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Is the Amex Platinum Even Worth it Anymore? Ranking Credit Cards We've Had
285 Plays1 year ago
On this episode, Eleanor and LD battle it out, it’s Chase versus Amex. They break down the mysteries of credit cards, their credit card drama, the point system, and how to pick the right credit card for your lifestyle.
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Pretty Invested Media and this related information does not constitute professional or financial advice of any kind (including business, employment, investment advisory, accounting, tax, and/or legal advice). Advice from a suitably qualified professional should always be sought in relation to any particular matter or circumstance.
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Transcript
Introduction to Pretty Invested
00:00:00
Speaker
Welcome to Pretty Invested. I'm Eleanor and this is LD. Presented by your favorite ex-finance bros. We talk about the money things you actually care about. Hey guys, welcome to Pretty Invested. It's Eleanor and LD, your favorite ex-finance bros.
Credit Card Mishaps and Lessons
00:00:20
Speaker
Elvie, how are you? I'm good. It's kind of gross in Miami today, but otherwise, doing fine. Not too rough on Friday night, I would say, for Miami. How's your night?
00:00:33
Speaker
Well, it's very topical because I went to this spot called House of Yes, which is very notorious in New York as like a very fun club to go out in super inclusive and it was disco themed. But at House of Yes, I lost my credit card. I don't.
00:00:55
Speaker
No, what happened? I just woke up this morning and when I went to grab it, it wasn't in my wallet. So that brings us to today's episode, taking the right credit card for you. And I'm going to need to, I probably won't pick a new credit card. I'm just going to have to call Chase and maybe one. Yeah. What credit card was it?
00:01:17
Speaker
It was a Chase Sapphire Preferred. I already paused it, good tip. If you can't find it, just put it on pause so no one can make these extra charges. Wow. I have that one, I like that one. Yeah, yeah, yeah. But usually the credit card companies are pretty good about if you get it stolen. They have like a buffer, like they won't actually charge you. Since I bring this to our topic, credit cards, I'll be wise and important to have a credit card. I think it's really important to start
00:01:46
Speaker
your credit card journey early on in life. My parents growing up were never, they were like cash only people. It was like the immigrant mentality. And they, I don't think got their credit cards until after I got my very first credit card in college.
Understanding Credit Scores
00:02:01
Speaker
So that's when I started my journey. Yeah, so like my financial history is like super short relative to what it should be. And the reason that that's scary is because one of like the most damaging
00:02:13
Speaker
things to your credit score is having a short credit history. So I would say open up a credit card for yourself in college and start racking points up little by little. Just use it for small purchases like groceries and things like that. It's a good way to develop really strong spending habits and budgeting habits. Yeah so like I guess the alternative to a credit card is cash which is first of all inconvenient and just
00:02:40
Speaker
No one really uses cash that much these days. You could use debit card, but you're not building your credit score. And you're not being able to capitalize off of the rewards that a lot of these credit card issuers give. So it just makes more sense for your everyday expenditures using your credit card.
00:02:58
Speaker
And you brought a great point of your credit score. I think the max is 850, which is a good credit score. And the reason why it's important is if you ever want to, first of all, open up a higher tier credit card, you need to have a good credit score. You want any type of loan for.
00:03:17
Speaker
you know, buying a house, you get a lower rate. And there's a huge difference between having to pay like 3% versus 6% in cost. So credit score is really important. And also just even if you want to rent.
00:03:34
Speaker
It's really tough if you don't have a credit score to just be an adult and starting early so that way you have longer credit history. And I can quickly go into the factors of a credit score. I think I'll just knock them out.
00:03:48
Speaker
The number one is your payment history. So this is approximately 35% of what factors into your credit score, making sure you pay your, make your payments on time, not having late humans or defaults, because that's the whole point. And that's why people care about your credit score. Like how reliable are you? And you have to pay your balance off every single month, preferably in full and on time. So that's the most important thing.
00:04:13
Speaker
The next most important thing is credit utilization. That's 30%. And that's something that I actually didn't know about. Credit utilization means you have a line of credit.
00:04:29
Speaker
where your credit card might have a max of 5k, 10k, 20k unlimited. How much you use of that every single month is your credit utilization. And I think the recommendation is keeping it below 30%. Yeah, I think 30% is ideal. Yes. And my faux pas was that
00:04:52
Speaker
Okay, I'm admitting it to you guys is that one month, I think he's almost 80%, which is no bueno. Really? Yes. And the reason being is because I had front loaded so many expenses on my credit card and I had never asked for a credit card extension because usually my utilization is not too high. Yeah. I think my credit limit I had was 10,000.
