What’s a good credit card to spend on?
I was asked this twice in the last couple of days, and of course you just can’t answer this without knowing some additional information.
I think one of the most important question to ask is:
(Besides can you afford to do this?)
1. What kinds of rewards are you looking for?
Many people out there are very happy with the free groceries they are getting from PC Mastercard or free stuff from Canadian Tire Mastercard. These credit cards do not pay you a good return, but people “know” these credit cards and are happy with the free stuff now and then.
Other people have put a little more thought into this and collect various “points” from CIBC, RBC, TD etc. You can use these points for travel and generally offer some sort of sign-up bonus to get their cards.
In a great scenario you are getting a 2% return on some of these cards and there are ways to get this on certain cash-back cards here in Canada. Rather than give you links to different articles on this, if you just google “Canadian credit card returns” or something similar you will find enough information.
There are many, many other factors involved here – different returns for grocery shopping, drugstore, travel, etc – but we will assume normal spending – some gas, some restaurant, some paying bills, some shopping, etc.
It is fairly safe to say that a 2% return – either cash-back or in travel is very good and if you are currently getting that you are doing OK.
2. What are you using your card to purchase?
Like I just mentioned, there are cards that offer higher returns for things like purchasing travel, gas, groceries, dining out, drugstores, etc. So if you are using the card often at one of these places you should get a credit card that offers higher bonuses at these places.
As an example, the Amex Gold Rewards Card offers double points on travel – so if you spend $500 on a flight, you get 1000 MR points, which can be valued as high as 2 cents each, or $20.00 in travel. That’s a 4% return.
Generally though, most people tell me their spending is on everything and there is no real focus on any particular expense.
That is why I came up with this article – what card do you use for normal, everyday spending?
Well…is there a card that can get you BETTER THAN 2% RETURN? – or 2 cents per point?
Without a doubt there is -and since this is a travel site I am going to recommend a card that is travel related – the AMEX Starwood Preferred Guest Credit Card.
Yes, we get a referral bonus if you get this card, but you can go straight to their site if you want.
Basically, for every dollar you spend on the card, you get one Starpoint.
I have been researching this information for over 2 years myself, but the pro on this – Rewards Canada – has this card rated as the #1 Hotel Credit Card in Canada.
But that is other people from around the world – I want to know how to value it for hotels my family and I might stay at.
So I picked destinations that are likely for me to be needing a hotel room now and then – Toronto, Detroit and Florida.
If you are OK staying at a Cat 2 Starwood property (Sheratons/Four Points) then you are going to get great value out of Starpoints – you need 3000 points for a night stay.
Here is a rundown of what I found. Prices are after taxes for a regular room with 2 Queen beds. US rates are multiplied by 1.1.
4 Points Toronto Airport – $110 = 3.7 cents per point
4 Points Mississauga – $150 = 5.0 cents pp
4 Points Niagara Falls, NY – $233 US = 8.5 cents pp!!!
Sheraton Detroit Airport – $120 US = 4.4 cents pp
4 Points Detroit Airport – $140 US = 5.1 cents pp
Aloft Jacksonville Airport $91 US – but 2000 points = 5 cents pp
Jacksonville Sheraton – $123 US = 4.5 cents pp
Orlando Sheraton – $100 US = 3.7 cents pp
Orlando 4 Points – $125 US = 4.6 cents pp
Sheraton Lake Bueno Vista – $150 US 5.5 cents pp
Tampa Airport Sheraton – $133 US = 4.9 cents pp
Ft. Lauderdale Sheraton – $111 US = 4 cents pp
So…the average for these numbers is 4.9 cents per point!!! Call it a nickel!
Now, this is for nice, but not spectacular hotels – but still – a 5% return on a credit card to stay in certain hotels is incredible.
That is at least twice as good as these other credit cards and hotel credit cards returns.
Yes, it is for specific examples – but anyone can take advantage of these deals!
Again, I am not the first person to figure this out, but sometimes it needs to be repeated.
You can get 10,000 Starpoints when you spend $500 on the card in the first 3 months. That alone could be worth anywhere from $300+ in hotel stays. It’s worth $850 at the 4 Points, Niagara Falls, NY!
There is a $120 annual fee on that, but in this case, if you do the math it is totally worth it.
1. You can refer someone to this card after you have it (in Canada) and pick up an extra 5000 Starpoints – total between you is 10,500 + 5000 + 10500 = 26,000 – over a week in these Cat 2 Hotels
2. There is an option “Cash and Points” that sometimes offers better value for your Starpoints – you need to enroll in Starwood Preferred Guest to see the rates.
ie 3000 points for night or 2000 plus $35
3. There are some nice Cat 3 hotels on beaches in Florida for 7000 points per night.
4. On Cat 3 hotels and higher there is an option to get the fifth night free on the same booking of 4 nights in a row at same location.
ie. 4 nights for 28,000 points – fifth night is free!
5. There is a Business card as well – same bonus points, but $150 per year.
6. Interest rate on this one is 19.99% per year – is lower than other Amex cards
7. Millionmilesecrets.com has a great article on how to use Starwood points – here is the link