There’s a ton of credit cards out there and because of all the various credit card rules such as 5/24, you want to make sure that you don’t waste your time, money and effort on a bad card. Unfortunately, a lot of people wind up applying for the wrong cards because of slick marketing. Others make assumptions without really digging into the card or understanding how travel hacking works. By the time you have finished all of the courses, you should know what cards to apply for and which ones to avoid without having to go through this course. Since not everyone wants to go through all of the courses before applying for cards, we wanted to list some of the worst cards out there so you know to avoid them. These are in no particular order.
The Black Card
You’ll probably get a mailer for this card eventually. You’ve finally arrived. You are pre-selected for a Black Card. What a great privilege right? WRONG! This card appeals to people’s egos. For $495 you get no SUB and just a $100 annual airline credit. The points don’t transfer anywhere. I could keep going. This is a gimmick. Don’t give it a thought.
Store credit cards
Whether it is Macys, Pottery Barn, Nordstrom or any other store, you should avoid store credit cards. These cards usually give you a one-time savings such as 10% off your purchase. That’s why a lot of people wind up applying for these cards as they are checking out. The cashier hits you with a big total and then tells you that you could save 10% by applying for a card. Sounds great but even 10% of $1,000 is just $100. Most credit card SUBs are worth way more than that. While some cards such as the Lowes credit card comes with 5% off Lowes purchases, the average travel hacker doesn’t make enough purchase at Lowes to make this make sense.
Consider this scenario, you are making a $2,000 purchase at Lowes and in a year, you buy a total of $10,000 from Lowes (including the $2,000).
With the Lowes card, you’ll get 20% off on the $2,000. You’ll get 5% off on the remaining $8,000. That comes up to $400 and $400 for a total of $8,000.
With the Chase Business Ink Unlimited that has a 90,000 SUB, you’ll earn 1.5x on all of those purchases. However, instead of saving money, you’ll earn URs worth 2cpp. We’ll also assume that you use all of your spending at Lowes to meet the SUB. You’ll get the 90,000 points for the SUB plus 15,000 points for the spending (1.5 x 10,000). That’s a total of 105,000 points. 105,000 x 0.02 (2cpp) = $2,100.
$2,100 is worth way more than $800. You don’t want to waste a 5/24 slot and give up on an extra $1,300. Note that this same analysis can be used for any store credit card.
Costco Anywhere Visa Card
While this is a store card and could have probably been put in the previous category, it’s such a popular card that I needed to call it out in its own category. This is really going to offend some people that love Costco. People love this card because they get 5% back on gas purchased at Costco, 4% back on gas purchased elsewhere and 2% back for Costco purchases. Of course, 2% cash back is equivalent to 1x with Chase UR’s. Since the CFU gets 1.5x on everything, the 2% back at Costco doesn’t really do anything for you. But what about the gas? Again, you have to divide those in half when comparing to a points currency like URs. There are cards that get you 2x back on gas or better. You can also use gift cards to get 5x back on gas. Thus, this doesn’t really help.
But wait, it gets worse. That cash back isn’t really cash. It’s store credit that you can only spend at Costco and it is only paid out to you once a year.
The Amazon Visa card
This one really drives me up the wall because it’s so common. A lot of people buy a lot of stuff from Amazon and this card gives them 3% back so it’s a no-brainer right? Wrong. Remember, a 3% cash back card is the same thing as a card like the CFU that earns 1.5x. The SUB, if you can call it that, is just $50. Keep in mind that CFU gets 1.5x everywhere and the Amazon card only gets that rate on Amazon. Of course, for those not interested in travel hacking, this card may make sense given how much people spend on Amazon. But for travel hackers, you should stay away from this one as just about any other card will do better for you.
Cash back cards
Not to pick on Wells Fargo Active Cash Card as this just one example of many. This one does have a SUB of $200 and then earns 2% back on everything. You should know by now that 2% cash back on everything is worse than 1.5x on everything with the CFU. Although the CFU is used a comparison, any card that earns a transferrable points currency worth at least 2cpp can be substituted in here. Again, people like these cards because they are easy to use and understand: just use the card and you’ll save 2%. But remember, when it comes to travel hacking, if it’s easy, it’s probably not good for you.
Note: some would argue that a card like the Discover It Cash Back card will provide a better rate at 5%. However, that particular card only earns 5% on rotating categories only up to $1500 in spending just like the CFF. In that situation, the 5% back with the CFF is actually worth double what you would get with the Discover It. Of course, the categories won’t always match up so there may be times where the Discover It technically wins but in the long term, you’re not coming out ahead and it’s not worth a 5/24 slot.
Cruise line credit cards
You know the drill by now, just using Royal Caribbean as an example. These cards usually come with a SUB, in this case you get 30,000 points, which sounds a lot better than 30,000 pennies. Don’t let the term points fool you. These are pennies. You are getting $300 in on board credit for getting this card. You get 2% back for every dollar you spend with the cruise line and 1% on everything else. You then have to use these “points” that you earn with Royal Caribbean. This is worse than a cash back card! But again, it’s very easy for people to understand so a lot of people fall for this.
Theme park credit cards
I’ll use the Disney card as an example. This one comes with a $49 AF which is nuts. Currently, you’ll get $400 after you spend a $1,000 so there is a SUB which is offset by the AF. If you hold the card for just one year, the SUB nets out to $351. The SUB is a statement credit so at least there’s that. You’ll get 5% back on purchases made with DisneyPlus, Hulu and Espnplus. Those services aren’t expensive so that’s not even worth thinking about. Otherwise, you’ll get 2% back at Disney and a few categories and 1% back on everything else. But instead of earning cash back, you’ll get Disney Reward dollars which can only be used at certain places like Disney resorts, cruises and shopping. This card wouldn’t make sense for the average person if it was free but add in the AF and it gets even worse. People fall for it though or else it wouldn’t exist.
Gas Station credit cards
These cards are so bad that we have a separate course on them. You can read that here.
The Aven Card and other HELOC cards
HELOC cards might be new to a lot of people as they differ from all other credit cards. Simply put, the equity of your home acts as the collateral for the card. As a result, you could lose your house if you default on your credit card. This could also really mess up your credit report in addition to making it near impossible to refinance your house. Putting all of that aside, the card earns 2% cash back which we’ve already discussed in addition to 7% cash back on hotels. Well that sounds good right? Check the fine print. It’s actually 7% cash back on hotels booked through their portal. Portal hotel bookings are a whole other topic that should be approached with extreme caution. Both the CSP and CSR (in addition to other credit cards) earn a better return on travel when booked through their own portal. You’ll see a lot of people shilling this card because they have a good affiliate program. As always, we’ll never steer you wrong. This one is a very hard pass.
Chase Ink Business Premier
No card causes more confusion than this one. Why Chase chose to have two cards with similar names is beyond me. This card is so bad that it deserved its own course. You can read that here.
Conclusion
Hopefully you didn’t apply for any of these cards yet. At this point, you should know why these cards should be avoided if you are interested in travel hacking. If you already have one of these cards, there may not be any reason to close them if there’s no AF. However, there’s no real reason to use them. When it comes to teaching people, the hardest thing to do is to get people to unlearn. So for those of you that may have some of these cards, it can be difficult to here that you shouldn’t use them. I’m sure someone reading this is saying “but, but, but….”. All the buts in the world doesn’t change the fact that there’s a better way to go about this. It might take more mental energy, but in the end, the math doesn’t lie. If you are still struggling with these concepts, join our Facebook group to discuss. Did we miss any cards that should be on this list? Let us know.