00:05:21
Speaker
I usually don't spend more than 10, I definitely don't spend more than 10,000 a month. It never became an issue, but it was the case where I was booking a vacation for me and my friend. So I booked Argo hotels and she was been knowing me and I was booking another Airbnb. I was looking all of my travel for the year upfront on my one credit card. So I had spent $8,000 spending on flights upfront early in the same month. And I think my credit score dropped maybe
00:05:52
Speaker
40 points. What? Yeah, it was that bad. Yeah. And I was like, what happened? And credit utilization is your second highest factor in your FICO score. So tip one, make sure you don't spend too much in a specific month. And then
00:06:14
Speaker
Two, if you can, increase your credit limit. If, let's say, you are going to be signing more, have additional credit cards, and then also
00:06:24
Speaker
Ask for credit increase. And sometimes it's really easy. Yeah. I, as a general rule of thumb, like I would just ask for a credit increase every year because it's just going to help your score. Let's say you're spending like $2,000 a month on your credit card. Like it's always, always, always, always better to have a higher limit because then that percentage of total credit usage is going to go down over time. You always want it to be as small as possible.
Credit Applications and Utilization
00:06:50
Speaker
Yeah. So the third one, I don't know if you want to mention it is what you were saying about credit history. So the length of your credit history is like 15% of the weight of what your score is. Um, so it basically looks at like the average age of all of your accounts. So another thing here is try to avoid canceling your first ever credit card, because that's going to be your longest held account and try to.
00:07:17
Speaker
get new credit cards spaced out regularly over time so that if you do want to cancel one of them, it's not catastrophic to your credit score. This happened to me actually in
00:07:31
Speaker
I think like the third year of building my credit history, I got a credit card at TJ Maxx because I had spent like a lot of money that day. I literally never used the card again and because I never used it, they canceled it on me. But at that point, it was my second oldest credit card and it was actually really bad for my score. Wait, so they canceled it without telling you?
00:07:52
Speaker
Yeah, I mean, they prompted me. They're like, oh, if you want to buy something, go for it, and we'll keep your card open. But I just didn't go back to TJ Maxx for ever. Yeah, I think store credit cards are a little scamier with that, where they're a little more strict with their rules. And there's no explicit minimum spend, but there is. Yeah, I can't believe if you don't use it, if you don't go to TJ Maxx, they'll just cancel your card.
00:08:21
Speaker
Yeah, to be fair, it was like two years of inactivity, but it was scary because I was like, okay, now I'm back in like the low 700s. And like, I always had an ego about my credit score. So I was like, I feel like I'm a B minus student. It didn't feel good. It is. It's kind of like, I get a high when I see like, oh, your credit score went up. I'm like,
00:08:47
Speaker
Yeah. I think as nerds, we kind of care about doing well and how we benchmark. Yeah. Oh, that's good. I thought I had a great credit score. What? No, the type A in me really gets injured when my score takes a hit.
00:09:02
Speaker
I know. When I dropped 40 points, I was shocked. I was like, I pay on time. I pay in self. I'm just like in the motion. And I was booking my travel for the rest of the year and didn't think it through. And it's like, let me just do it all now. And I'll put, and put not only my expenses for the trip, but also my friend's expenses. And she was paying me through Venmo. So it was just a lot. Yeah.
00:09:28
Speaker
But yeah, and I think the next one is credit mix. That's a little bit lower. I think the average is 10%. I'd like to see that use a credit card, mortgage, loan. I think for us, that's not as relevant. Yeah, maybe. I actually don't know if paying off your college debt counts towards improving your credit score. Yeah.
00:09:52
Speaker
And then the last factor that really goes into your credit score is new credit card applications. Good thing to know. So after this podcast, do not open, go and apply for like three or more credit cards at once. Yeah.
00:10:10
Speaker
And the reason being is because when you apply for a credit card, they'll do something called a hard poll of your credit score. And each additional new poll makes you perceived as a higher risk. So what you should do is figure out the one that you want to apply for, apply for that one, and then wait three to six months, six months preferably before applying for your next one.
00:10:36
Speaker
I had a friend who got dinged for that where he got super excited about the credit card hacking. He wanted to get all those bonus offers and so applied for I think three credit cards. I also had an issue, a story of why my credit score went down. So a little bit shameful, but I was turned down by the free Bank of America 2% cash back card.
00:11:04
Speaker
And the reason being was because I had opened up a credit card, I think, within that year. And then I applied for the Bank of America one. And then I was, I think, in Italy when I applied for it. And something got flagged where they said there's something off. Like, why is this person in Italy applying for a credit card or your name?
