Vox

Leitura de 33 min

Make credit cards work for you

Summary

This episode of Today, Explained delves into the pervasive issue of credit card debt in America, where consumers collectively owe nearly $1.3 trillion. Host Jacqueline Hill guides listeners through the personal, historical, and strategic dimensions of credit card use.

The episode begins with a personal story from Angel Sevilla, who describes getting his first credit card at 18 and quickly accumulating $3,500 in debt. He details how small, daily purchases added up, leading to a low credit score of 490 that prevented him from renting an apartment. His journey to financial recovery involved paying off small collections, using a secured credit card, and making significant lifestyle sacrifices like cutting back on dining out and gifts.

Financial historian Sean Venata explains the origins of the modern credit card system, tracing it back to department store credit in the early 20th century. He details how banks entered the market in the 1950s and 60s, and how a pivotal 1978 Supreme Court decision (Marquette v. First of Omaha) allowed banks to charge the interest rates of their home state nationwide. This led banks to relocate their credit card operations to states like South Dakota and Delaware with no usury caps, enabling today’s high interest rates.

Finally, credit card expert Sarah Rathner from NerdWallet offers practical advice on making credit cards work for you. She explains the difference between cash back and travel rewards, and strategies for maximizing points by matching cards to your spending categories. She strongly advises against playing the rewards game if you have existing credit card debt, as the interest will outweigh any benefits. For those without debt, she recommends having a specific travel goal in mind to effectively use points and miles.

Recommendations

Books

  • Plastic Capitalism — A history of the credit card industry in the United States, written by financial historian Sean Venata. It was referenced to explain the origins and evolution of credit cards.

Tools

  • Secured Credit Card — A type of credit card where you deposit your own money as collateral. It was recommended as a tool to help rebuild credit, as it reports to credit bureaus like a regular card but uses your cash as the credit limit.
  • NerdWallet — A personal finance website where credit card expert Sarah Rathner works. It is implied as a resource for comparing credit cards and financial advice.

Topic Timeline

  • 00:01:56 — Personal stories of credit card debt and its consequences — Listeners share their experiences with credit card debt, including one person who accumulated 15,000 on furniture. The emotional and practical toll is highlighted, with one person stating the debt ‘has ruined my life’ and another resorting to donating eggs to pay it off. The segment introduces the scale of the problem: Americans owe 6,500.
  • 00:02:18 — Angel Sevilla’s journey from first card to debt and recovery — Angel Sevilla recounts getting his first credit card with a 8-3,500. He ignored the debt during college until he was denied an apartment due to a credit score of 490. With help from a loan officer, he began paying off small collections and used a secured card to rebuild his credit, eventually raising his score to 760 and qualifying for a house.
  • 00:12:54 — The historical origins of credit cards and deregulation of interest rates — Financial historian Sean Venata explains that credit cards originated with department store charge plates in the early 1900s. Banks entered the market in the 1950s/60s to compete and reach suburban customers. The key shift came with the 1968 Truth in Lending Act, which forced banks to disclose annual percentage rates (APRs), shocking consumers. The 1978 Supreme Court case Marquette v. First of Omaha ruled that a bank could charge the interest rate of its home state to customers anywhere, leading banks to move operations to states with no usury caps like South Dakota and Delaware.
  • 00:24:52 — Expert advice on using credit card rewards strategically — Credit card expert Sarah Rathner explains how to use credit cards to earn rewards. She distinguishes between cash back cards and travel rewards cards. Her advice is to start with a simple 2% cash back card, then potentially add cards that offer higher rewards in specific spending categories like groceries or gas. She emphatically states that people with credit card debt should not play the rewards game, as interest charges will negate any benefits.
  • 00:29:03 — Listener examples and advanced strategies for travel points — Listeners call in to share how they used credit card points to pay for honeymoons and flights to Greece. Sarah Rathner advises that for travel rewards, it’s best to have a specific trip in mind and choose cards (airline, hotel) that align with that goal. For more advanced users, points can act like a travel savings account. She recommends spending points frequently rather than hoarding them indefinitely, as reward programs can devalue points or change terms.

