Credit cards are a common financial management tool in the United States, but how do you choose among the thousands of options available? The 2024 America West Summer Conference invited the well-known blogger “Old Fox” to share financial management tips for using credit cards in Southern California and how to exchange credit card points for free round-trip flights between the United States and Taiwan.
There is no such thing as a free lunch in this world. If you want to earn rewards from banks and credit cards, you must first understand the basics of credit cards. Old Fox immigrated from Taiwan to the United States in 1999 and has been living in California for 16 years. In 2015, he started operating “Old Fox’s Credit Card Diary” on various social platforms. He shares strategies and practical tips for using American credit cards, helping thousands of people achieve free transoceanic business class flights. Currently residing in Texas, Old Fox enjoys free travel with his family every year through credit card rewards.
Credit card information changes rapidly. To make the most of your credit cards, you must constantly stay updated with the latest information and find a method of credit card management that suits you. Immigrants who are new to the United States often have experiences applying for credit cards. Unlike Asian societies, Americans are accustomed to using credit cards for purchases. Applying for a credit card is the easiest way to increase your credit score with the bank, as long as you do not delay bill payments, maintain a low credit utilization ratio, or open new credit accounts unnecessarily.
According to Old Fox’s analysis, applying for a new credit card may temporarily slightly lower your credit score, but it can lead to long-term stable improvement. When the benefits of a credit card no longer outweigh the holding costs, closing the card may cause a minor drop in credit score in the short term. However, in the long run, it could still be beneficial for increasing your credit score. He also advises the public that it’s best not to hold a credit card for less than a year to avoid leaving negative impressions on record with the bank.
The simplest way to exchange credit card points for flights is through “first purchase rewards.” For example, by applying for a Bank of America Alaska Airlines co-branded credit card, you can earn first purchase rewards, which can be redeemed for round-trip Starlux economy class flights between Los Angeles and Taiwan. If you do not frequently fly with Alaska Airlines, after holding the card for a year, you can consider converting it to a no-annual-fee credit card from another American bank like Bank of America to continue preserving the credit history of that card.
American Express credit cards and Citibank credit cards also offer first purchase rewards for exchanging round-trip EVA Air business class or China Airlines business class flights between the United States and Taiwan, making it not difficult to fly for free every year through long-term accumulations. Old Fox explains that the key to benefiting from credit card rewards is to have the ability to repay the balance in full. Falling into a cycle of interest or using balance transfer features can result in more losses than gains. He believes that to play the credit card game, you must be able to “win,” and any credit card fees beyond interest and annual fees are considered “losses.” Therefore, when the introductory zero interest rate (0% APR) period ends, make sure to pay off the card debt in cash and then apply for a new credit card with a new zero-interest introductory period to use for future spending.
Old Fox points out that as long as you have high-quality first purchase rewards, you can consider applying for a credit card to earn such rewards. Choose credit cards that offer the highest rewards for your current spending categories, and if the annual holding costs are higher than the value gained, it’s time to consider closing that credit card. To avoid missing payment deadlines, he recommends using Excel and financial management apps to simultaneously manage multiple cards and categorize credit cards into “wallet cards” and “drawer cards,” only carrying the cards that accumulate points daily.
Credit cards are suitable for most middle-class individuals to profit from, but they are not suitable for those already in debt troubles. Earning credit card rewards can enhance quality of life and should only be played as a game when financial conditions are good. Old Fox warns to never accumulate credit card debt because of the high interest rates, which can lead to significant losses when repaying interest. After applying for a credit card, it should be held for at least a year. Closing the card too soon may give the bank a negative impression. It is essential to remember the payment due date and, if it’s challenging to keep track, set up automatic payments. Most importantly, do not hoard credit card points; exchange them for rewards promptly to avoid devaluation.