00:11:31
Speaker
So they did a hard pull and I explained to them, hey, I was in a lead, like that, this was a situation. And then they're like, okay. They did another hard pull, which I thought was weird. And so even though I only applied for one, and I think it had been over six months since my previous credit card that I opened, they rejected me and I had to go on the phone. I was a little bit hurt because, you know, it's like, I didn't even want you guys that badly, but I think the two hard pulls sequentially. And then the weird thing about
00:12:00
Speaker
me applying from a foreign country dinged me and I didn't get my... That's so frustrating. Like the credit bureaus are... I'm gonna go off on a tangent, but like credit bureaus are so scammy because they have like this monopoly on like the rules of like what makes you have like a healthy credit score versus like a bad credit score. Like I know going through the home buying process it's a similar thing where it's like if you're
00:12:28
Speaker
exploring an application to a house they'll do like, it's like a medium pool it's not quite like a soft pool, it lingers a little bit longer than a soft pool. And so like, let's say you want to apply to like three houses right because like the work it's kind of, I mean I don't know that it's like as aggressive as it was like a year ago.
00:12:49
Speaker
Like with each progressive application, you just look like a worse and worse applicant. And it's like, okay, so you're gonna pressure people into making really scary, incredibly important life decisions because you're pressuring them into not damaging their credit score.
Choosing the Right Credit Card
00:13:07
Speaker
So do you have a worse credit score than that impacts your rate? That's why it's so important to have a great credit score because then you'll have lower interest rates that are charged back to you when you're like,
00:13:18
Speaker
applying for a mortgage. And that's like tens of thousands, potentially hundreds of thousands of dollars in interest that you're paying for because this centralized entity was like, oh, you're only like a medium good credit score. You're not an excellent credit score. And it's because of these like stupid arbitrary rules. Wow.
00:13:41
Speaker
Yeah, the credit score system is highly flawed. Just because someone has a low credit score does not mean they are more trustworthy or the less trustworthy, or just because someone has a high credit score doesn't mean they're the best applicant. And then we can go into the whole how disadvantages certain population, demographics, and it's just a very broken system. But it's a lot we're living in, so we're giving you the tidbits on how to
00:14:11
Speaker
work within the system. I didn't really did that though because then it's such a negative feedback loop because I don't want to have my credit score. Nothing more. Yeah. Wow. That's predatory. It's scary, but this is what happens when you have systems of monopolies. Wow.
00:14:30
Speaker
Yeah, that's a refresh. I was going to summarize. Payment history is your number one. That's 35%. Credit utilization is 30%. The length of history credit of how long you've had a credit card open is 15%. The credit mix is 10%. I wouldn't worry too much about that one. And the new credit card applications, 10%. But that's the boring credit score stuff out of the way. Next, we'll talk about which credit card should you get.
00:14:59
Speaker
Because you can only apply for, you can only apply for one. Yes. Yeah. So what are the things that you consider when applying for a credit card? How well it matches up with my lifestyle. I like a system of having like three different credit cards where one of them is my airline credit card. So like I'll pick one that I'm the most loyal to. Unfortunately, I live in Miami, so I have to do American Airlines. Don't love American Airlines at all, but like it's just like one of their hubs.
00:15:27
Speaker
I would have a Delta credit card if I could, but yeah, so I, I like having a credit card for an airline and then I like having two credit cards that are optimized for food spending and other kinds of like big travel expenses or like big life expenses.
00:15:46
Speaker
So I think take into account your lifestyle, like how often are you traveling? Like, do you really need to have like one credit card that's like optimized for travel? Like the Chase, I think it's like the Sapphire preferred and the reserve are both like good for that. Or like the Amex Platinum is also really good for travel. If you're not, and you're more concerned about like, gas expenses, food expenses, like how much you're spending at department stores, I think
00:16:16
Speaker
there are a bunch of really good credit card options for that as well. So I really just care about like how well it matches up with my lifestyle. And I've been at like different points of my life where like, at one point like I really, really cared about getting cash back on groceries. And then at another point, like I was traveling a lot for work and like paying for certain things on my personal credit cards where I could like get a bunch of personal points and like have my stuff expensed. And so I would look into getting a travel credit card if that is your lifestyle.
00:16:46
Speaker
Yeah, yeah, there's definitely and this this is a difference between the credit cards because not all credit cards the same Some of them have an annual fee where you pay to basically have it you're saying I think
00:17:01
Speaker
Chase Sapphire Preferred is $95. Amex Platinum, which I'm sure it's going to get that I've heard of, is I think $695 a year currently. Yeah. So there's the annual fee. Some cards are travel cards, like you mentioned. Some cards are more cashback. And quickly, because I didn't know cashback when I first started. But cashback means when you spend on your credit card, it's usually between one
00:17:29
Speaker
I think the high and 5% of what you spend, you'll get back in points. And then how you can redeem those points is maybe through travel, maybe you can cash it out, they'll give it back to you. So you have to think about what your needs are. And then other things to consider is,
00:17:52
Speaker
We don't recommend keeping a balance.