Episode Info

  • Podcast: Today, Explained
  • Author: Vox
  • Category: News Daily News Politics
  • Published: 2026-02-22T13:00:00Z
  • Duration: 00:30:12

References

Podcast Info

Transcript

[00:00:00] This week on Net Worth and Chill, I’m taking you inside my sold-out New York City book tour stop for my brand new book, Well Endowed.

[00:00:07] I sat down with the hilarious Heather McMahon for a night of laughs, real money talk, and honest financial truths.

[00:00:13] We’re getting into everything the book covers from how to actually build wealth, how to protect it, and how to stop leaving money on the table.

[00:00:20] Whether you’ve already grabbed your copy of Well Endowed or you’re still on the fence, this episode will show you exactly why everyone’s talking about it.

[00:00:26] Listen wherever you get your podcasts or watch on youtube.com slash yourrichbff.

[00:00:32] When is the AI bubble going to burst? How do you AI-proof your job?

[00:00:37] How should colleges handle AI and prepare students for a shifting job market?

[00:00:42] I’m Henry Blodgett, and on my show Solutions, I’ve been exploring all of those questions and more with experts who have actual answers.

[00:00:50] We hear enough about our problems. Let’s solve them.

[00:00:53] Follow Solutions with Henry Blodgett.

[00:00:56] It’s crazy that they hand out credit cards to 18-year-olds.

[00:01:04] Interest rates are no joke.

[00:01:06] Paid for flights to Greece? Pretty incredible.

[00:01:10] Americans are in serious debt.

[00:01:13] Together, we owe nearly $1.3 trillion in credit card debt alone.

[00:01:18] And our average balance? Around $6,500 each.

[00:01:23] Owing that much can get really scary and overwhelming.

[00:01:26] I know firsthand that you can make your way out of it, but it can be really hard.

[00:01:33] Spent about $15,000 on furniture when I moved into a new place, and I’m still paying that off.

[00:01:38] I didn’t know what a credit score was. I didn’t know what my credit report was.

[00:01:42] I had no idea what it would affect in the future, and that credit card ended up in collection.

[00:01:47] I ended up having around $24,000 in credit card debt within two years of being in grad school.

[00:01:56] And it has ruined my life.

[00:02:00] I am now donating my eggs to be able to pay off that debt.

[00:02:05] I’m Jacqueline Hill. It’s Explained to Me from Vox.

[00:02:08] And this week, how did we get in so much debt?

[00:02:12] And is there a way to work the cards instead of the cards working us?

[00:02:18] For a lot of people, getting your first credit card is a rite of passage into real adulthood.

[00:02:24] When Angel Sevilla was 18,

[00:02:26] he walked into the credit union where he had an account and asked about getting a card.

[00:02:31] And they essentially just handed me one. It took no time at all.

[00:02:35] The woman is really friendly, and she brings me these forms,

[00:02:39] and I sign away my life and not knowing what I’m signing.

[00:02:44] And it really only took about, I think, 15 minutes.

[00:02:47] And I walked out with a credit card, and I felt empowered.

[00:02:49] I was like, wow, that was easy. Being an adult is great.

[00:02:52] Do you remember what your credit limit was, what it was for your first card?

[00:02:55] The first card was $15.

[00:02:56] It felt like I could put all of the little expenses on there.

[00:03:03] All of the 3, you know, McDonald runs.

[00:03:07] Swipe.

[00:03:07] Or coffee shop runs.

[00:03:09] Swipe.

[00:03:10] Everything that adds up really quickly that you don’t realize.

[00:03:13] I was like, oh, you can easily just throw that on the credit card, and I’ll pay it next month.

[00:03:17] Woohoo, swipe.

[00:03:18] I was working at a coffee shop at the time, I think.

[00:03:21] I mean, I was making, I think, $8 an hour.

[00:03:24] I later got a raise for $10 an hour.

[00:03:26] This was 2005.

[00:03:29] My rent was $450.

[00:03:31] So let’s stop and marvel at that for a second.

[00:03:33] Yeah.

[00:03:34] So I was doing fine for a single person, but I wasn’t bringing any type of extra income in.

[00:03:40] And I definitely hadn’t learned how to save yet either.

[00:03:43] So I’d buy myself lunch every day.

