and they got stuck in Nashville for three days before they could get out. And a credit card company actually reimbursed them for all of their meals and all of their lodging during those three days because they had trip interruption insurance on their credit card. That’s amazing. That’s interesting stuff, Joe, when you try to figure out what additional perks, cards offer. I feel like sometimes when I look at it, it’s buried in a lot of fine print. Do you find that the credit cards have made it easier to research some of the perks that they offer on their sites? I find a lot of times they’ll give like a big, bold caption of this benefit is available, but they don’t necessarily dive into the terms and conditions. So yes, it’s great that they may offer this benefit, but you really have to dig down into the weeds to see what hoops you need to jump through in order for that coverage to be effective. So Joe, outside of those great cards for beginners in your opinion as you assess the landscape right now, what are just some of the best cards out there now in general? So there’s another chase sapphire card called the chase sapphire reserve, which provides really great flexibility and value along with a good sign of bonus. They give you a $300 travel reimbursement, which helps offset the $550 annual fee that they charge. They have really good travel protections for trip interruption and cancellation coverage. It’s easy to use and the terms and conditions aren’t as harsh as some of the other cards out there. And the points can also be used to book on their travel portal or transfer to travel partners. The AmEx platinum card, which I mentioned earlier, also has a big sign up bonus, and it does have a lot of travel benefits as well. There is a big annual fee, but like I mentioned, Heritage clients could potentially get a waiver towards that fee of a hundred or $200 based on their balances in their brokerage accounts. The delta AmEx platinum business card is another good card for business owners. It has a great sign up bonus. It actually gives you a buy one get one free certificate, meaning you buy a seat on Delta and they’ll give you a free seat round trip. And it also gives you one and a half delta miles on any large purchases over $5000. The last card is another business card. It’s the chase ink business card and it gives you 5 times points on any cable Internet phone or office supply stores up to $25,000 in spend with no annual fee. And I know what some of you people are thinking, you know, what am I going to use a card at an office supply store for? But say if you go into Staples, they have a display with all these different gift cards for every company under the sun, whether it’s restaurants, retail stores, they even have cash back cards, you know, those American Express cash cards. You can go into a supply store like Staples or Office Depot and buy a gift card for anywhere that they sell and you’ll get 5 times on your money. So basically, think about going into a Khols or Macy’s or an Applebee’s or whatever kind of gift card they have on the rack. You can get 5 times your spend by using this card, which is a great feature. Wow, so you’ve clearly thought this through, and I feel like I’m going to get some kind of gift card from you around the holidays. So now I’ll know why. Joe, you’ve got people, you know, moving forward on this, they do their research, they figure out what cards they want to buy, they’ve got a game plan, they’re tracking things so they don’t get into any trouble with miss payments or deadlines, do you have any thoughts on how best to utilize a new card? Yeah, so I mean, there’s definitely a lot of things that you can do when you first get your cards. I would say that you want to utilize your cards for every kind of purchase that you can to ensure that you get the most cash back or miles and points. When you’re signing up for a new card that gives you a sign up bonus, you want to make sure that you have a plan in place to earn that sign of bonus because you don’t want to miss out on the best opportunity to rack up a lot of points quickly.

00:25:12 – 00:27:56
So typically these offers will be like spend $3000 in the first three months or spend $5000 in the first 6 months after you get approved for the card. You want to make sure you’re aware of those deadlines because if you go beyond that deadline and you haven’t spent the required amount of money, then you’re not going to get the sign up bonus and regardless of how many times you call the credit card company and ask them to do you a favor, they’re not going to give you that bonus. So I would say that’s the most important thing is you want to make sure you hit the sign of bonus when you get one of these cards. Awesome. Thank you, Joe. No, there’s so much more we could talk about here, but this is a really great overview of how to think about getting rewards for the spending and travel that’s part of your everyday life. If our listeners only take one thing away from our conversation about spending on credit as it relates to their wealth, what should it be? I would say the one thing that I can’t stress enough to our listeners is that while miles and points can definitely lead to some amazing life-changing experiences, they’re not worth the 23% rate that credit card companies are going to charge you on your unpaid bills. You have to pay your bills on time and in full every month otherwise, it’s not worth trying to earn those miles and points or the cash back that they’re going to offer you. Got it. Nope, that’s perfect. And since the name of our podcast is Wealthy Behavior, what’s one wealthy behavior that you practice consistently and would recommend to our listeners? So I actually prefer to live a thrifty kind of lifestyle and I use my resources carefully as opposed to wastefully, so I would say just leaving a thrifty lifestyle. Living below your means always makes sense. So thank you, Joe. Really had a great conversation and appreciate your time today. Yeah, it was a pleasure. Thanks for having me, Sammy.
Thank you for listening to Wealthy Behavior. If you found the conversation useful, please consider leaving us a review wherever you listen to your podcast and sharing this episode so those around you can live a rich life too. For more insights, subscribe to our weekly blog and heritagefinancial.net and follow heritage financial on Facebook, Twitter, and LinkedIn. Check out my personal finance blog at thebostonadvisor.com. This educational podcast is brought to you by Heritage Financial Services, LLC located in the greater Boston area. The views and opinions expressed in this podcast are that of the speaker, are subject to change and do not constitute investment advice or a recommendation regarding any specific product or security. There is no guarantee that any investment or strategy discussed will be successful or will achieve any particular level of results. Investing involves risks including the potential loss of principle. *This automated transcript may contain grammatical errors.

About Wealthy Behavior: Heritage Financial Services

Wealthy Behavior digs into the topics, strategies, and behaviors that are key to building and protecting personal wealth and living a rich life. We’re Boston Massachusetts-based wealth managers who have been helping busy, successful people pursue their financial goals for more than 25 years. Hosted by Sammy Azzouz, President & CEO of Heritage Financial, Wealthy Behavior digs into the topics, strategies, and behaviors that are key to building and protecting personal wealth and living a rich life.