Credit Card Economics and Debt Avoidance
00:17:54
Speaker
So you should pay off your credit card every single month in full, the balance. But one thing to consider is if you do know that you're going to have some debt on your credit card is the low interest rate in APR.
00:18:08
Speaker
because then if you do have a balance, you're going to get charged additional on that. So that's what we consider, but we really want to emphasize you should do your best not to have any credit card debt because that's how the companies will make money off of you. Yeah, we were talking about compound interest. That compound interest on debt is really scary. I've luckily never had to deal with like
00:18:39
Speaker
credit card debt, because like I said, my parents are terrifyingly like, pro cash and like anti credit. But that stuff just like racks up over time. And you shouldn't be giving credit card companies your money. Yeah. Which brings us to our next point. That's how they make money off of you. So yeah, a lot of people understand is how credit card companies are able to offer all these
00:19:07
Speaker
you know, perks or awards, their credit cards, I think the Chase Freedom Flex or one of those offers you $200 just for signing up to use their credit card. Like how do they pay for that? The first way that credit cards make money
00:19:24
Speaker
I'm a FinTech investor, so it is off of interchange fees. What you don't know is that most of them it's passed on to the merchant, but whenever you make an expense, two percent typically, one to three percent of that purchase is given to the credit card companies. That's why Visa, MasterCard, and the payments industry is so bloated because
00:19:52
Speaker
What other business gets one to 3% of every purchase you make? I feel like as a consumer, you don't see it as much because typically the merchant or AKA the person that you're buying from takes that fee in. But what happens is because they're like, oh, well, I have to pay, you know, chase 2%. I'm going to make my product 2% more expensive.
00:20:16
Speaker
Yeah, no, don't do the merchant who passes it down to you. Yeah, the payments industry, I think has a lot to be disrupted personally. But that's why these are such behemoth companies. The other one is late payment fees. Like we were saying, don't have a balance. They charge you interest on all that and make
00:20:35
Speaker
money that compounds on it. I think we said interest rates vary from 1.75 to 4% a month. That can be pretty high. APR varies between 16 and 48 to 48%. That's how they make money. And then there's also the annual fees like paying for Amex Platinum, but usually people get their benefits
00:20:58
Speaker
off of that, but this is just like not really relevant to selecting a credit card, but I think it's interesting how these credit card businesses work and why they're motivated to get you to use them because if you're using Chase, 2% of every purchase you make goes to them. Same with all these other credit card companies. There's a split in between all of them. It doesn't all go to Chase, but
00:21:24
Speaker
There's a reason why, they're not just giving you free perks and $200 signup bonuses or free Equinox credits, right? So that's a tangent, but it is- We love a good FinTech lesson. I don't believe that was understandable, but yeah, that's how these are such big companies and they make a lot of money. Credit cards are just loan sharks and nice outfits. Yeah.
00:21:52
Speaker
The whole idea is I give you money, but you gotta pay me to use my money. But you can get around that by... Paying off your balance. Paying off your balance, taking advantage of all of those rewards and points, which we'll give you tips on later on in the episode and so stay tuned. So you don't have to be one of those people that they're praying on.
Maximizing Perks and Rewards
00:22:16
Speaker
Yeah. And then, oh, another thing to consider
00:22:20
Speaker
for a credit card is the limit that they'll give you and your credit score. So maybe some of you guys are just trying to open up your beginner credit card. Probably if you are in college, yet one that has no annual fee, there are plenty of good options. The Bank of America 2% cash back. There's Chase. I'm unlimited. Freedom Unlimited. Those credit cards vary in terms of your credit score.
00:22:46
Speaker
But then just put like a little bit on that. You can still use your debit card and not completely transfer over to these credit cards. But just make sure you put a little bit on it and then pay off well. Have a low utilization rate. Also possible if your parents do have a credit card, see if they can open up one for you. Get your name added to one. That'll help with your credit score because
00:23:10
Speaker
For instance, the Amex Platinum, if you don't have any credit history, you're probably not going to get approved. Yeah, you'd get rejected right away. So we have to work our way up. And then another thing to consider is the rewards of
00:23:31
Speaker
if you sign up and it's not just like you get $200. I think it's that you spend $500 in the first few months or each credit card is a different. Yeah. Wow. If you can get one of those, that's great. Cause then you get $200 free, but you have to make sure it makes sense for you. Like don't spend $500 in order to get that $200 back. Like stack your expenses on that credit card for those first few months.
00:24:00
Speaker
and get your reward, your bonus, your cash bonus, but don't spend unnecessarily like, oh, now I'm going to go buy $500 of clothes from Zara just to meet this minimum. Like you'll probably meet the $500 just, or sometimes it's a lot more for other credit cards.
