Rookie advice – what’s the best card if you’re only getting one

So the other day I got a note from a reader that said

We are getting a new mattress. Yow, didn’t know how expensive those things are anymore. But we might get a credit card for some air miles. Can you recommend a good credit card for this major expense. Where should we look. What should we look for.  We will put about $4000 on a credit card and then pay it off immediately I don’t know if that makes a difference or not. Any advice would be greatly appreciated.

I thought that this was a great post because a lot of times people tend to focus on aspirational trips, and signing up for multiple credit cards.  I know that I tend to go overboard with things like this – let’s call it a personality feature flaw.  In fact, I make no secret that I make the majority of my points and miles from signup bonuses from credit cards, and then doing that every few months or so.  But the reality is that most people are not interested in spending hours of their time tracking their purchases and signup bonuses, or driving around to different stores “manufacturing” their spending.

Prework

But before we get to any credit card recommendations, let’s look at the basics.  First of all, it was good that he said that they would be paying off the card immediately – if you’re keeping a balance at all, the interest you pay will more than eat up any advantage you earn in miles.

I then suggested he read our blog’s Beginner’s Guide – which talks a lot about some of the basics and things that you should know before trying any sort of travel hacking.  I then encouraged him to check his credit score with Credit Sesame.  I was not surprised when he told me that his credit score was around 800, which of course is excellent.

What do you want to do?

The next question I asked was what he wanted to do?  All miles are not created equal – so it is key to figure out what we call a “demand schedule“.  If you live in an American Airlines hub city and want to make a lot of short-distance flights, then you might collect British Airways Avios.  If you’re flying other domestic flights, maybe Southwest Airlines.  If you want to take a business class flight for a European getaway, then maybe United, or a more flexible currency like Chase Ultimate Rewards or American Express Membership Rewards.

His response was

I think flexibility would be good, so a card that lets you do airfare, hotels, car rentals, in short anything you need traveling.

So what’s the card to get?

With that response, it was pretty clear to me what the best card would be – that’s the Barclay Arrival card.  I’ve written about this before, but Barclay Arrival points are another type of bank mileage currency that lets you spend money on anything travel related.  Every dollar you spend on the card gives you 2 Arrival miles, and you can redeem those for  a penny each as statement credits.  So you rent a car (or a hotel, or buy a plane ticket) for $100, you can redeem 10,000 Arrival miles, meaning each dollar you spend on the card is worth (about) 2 cents.

The bonus about the Arrival card is that if you redeem for travel, you also get a 10% rebate.  So in our previous example, you’d redeem 10,000 points, but then receive 1000 points back, making your net cost only 9,000 points.  This makes each dollar you spend on the card worth closer to 2.2 cents, which is the best card that gives you this kind of flexibility in redemptions.

In conclusion

I actually suggested that he get 2 Arrival cards (one for him and one for his wife).  The current offer on the Arrival card is 40,000 points when you spend $3,000 on the card in the first 3 months.  After meeting the spending requirements, he would then have 92,000 points, which (when accounting for the 10% rebate) would be about $1022 in travel that could be used for anything travel related.  It’s not going to get you any super aspirational trips, but for regular domestic travel (the kind most families do), that could go pretty far.

What do you think?  What kind of card would you recommend for a first-time travel hacker?

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