[00:03:45] Swipe.

[00:03:45] And I’d treat my friend to coffee.

[00:03:47] Like, no, I’ve got this one.

[00:03:49] Swipe.

[00:03:49] Swipe.

[00:03:50] Later on in the year, when Christmas time came around, I was like, oh, I’ve got Christmas gifts for everybody.

[00:03:55] Swipe.

[00:03:55] Swipe.

[00:03:56] Swipe.

[00:03:56] Stuff like that, where I thought I was just being this really great, generous person.

[00:04:00] And I was, but I was just digging myself into a hole.

[00:04:02] Woohoo, swipe.

[00:04:04] I was getting bills, and I’m paying the bills minimum balance, thinking that I’m going to be able to make a fatter payment later on down the line.

[00:04:15] And some weeks I’d have overtime, and I’d have a little extra.

[00:04:18] But it was slowly, slowly creeping up higher and higher above my head.

[00:04:22] When were you like, wait, this isn’t just a thing.

[00:04:26] This is a thing that I can do.

[00:04:27] So I was reaching the higher end of my credit limit, and I needed more because I wasn’t able to pay it off.

[00:04:36] And I had luckily seen a newscast where they were talking about credit cards.

[00:04:41] And they’re like, you can easily call them and ask for more.

[00:04:44] So I did that, and they gave me more.

[00:04:46] Yeah, how deep did you get into debt?

[00:04:49] So about $3,500, something like that.

[00:04:54] Which, at this time, I’m like 20 years old.

[00:04:56] And that’s an unattainable mountain that I can’t summit.

[00:05:05] I was compartmentalizing the feeling of being overwhelmed by my debt and just shoving it away.

[00:05:13] And I had started college at the time, so for those four years, I just didn’t even think about it.

[00:05:18] Because now I’ve signed up for all these student loans, so I’ve got an additional load of debt.

[00:05:23] I’m like, you know what, just put it all in the back of your mind.

[00:05:25] Someday you’ll be a millionaire, and you’ll pay it all off.

[00:05:28] I get a wake-up call when I try to apply for an apartment, and I am denied, which was super confusing.

[00:05:36] I was like, what happened? What’s wrong?

[00:05:37] And I was told that the reason was because my credit score was too low.

[00:05:40] I’ll be transparent, it was $490.

[00:05:45] Ooh, okay!

[00:05:46] At this point, I’m like, oh my god, if they’re denying me for this apartment, they’re going to deny me at the next one that I apply for.

[00:05:51] And so I ended up having to move in with a boyfriend.

[00:05:54] I’m like, oh my god, if they’re denying me for this apartment, they’re going to deny me at the next one that I apply for.

[00:05:54] And so I ended up having to move in with a boyfriend.

[00:05:55] And so I ended up having to move in with a boyfriend.

[00:05:55] I had a boyfriend at the time who I had not been with that long, so I got put in this situation that I didn’t really want to be in because I needed a place to live.

[00:06:03] I’m working at a restaurant, and there’s one of my coworkers who’s a real estate agent.

[00:06:12] And I see him just slinging all these homes, and I’m like, well, I want a home someday.

[00:06:16] And now knowing that my credit is bad enough where I can’t even get an apartment, I’m like, how do I repair this situation?

[00:06:25] He actually put me in contact with a loan officer who was great.

[00:06:30] And she sat me down, she printed out my credit report, and she used a highlighter line by line.

[00:06:35] And it’s like, what are these?

[00:06:37] Why are these here?

[00:06:38] Can you pay some of these off?

[00:06:40] And it will help increase your score.

[00:06:42] And there’s a bunch of $15 charges from the leftover that my insurance didn’t cover for therapy sessions for two years.

[00:06:51] Oh, wow.

[00:06:52] They were mailing the wrong address.

[00:06:54] She’s like, can you pay these off?

[00:06:55] So I start with those.

[00:06:57] I start with an old Verizon bill that had gone to collections because the account had closed and I didn’t pay it off.

[00:07:03] So that’s kind of how I began knocking things off and chipping things off of the list.

[00:07:09] I was also advised to open a secure card, which is the type of credit card where you put forward your own money into an account that pulls up on your credit report as if it was the bank’s money.