00:24:23
Speaker
the one bit of advice is not to spend unnecessarily what you wouldn't spend just to get that bonus. Yeah. Like I'm on fiance TikTok and I've seen a lot of newly engaged girls talking about like Haki a credit card where they'll
00:24:43
Speaker
get one that gives them a bunch of points for spending like what's typically like an egregious amount of money, but they're putting those expenses towards their wedding planning. So I think like getting a new credit card ahead of a big event where you know you're going to be spending way more than you normally would and like maybe dipping into your savings a little bit for that big expense, like planning an event, moving into
00:25:06
Speaker
apartment, living in cities, those are really good ways to hack those points and then get a little bit more cash back for money that you would spend anyway. Or if you're planning a vacation and you're going to be booking hotels, instead of doing what I did that was wrong and using too much of my credit card, put that on the new credit card that you open because instead of just using your debit card or enough means.
00:25:36
Speaker
Yeah. So those are like the main things that we consider, right? Like if you want to spend it on an annual fee, what type, like if you spend on food, travel, or you just want to cash back, if you, if you must have a balance, what that APR is. And then now I think we're going to get to the fun part, which is the perks and how do we best hack it?
00:26:03
Speaker
Love perks. I love, love credit card perks. Yeah. So you say you have the platinum, right? Tell me about it. I don't have it. I do. So story on the platinum is I had just moved to Miami and it was like soft hurricane season. So I was trying to get back to New York.
00:26:28
Speaker
But my flights kept getting cancelled, so there was one point where I was spending literally hours a month in the airport having my flight get cancelled, turning back home, and I was like, dude, I need lounge access. So I was also working. I wanted to be working at those times of day.
00:26:48
Speaker
I was like, if I'm going to be stuck at the airport, I need access to the lounge so that I can sit down somewhere quiet, have some snacks and get my work done. I had my friend refer me because I got like a sweetener on the rewards for opening the card. It's a fairly expensive card. It's like $700 a year or like $695 to be exact, but it worked out for me because it gives me so much cash back on things that I would be spending money on anyway.
00:27:15
Speaker
I get like $200 a year back on Uber. I got $200 a year back on incidental flight expenses. So like when I purchase wifi or if I'm flying with Sushi, my cat, he's $125 one way to add the cat on. So they cover $100 a year for that. And why I really like it is I get like five extra points on travel related things. I travel a lot. I used to travel a lot more for work, but
00:27:45
Speaker
I think I'm always going to have a lifestyle where I'm traveling a bunch, going back to my family, et cetera, in New York or elsewhere. I also have the Amex Gold though. That's more for like food, right? Yeah. The Amex Gold is for food expenses. So like restaurants and groceries. I think you get four times the points on that one. And the annual fee on the Gold is $250. And they also give you like
00:28:10
Speaker
similar perks to the platinum, like I think it's $150 back in Uber, et cetera, et cetera. I will bore you with the details, but like they both work out for me because one is like shopping and travel, and the other one is restaurants and groceries. And like, those are kind of like the big areas of spending in my life. And also, I don't know, like I really, I really like the aesthetic of them. And we think something about being an Amex,
00:28:40
Speaker
and then clapping that down at the dinner table. Kind of, but also like I just really like that I can customize them and that wouldn't be a deciding factor for me if I were like comparing two cards and like
00:28:53
Speaker
say one of them was like slightly more expensive than the other one, but it was way prettier. I would go with a prettier card. I'm just like, okay. Yeah. And before, you know, it's funny, the first time I really known about Amex was that the lounge and I, I didn't realize why
00:29:10
Speaker
When I was traveling with a friend, why they wanted us to both go to the Amex lounge and maybe their guests and like, well, let's just set up the gate. Who cares? But apparently they give you like free food, free drink when you're in the lounge. It's like nice. Like tell me about the lounge. When I first got the card.
00:29:27
Speaker
It was great. You go sit, order your drink, get some snacks. The staff there are so nice. You need a refill on your drink. They're like, Oh, can I top you up when you're roasting? You're like, Oh my gosh, thank you so much. It was a really great experience. And it was very calming. They have little offices where you can do work.
00:29:44
Speaker
They have spas in some of them, showers, in some of them they even have beds or areas to sleep. That's a huge perk I feel like if you're flying a red eye or you have a long connection. It's so nice to go and relax at the lounge. I think the Platinum Card has gotten a little bit too viral on TikTok and it used to be quote unquote exclusive.
00:30:07
Speaker
And now it's less exclusive. So for the past few times that I've gone to the Amex lounge, it has been packed, like packed. But yeah, they've definitely gotten more crowded over time. And I think like you're better off at this point going to like a Delta lounge or like an airline specific lounge, which you do get access to with the platinum, but you can achieve the same thing with a Delta credit card.
