Credit Cards: The Process

Credit Cards: The Process

In this article I will give an idea of how you should construct your own process for playing the credit card ‘game’. The rules are fairly independent of the person playing, while a process is more specific. What I will do here is outline how to create your own process from the framework I am providing. This article is fairly UK-centric but the logic applies fairly universally.

To begin with I will provide the process in brief and then expand upon the the items in the process list below. I will also point out that this process is geared around earning points, not spending them. The spending of points will be in another article.

The Process
Similar to my set of ‘rules’ this is my process list. The previous list (‘the rules’) was a set of general constraints while this list is more about the step-by-step process you need to follow.

  1. Find your first credit card — something with a decent sign up bonus: e.g. Amex Gold / Platinum.
  2. Meet the minimum spend: e.g. £3 in the first 90 days of obtaining the card.
  3. Sign up for several loyal programmes: e.g. Avios, IHG, Tesco Clubcard.
  4. Obtain another credit card and meet the minimum spend.
  5. Consider cancelling the first card if appropriate.
  6. Look for attractive sales and points boosts.
  7. Consider whether it makes sense to get another card and meet its minium spend.

Getting Started
Look for a credit card with a large sign up bonus. Sounds obvious, but not all credit cards have a large sign up bonus. The catch is that you have to spend a minimum amount in order to trigger the sign up bonus. If you have a few large purchases to make then try to put them off until you get your card. In the UK the best sign up bonuses are with Amex (good comparison of cards can be found at: Head for Points). In the US there are a few more options and it is worth checking out the latest deals from banks such as Chase (confer with the information on: The Point’s Guy, One Mile At A Time).

The cards here are about taking advantage of the sign up bonus, they are not necessarily the best cards for long term spend. Once the sign up bonus has been collected ask yourself if that card is going to be good in the long term. Different cards are good for different reasons. Think back to my rules list: obtaining more credit cards which are paid-off on time should help boost your credit score.

Cards to consider for the first time:

  • Amex Gold Preferred Rewards Credit Card — 20,000 Member Rewards (MR) points upon sign up. 1 MR per £1 spent. £140 annual fee (£0 in the first year).
  • Amex Platinum Charge Card — 30,000 Avios upon sign up. 1 MR per £1 spent. £450 annual fee.
  • Amex British Airways Credit Card — 9,000 Avios upon sign up. 1.5 Avios per £1 spent. 2-For-1 Voucher. No annual fee
  • Amex British Airways Premium Plus — 25,000 Avios upon sign up. 1.5 Avios per £1 spent. 2-For-1 Voucher. £195 annual fee.

Note: there is a minimum spend required to meet the sign up bonuses. I am not recommending any of the above cards. I’m just pointing out that they exist.

The valuation of Avios and Reward Points is a mix of art and science. To see some illustrative numbers try reviewing the calculations provided by Head For Points and The Points Guy.

Loyalty Schemes
While you are deciding which credit card to get for your first card it is worth signing up to several loyalty programmes. Most of them tend to be free. This is an optional stage that can essentially be done at any time. Keep an eye out for any scheme that’s offering sign up bonuses or cross-promotion awards.

Obvious ones to sign up to:

  • Avios
  • IHG
  • Tesco (can convert clubcard points to Avios or Virgin airmiles).

Next Card
Once you’ve signed up to your first card and met the minimum spend consider moving on to the next card. This depends on how far you want to go with collecting credit cards and obtaining the sign up bonuses. Just remember that sign up bonuses are great to build up a nice chunk of points but they may not be the best long term option. If you started with the Amex Gold or Platinum then consider going for one of the Amex BA cards.

Points Boosts
Every so often you will see certain items in Tesco offer a clubcard points boost. This is interesting because clubcard points can be converted to Avios. Moreover, Tesco has sold branded third-party gift cards (e.g. Amazon) from time to time.

British Airways and Avios provide a shopping portal which shows which companies are offering an enhanced rate of Avios: e.g. purchasing flowers from Interflora may provide a rate of 7 Avios per £1 spent. This is a highly attractive rate but it does not make sense to spend the money unless you actually need to. If you do need to spend then it is worth checking out the brands which partner with Avios through the Gate 365 website.

Disclaimer: I am not recommending any of the above cards. I am just pointing out that they exist and receive no payment from any company mentioned.