In a previous post, I went over the 3 main ways to earn points and miles: traveling, credit cards, & miscellaneous other activities.
Of these three activities, using credit cards is the easiest way to earn massive amounts of points & miles. You earn them through earning sign-up bonuses, as well as through your everyday spending. However, given the large number of credit cards out there with different value propositions for all of them, how do you go about organizing them to make the best decision about which card to get?
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Over the next few classes, I will go over the various types of credit cards out there. Just by looking at the Doctor of Credit Best Credit Card Bonuses page, you can see that there are 63 credit cards on this page alone. Furthermore, many banks and credit unions have their own credit cards that you can open up and get the sign-up bonuses for. You can probably never run out of credit card bonuses to get!
It is my hope that providing a little bit of organization and structure, it can be a lot easier for you to think about how to use them to earn more points, travel more cheaply, and enjoy seeing this great big beautiful world we live in.
The Hierarchy of Credit Cards
Taking a Hint from Genetics
If you don’t know what a Punnett Square is, to put it simply, it helps demonstrate the different combination of genetic material to determine what the characteristics of offspring might look like (stick with me, I promise this is useful).
For example, let’s say that two people come together and have a baby. One has blonde hair, and one has black hair. What color hair will the baby have?
In genetics, there’s a gene for blonde hair and a gene for black hair. While actual genetic theory goes into dominant and passive genes, for our purposes, the genes of the parents crossover to create a combination that results in either blonde hair or black hair. The genes of the two parents come together and create one combination that results in one outcome.
How does this apply to credit cards?
The Punnett Square of Credit Cards
I present to you, the Punnett Square of Credit Cards.
Along the y-axis, we have two types of credit cards: personal and business card. Personal cards are pretty self-explanatory; they’re for your personal expenses. Business credit cards can be used for personal expenses, but are associated with a business.
For example, if you resell stuff on eBay, you’re eligible for a business credit card! Even if you only make a couple hundred bucks, that’s technically a business, making you eligible.
Along the x-axis, we have the three types of rewards. I’ll go over each of these in separate posts, but they each have a unique proposition within the hierarchy of your point-earning prowess. You get a lot of flexibility, and each one can fill a unique role within you wanting to travel.
Stay tuned for these posts coming up!
Conclusion
There are 6 types of credit cards, divided amongst two divisions: personal vs. business credit cards and cashback vs. brand-specific vs. “flex” cards. By crossing these two divisions, you can begin to organize how credit cards function in the real world.
There is a lot of competition for providing these cards amongst these divisions, so the opportunities to use them are endless.
What do you think about this hierarchy of credit cards? Which one do you seem to rely upon the most right now?