00:30:33
Speaker
So the lounge, to summarize, is a nice park, but it's not like your biggest factor anymore, even though it was your original one. Yeah, I think the lounge is now less of a selling point, and I think it'll continue to become a weaker and weaker selling point until they either get more real estate in their lounges so that they're not as crowded, or I don't know, like,
00:31:00
Speaker
make the card more exclusive. Like do something. Like it's just way too crowded. Really? Where are you? I don't have that problem because I'm not. I've actually had so many friends try and get me to join Amex and like give me their, their referral code. Which by the way, I think we can drop if you don't have one, our referral codes, it'll give you a better deal. Like versus I don't know, 80,000 versus a hundred thousand
00:31:24
Speaker
extra points for signing up. So if you do sign up, you should get someone's code. We can add ours into the description or the show notes.
Spotlight on Amex Platinum Perks
00:31:32
Speaker
But I've had so many friends ask me and be like, oh, why don't you have one? It makes so much sense. You travel so much. And for me, and I think a good tip to reinforce is in order to get the deal, don't increase your spending in order for it to make sense. Like I would have to have to change certain parts
00:31:52
Speaker
of my lifestyle or my spending habits in order for me to get my $6.95 annual fee worth, right? Like, yes, the first year they give you a bunch of points, but then every year you have to pay $6.95, which I heard you can actually get maybe waived. I don't know. So you can actually call every year and say like,
00:32:17
Speaker
Like, I love using this card, but I'm comparing it to insert competitor name. And I don't know that I want to pay the fee anymore. Like, is there anything that you could do about it? And sometimes they will like, just let you not pay the fee that you're cut in half, or they'll give you statement credits or something. It's always worth pulling to get the fee waived. Yeah, just ask. Yeah, that's what I heard. So that was very intriguing to me.
00:32:45
Speaker
For me, I just, it wasn't going to make sense, right? And I think that's a good lesson for us for good financial hygiene. Like you can get, for instance, I think a plus was they have Equinox, but I don't have an Equinox near me. I'm not going to start going to the Equinox far away from me and give up my current like memberships in order to like make Amex make sense. I also, I'm already in the chase.
00:33:14
Speaker
ecosystem and my points are there. Yeah. That's a whole other topic. So I didn't really want to then start spending and building an Amex. And then I think also something like, for instance, Amex offers, I think Hulu subscription, but I don't want Hulu and I'm not going to start watching Hulu.
Building and Using Credit Card Points
00:33:35
Speaker
And I already, if you, maybe they did HBO max variation factor. Yeah. Another perk that.
00:33:43
Speaker
credit card to give you is they'll pay for your TSA pre-checker global entry, which is like $100 otherwise. But I had already gone in that through my capital one several years ago. So that was not an additional cost. I think it would just be a lot of mental work to make it make sense for me to get an Amex. And I still think I have the trait where I love hacking the system.
00:34:13
Speaker
you know, like, yeah, it's like a hobby in and of itself. And if it's not fun for you, then it's not worth it. Yeah, right. Like my friend who opened up three credit cards and got his credit card score dinged. Like he loves this stuff, right? Like, Oh, look how I'm hacking the system. My personality trait is
00:34:31
Speaker
I don't want to have to work so hard to make $700 worth it. I get most of what I need from my Chase Sapphire preferred. And yeah, if it's not something that I need to do, then I would have to jump through hoops to make it work. And then maybe just barely going forward and make the $700 worth.
00:34:54
Speaker
Not every credit card is right for each person, even if it might appear to be. Long story short, still being reasonable with how you pick your credit card. It's not like I need to just get this one because I'm at this point. Do you have any favorite credit cards?
00:35:12
Speaker
Oh, so I was just telling someone I really like the Amazon credit card. They're partnered with Visa and they're able to give you 5% cash back. I had no idea that was a thing. No idea.
00:35:29
Speaker
spend most of my money on Amazon. Buying random coffees, kitchen appliances, everything. Almost everything from Amazon and so. Workout clothes, long decor. So link to my Amazon account is just that credit card. I don't use it for anything else. I think that one's great. I use my Chase. I used to have Capital One before that. Both paying around $95 annual fee.
00:35:56
Speaker
To be fair, I don't really feel that much of a difference between the two. I'm already in the Chase ecosystem, so I didn't get a new Capital One. I just moved on to Chase.
00:36:07
Speaker
Yeah. I like Chase. I bank with Chase. I find that their customer service is really reliable. But I do think that that's a tip. It is helpful to get a credit card with the same company that you bank with. Because a lot of times, this actually happened to us last summer. We were on a trip in Greece. And one of my friends, we had rented out mopeds. And she'd put it on her credit card.
00:36:35
Speaker
And basically they said that it came back damaged and they were going to charge her credit card.
