A reader contacted me a few days ago asking me what the best overall miles and points earning credit card is. After further discussion, I found out she had another cash back earning credit card that was about $5,000 in debt.
My main point to her was that she shouldn’t even think about a miles and points earning credit card until she fully paid off the debt on her other card. Simply, playing the miles and points game is not for people who are paying off any debt on their credit cards.
The rewards you’ll earn from a card such as the American Express Premier Rewards Gold Card won’t be worth more than the debt you’re still paying off. In other words, despite the points you’ll be gaining, you’ll always be losing. In fact, you’ll be paying more for those points than someone who is debt free, since the interest rates will make the value of those points next to worthless.
Let’s Look at an Example
One of the greatest travel credit cards, in my opinion, is the Barclaycard Arrival+ World Elite MasterCard which, with the 10% rebate in points, will earn a 2.2% rewards rate. So, if your interest rate on this card is more than 2.2%, you’ll be losing money.
- I recommend not getting any additional credit cards, until you’re debt free.
- If you risk not paying a credit card off, consider mileage earning debit card. Though few and far between, if you can start being a responsible payer with a debit card, you will be able to “graduate” to a credit card without payment issue.
- Pay your payments on-time. A late payment isn’t an option when you’re looking to earn and redeem miles and points.
- Choose your cards wisely. If you have trouble keeping too many cards open, with too many revolving balances, stick with one card that tends to have the best rewards rate and is otherwise a good rewards earning card. Even though other cards may add to your repertoire, and sound nice, keeping control of your balances is key.
Remember not to pay debt if you want to take advantage of redeeming awards for first class travel!
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