Credit Card types – which is right for YOU?
Flexible Reward Cards vs. Co-Branded Credit Cards
If you read my last post, hopefully you learned something about the perks (and the pitfalls) of different types of credit card companies. For this post, we’ll be learning about the two main categories of credit cards. They are:
Flexible Reward Credit Cards (i.e. American Express Membership Rewards, Chase Ultimate Rewards and Capital One Miles); and
Co-branded Credit Cards.
So, what are the differences between the two?
Flexible Reward Credit Cards allow you to earn points and then transfer them within their chosen network of affiliates. You can also redeem your points through the company web portal, which sometimes brings great value, but at other times is not as lucrative.
Co-branded Credit Cards are cards that are specific to a company or “brand”. For example, most retail stores have their own credit card, most airlines have their own credit card, and most hotel chains have their own credit card. These are all co-branded credit cards.
Wouldn’t it make more sense to ALWAYS go with a card that is a flexible rewards card?
At first it would seem that this is the best option, but in reality, it completely depends on your travel needs and spending patterns. While it’s definitely preferable to be able to transfer your points to many different partners, there are distinct advantages to having a co-branded credit card. For example, many hotel chains offer room upgrades, higher status, and even free room nights just for having their co-branded credit card. And most airlines offer an especially critical incentive for having their co-branded card: no bag fees. For a family of six, like mine, that adds up to a LOT of money. In 2018 alone, the airline industry collected over $4.8 billion (with a “B”) in bag fees. I’m assuming that you’re beginning to see the value, even if you only travel once or twice per year.
When we went to Hawaii for two weeks, I decided to skip out on getting the Hawaiian Airlines co-branded card. Had I applied for and received the card, I would have had more than enough points for all of our inter-island flights (which would have therefore been free), and there would have been no bag fees. In all honesty, this was a mistake on my part. As it turned out, we spent well over $250 in bag fees and had to use precious and valuable American Express Membership Reward points (at a less than stellar value). We were grateful that we never had to pay for any of our flights, but by not getting the Hawaiian Airlines credit card, we missed out on a huge value. Chock that one up to an expensive lesson learned.
The takeaway here is that the points and miles world is full of opportunities where we can get HUGE value for little to no money . . . but there are also those occasions when opportunities are missed. The good news is that, because I have the American Express Gold Card which earns 4 points for each $1 spent on dining out and on groceries (our biggest spending category each month), I have very quickly earned those Membership Reward points back! And they will be ready for use on our next adventure!
Let’s Get to the Point!
If you have questions about which credit card might be right for you, feel free to reach out to me at erin@letsgettothepoint.com, or find me on Facebook, Instagram, or Twitter. I’m always more than happy to help POINT you in the right direction!