00:36:43
Speaker
the entire value of the moped, which was like, I think it was like over a thousand dollars. But it was on her Chase credit card and she banks with Chase. So she was like, look, like I give you guys so much money. I've banked with you for years. Like figure this shit out. I'm not paying this. This is credit card fraud. And they took it off. So like the level of loyalty, like it really helps her negotiating power when you're at like customer service work.
00:37:10
Speaker
Right. Yeah. I mean, maybe that's why I got turned away from Bank of America. I don't bank with them. I have no relationship. So yeah, maximizing credit card rewards can be fun if it's easy, but if it becomes sort of a headache, it's not really worth it at a certain point. At least for me, it wasn't. It's funny because I feel like when I was looking at credit cards, I literally went to YouTube and looked up which credit card should I get. I also asked my dad and
00:37:40
Speaker
I just feel like I didn't understand all these words, like what's APR, what's the credit score, and you know, wait, what's good and what's bad? And so I think it's just nice to like break these things down, right? Oh, another thing I didn't get is a credit card for travel versus a credit card that's cashback. Once I first got my Chase Sapphire preferred, that's when you should also get a cashback credit card.
00:38:09
Speaker
And it's because I think on the chase unlimited, you get maybe, I don't remember.
00:38:17
Speaker
more points cash back. I think it's like 1.5%. Yeah. Something like that. And different for different categories, like maybe 1.5% for all, and then 3% for groceries or gas. So that's something you should also look at, right? Because they give different categories you spend more on, then you should pay attention on what the cash back is. Yeah. But with the Chase Speedo Unlimited, then I could transfer it to my Chase
00:38:46
Speaker
Sapphire preferred and use their travel booking and those credits and those points there and so that's why you have both because if I were to just spend with my Chase Sapphire preferred I wouldn't be getting as much I wouldn't get that like cash back those numbers. So
00:39:02
Speaker
you can actually save a lot of money for you know booking and travel if you have both and that's why we are also talking about ecosystems like you're more it sounds like in the Amex one I'm more in the Chase one where I'm trying to build up a bunch of points to book some some travel in the future what's easier when you when you could focus in one area and build that up
00:39:25
Speaker
Yeah, and stay in one portal. I also just don't like the mental friction of switching portals. I want it all in one app or on one website.
00:39:34
Speaker
I know and then there's this other complicated thing that other people figured out of like transferring to partners and then then you can maximize your points and then you can buy points from here and then book get like I don't know first class or business class to Dubai and you know for like 200 bucks or some crazy story that I've heard but I just I have not like I said I don't have the trade to care enough to figure that out
00:40:00
Speaker
Can you explain points and what they mean? Like, what is that? Oh, yeah. I mean, like the way I think of points is like cents. So like for every hundred points, you get a dollar. Uh, sometimes they're one-to-one. I find that if you're using a preferred airline, different cards will have different preferred airlines like Amex favors Delta. So you'll get one-to-one points if you book a flight with Delta. So like 90,000 points.
00:40:29
Speaker
is $900 for a Delta flight. And I actually just booked a flight to a wedding using my MX points like two weeks ago. And that was like the first thing that I'd spend my points on. I tend to hoard them. It's bad. And if you want to do like
00:40:46
Speaker
more bespoke purchases. Sometimes they'll partner with, for example, like Saks, and they'll give you like 1.5 times the points. So what would have been $1,000 is $1,500 if you spend it at Saks. Or on the flip side, if you're going with like a non-preferred airline, then it'll be like
00:41:06
Speaker
what would have been $1,000 of points is $800. So it really depends. And I think that you should diversify your ecosystems for that reason. Like, at most probably have like three, but probably stick to two ecosystems. I'm a Chase girl and an Amex girl. She gave me both. Yeah, I remember for the longest time, I thought this whole points concept was so...
00:41:44
Speaker
The airlines are even worse about it. I have no idea what points meet on certain of my accounts and memberships, and then those are even worse because they expire, and then it doesn't make sense in how you redeem flights for it. They do have to make it more complicated, but I think I'll explain it in a very simple way. Just think of it like 100 points is $1, so 70,000 points is like 700 bucks. Yeah.
00:41:53
Speaker
annoying. I think they purposely call it points and they don't make it one-on-one to kind of confuse you.
00:42:14
Speaker
just simplifying it. And I mean, yeah. Oh, no, I was just gonna add like, think of points as cash. But like, it's pseudo cash in that you're losing the value of those points year over year because of inflation.
