The Best Everyday Miles Credit Cards, Explained
(Ed. Note: As a fee-only, fiduciary planner I collect no outside fees or commissions for anything. The credit card links posted here earn me no fees or perks. Be careful of popular websites like 'The Points Guy' and others that promote certain cards and collect those fees. Those cards are not always the best or biggest bonus.)
Trish, my late wife, and I traveled a lot with my girls after she was diagnosed with breast cancer in 2003. We were both nonprofit professionals. I was at the Corporation for Public Broadcasting and she was at PBS. We had young girls, a new home, and solid if not generous salaries.
We didn’t always have enough money for travel. Airfares were 35% more expensive than now, adjusted for inflation, but we wanted to adventure. I borrowed from my 401(k) and used home equity loans, and I have never regretted paying that loan interest. The experience dividends have been priceless.
Trying to conserve costs, I started to look at airline mileage cards for the sign-up bonuses. Soon it was a gamified hobby. Optimizing points and harvesting miles comes naturally to a planner and finance nerd. We got our kids to 38 countries and rarely paid for international airfare. I still do it but at a much smaller scale.
You've probably gotten several credit card sign-up bonuses yourself. (Here is a great resource for the current best credit card bonuses.) You might know that some cards have category bonuses, like dining or travel, office supplies, or supermarkets.
But who wants a wallet full of cards (George Costanza)? With one card how can you get the best value with credit card points and miles? Here’s what I want in an everyday spend credit card:
At least 2 cents per dollar spent in value. This isn't an arbitrary number; it's been the standard for a long time. A mile is worth about 1.3 cents so a 2x card earns 2.6 cents for each dollar spent.
No annual fee. A $95 fee eats up a lot of your earnings. Compared to a no-fee card, the first $4,750 spent on a $95 card is ‘wasted’ on the fee.
A Visa and no foreign transaction fee, for international use. (And Costco. Otherwise, Mastercard is fine.)
Miles are usable on good airlines (major US carriers primarily). Here is the bad news: most of the airlines or hotels listed as transfer partners for the banks that offer multiple are not very good for using points.
One thing I don't care about is the interest rate. Miles and points cards should never be used for revolving credit. If you are leaving a balance on your credit cards, you will lose more in interest than you'll gain in miles. Get a low APR card. (Check here and here for options.)
There are only a few cards that come close to these criteria. And the winner is… a credit union cash-back card.
Why not a miles card, why not a big bank? The problem with most miles cards is that most miles are worth 1.3 cents.
The two cash-back cards listed below are my favorites. I've had the Penfed card for many years. I know it doesn't seem exciting to earn cash back. I know miles bring hope and the fantasy of future travel. I like to save my cashback and use it to spend on travel when I'm abroad: a meals and incidentals fund. As a credit card collector, I have or have had all of these. They are good but each has a tradeoff.
Winners
Penfed and State Department Federal Credit Union 2% cash back cards. These two cards are the only ones I have found that meet all the criteria. State Department FCU has a better bonus, but Penfed has better savings rates.
Runners up
Chase Freedom and Sapphire Preferred used together are very good if you can handle two cards, want the travel perks for a $95 fee, and value miles on United, Southwest, and Hyatt.
CapitalOne Venture X is best if you insist on a Visa with no foreign transaction fee and you know you can find a partner.
Amex Blue Business Plus - Best if you like Delta and don't mind Amex with a foreign transaction fee, and use it less than $50k per year.
Citibank DoubleCash with Citi Premiere: This is another that takes two cards, one with no annual fee and one with, to meet the criteria. Best if you value cash and maybe transfer.
Details of each card
State Dept Federal Credit Union.
$200 bonus.
Requires no checking account. Best if you don't need a connected checking account.
Penfed Power Rewards Visa 2% cash back.
$100 bonus.
It requires you to open a checking account and keep a $500 daily balance or a direct deposit. Has solid savings rates.
Chase Combo: Apply for and use Freedom Unlimited for spending with a Chase Sapphire Preferred for transferring:
It's 1.5 miles per dollar or 1.95 cents (1.5x1.3=1.95). At 1.3 cents per mile on average, the Freedom Unlimited is a 1.95 cents per dollar card, narrowly missing my 2 cents per dollar standard but worthy of mention.
The no-annual-fee Freedom Unlimited does NOT transfer to Chase travel partners so you need a second card with an annual fee of $95. However, you do get some benefits like primary car insurance and a little extra category spent on travel and meals (2x).
The Chase Sapphire Preferred has no foreign transaction fee but the Freedom Unlimited does.
Points can be moved to good transfer partners for many (United, Southwest, Hyatt).
It's a Visa.
2x miles per dollar is good.
The annual fee is $395 but you get a $300 travel credit and extra points every year worth ~$100 so one could consider this a no-annual-fee card.
Visa with no foreign transaction fee.
The partners are not good. I like Turkish and Avianca but generally, the airlines in this list are not easy to use.
It's a Visa.
Amex Blue Business Plus (Best if you like Delta and don't mind Amex with a foreign transaction fee):
It earns 2x miles/points per dollar spent, up to $50,000 per year which should be plenty.
It has no annual fee.
It DOES HAVE a foreign transaction fee.
Summary: Great if you fly Delta, other transfer partners are less exciting. It is an Amex which is not as widely accepted and it has a foreign transaction fee, so no use abroad.
Delta is a great partner but the others are difficult or niche.
It's an Amex.
Citibank Double Cash with Citi Strata Premiere:
2x miles or 2% cashback.
Partners aren’t great but there are a few. Avianca, Jet Blue, Turkish and Singapore Airlines are generally the easiest and most affordable to use.
Mastercard, no foreign transaction fee on the Citi Premiere.
The $95 fee means your first $4,750 in spending is ‘wasted’ on the fee but you do get some benefits like primary car insurance and a little extra category spend on travel and meals (2x).
Pro tip: when the kids are teenagers, add them as authorized users. It’ll help start up their credit score so when they get to college, they should be able to open cards for bonuses.