00:42:33
Speaker
So like, don't be like me, don't hoard your points because like what would have once been like a $700 flight is now like an $1,100 flight, like two years in the future. So use your stuff annually. Yeah. And you also reminded me of another thing learned from one of my lessons is not all points are made equal. Where before, before I got my Amazon card,
00:43:00
Speaker
I would sometimes see that my Capital One was connected to Amazon and like pay with your Capital One points. And so I'm like, Oh, it's so easy. I check out. I'll just pay with my Capital One points. And that's the worst way to use it. They did not have any special relationship. So I was getting maybe like
00:43:18
Speaker
80 cents on the dollar or if you were to cash out you just only get a dollar for a dollar or even less if you want to redeem those points because sometimes they will just give you cash back or like they'll take it off your balance and that's not the best way not all points are made equal and I I use so much on Amazon because I was like oh it's easy I'll just click it like redeeming my points but I swear I should have done is used it for travel which is you know sometimes
00:43:46
Speaker
multiples or maybe not multiples, like several amounts more where it's like you're getting $1.40 even on each point that you have used through the portal versus just getting cash back. So good tip and booking through the portals and trying to figure it out. They create friction points so you won't take advantage and it's not as easy.
00:44:11
Speaker
Yeah. It's, it's, you know, a business choice, right? It helps them make more money because if you don't do it and you just hoard more money. But when in doubt, when in doubt, use TikTok on like how to maximize your points.
History of Credit Cards
00:44:25
Speaker
TikTok is so good for like hacking your credit card. Yeah. But hopefully we gave you some good hacks, you know, like all the things to keep in mind.
00:44:34
Speaker
Yeah, I mean, it's really interesting to think about the history of credit cards because I feel like it's one of those industries that hasn't changed at all. It's so funny because credit cards, even, you know what's so funny, even recently credit cards are so much more popular. We're not as, I think maybe in the 90s, right? You would use cash still. Like people would have cash on them. Even growing up, I would have cash on me. And now, yeah, same. I feel like credit cards have taken over. And the crazy thing is,
00:45:02
Speaker
credit cards in their current state didn't really come to be until the 1950s. And I think what I learned about them is it was first thought of as a Diners Club card in 1950 in our music city of New York where I think they would
00:45:24
Speaker
their best members give them you know basically a small loan and I think it wasn't even like a plastic card in its current form and then there was like another bank that issued like the first card that you know general people customers use not just like bad diners and then I think Amex issued another
00:45:45
Speaker
credit card in 1958 and that was focused on its customers entertainment and travel needs. It was like charge card and the members were charging LC by Amex American Express and the Bank of America in 1958 launched its credit card which I think was probably the most similar to its current version and you know it's still around today but it's just fascinating the whole idea of
00:46:11
Speaker
You know, this concept, the person who invented it, like, oh, I'm going to give you a thing. So like if you, if you, let's say forgot cash, I'm going to give you this because I know you and you can charge a certain amount on it. And if you have additional, then I'll charge you interest on it, like a loan. Yeah.
00:46:32
Speaker
Yeah, the whole idea is quite brilliant. And I think I'm a very good business for like Chase, like not Chase, but Visa and MasterCard, who kind of manages the payment rails. And there's like this whole industry behind it. But I won't bore you guys with the whole payment stuff.
00:46:48
Speaker
I think not to be a doomer about it, but I think it's a good way for fintech companies to capture the arbitrage of Americans not receiving education on how to manage their finances. This isn't stuff that's publicly taught in schools, like how to budget, how to deal with credit cards. No one really knows the best way to do this unless they go out of their way to learn about it.
00:47:18
Speaker
Yeah, it's not that hard to teach on a public level. Yeah, honestly, I feel like our podcast today on the entertaining but on the more intentional side. Yeah.
00:47:30
Speaker
Yeah, well, I think we covered most of it, you know? Like, what is the freaking credit score? Why is it so complicated where everyone's talking about all these different things? Like, pay it on time. Don't use too much of it. Don't open a bunch of credit cards at one time. Here are the different options. Chase, Bank of America, Amex, Capital One. Here's what you should look at. Think about what you need. I've never had it explained to me in basic terms.
00:47:59
Speaker
by like another human, yeah. Yeah, or tell me about APR and all this other stuff. And if you plan on paying off your credit card balance, then you don't even need to worry about it.
00:48:12
Speaker
And then like the benefits, like what is points? Like it was so intimidating. That's why, oh, I didn't figure it out. And that's why I was using my points on dumb Amazon purchase where I was getting less from my point. So I think we covered it all. And then if you want to go more in-depth, you should buy. Yeah, the way I figured it out was through asking my friends what credit cards they had and then asking my dad. But it's really not that complicated.
00:48:40
Speaker
No, yeah, it's fine. Yeah, and it's fun. It can be like, oh, how am I like, I got an
Conclusion and Call to Action
00:48:46
Speaker
extra clapping dollars. But yeah, I think that's everything for us guys. Thanks for tuning in guys. Our handle's Pretty Invested Media, basically everywhere. If you enjoyed the episode, please rate us wherever you're listening to us and you can tune in on TikTok where we share a lot of our highlights. Yeah. Thanks guys. Bye. Stay pretty invested. Stay