[00:07:20] And it looks like you’re being given a loan, a credit card, but it’s your own cash.

[00:07:24] And it helps build up.

[00:07:25] It helps build your credit.

[00:07:26] So I kept that secure card for a few years, maybe like two years.

[00:07:29] And after that time, I think I was up to the $560s.

[00:07:33] Okay.

[00:07:34] So we’re making progress.

[00:07:36] Yeah.

[00:07:37] And I know when you’re paying off debt, a lot of it comes down to sacrifice.

[00:07:41] Are there changes that you made in your spending habits or you’re like, okay, I can’t do this thing anymore?

[00:07:46] Well, I learned that all of the little expenses, the 10 and $15 expenses add up very quickly.

[00:07:55] So those kind of took a cut back.

[00:07:57] Not as many McDonald’s runs, not as many lunches bought while at work, maybe pack my own lunch and take it to work.

[00:08:05] And then less Christmas gifts for everyone.

[00:08:07] I have a huge family.

[00:08:08] JQ, I have 12 siblings.

[00:08:10] Woo!

[00:08:10] Yeah, you’re making some cards.

[00:08:12] We’re going to make some cards this year.

[00:08:14] Yes.

[00:08:14] Handmade gifts.

[00:08:15] I wasn’t buying new clothing.

[00:08:17] I wore the same clothing for like six years.

[00:08:20] And my friends dubbed me having the worst style of the entire group.

[00:08:24] But I needed to cut back on these things so that I could have money to start making payments toward all of the items that were needing attention.

[00:08:34] How’s your financial situation now?

[00:08:37] Yeah, it’s way better now.

[00:08:39] I was able to qualify for my house.

[00:08:42] I had a credit score of 698 when we closed, which was in April of 2020.

[00:08:52] Oh, that’s awesome.

[00:08:53] Yep.

[00:08:54] And then I think the highest it’s been, you know, it fluctuates, but the highest it’s been has been like 760.

[00:08:58] Okay, that’s good.

[00:09:00] That’s like you went from, wow, you’ve, you turned it around.

[00:09:04] Started from the bottom, now we’re here.

[00:09:06] Yes.

[00:09:06] Oh my gosh.

[00:09:07] Do you still use credit cards or have you sworn them off?

[00:09:10] I have three credit cards currently.

[00:09:13] I really only ever use one of them.

[00:09:15] And I keep that balance low.

[00:09:20] How do you feel about the idea of giving 18-year-olds credit?

[00:09:24] If you’re lucky enough to have parents that will set you up for success and give you that knowledge so that you know what to do when you get it, that’s great.

[00:09:34] But maybe the people handing out the credit cards should find out if you have that knowledge first before just giving you free reign to dig yourself a hole that’s going to affect you in the future.

[00:09:47] So if so many of us find ourselves in this hole, why is the system set up like this?

[00:09:53] That’s next.

[00:09:54] We’ll be right back.

[00:10:24] We’ll be right back.

[00:10:54] We’ll be right back.

[00:11:24] We’ll be right back.

[00:11:54] We’ll be right back.

[00:12:24] We’ll be right back.

[00:12:25] I’m JQ.

[00:12:26] This is Explained Into Me.

[00:12:27] And we’re talking credit card debt.

[00:12:31] And so is President Donald Trump.

[00:12:34] I’m asking Congress to cap credit card interest rates at 10% for one year.

[00:12:40] And it turns out the cap is one of the few things Trump, Bernie Sanders, and Josh Hawley can all agree on.

[00:12:47] You know who’s not into it?

[00:12:49] Banks.

[00:12:50] So how did credit card interest rates end up being so high in the first place?

[00:12:54] That’s a question for Sean Venata.

[00:12:59] I teach financial history at the University of Glasgow.

[00:13:03] And I’m the author of a book called Plastic Capitalism, which is a history of the credit card industry in the United States.

[00:13:10] Where does that story start?

[00:13:11] So it really starts in department stores.

[00:13:14] So you can think about big city department stores, something like Macy’s in downtown New York.

[00:13:19] And it really starts at the turn of the 20th century.

[00:13:21] So these are huge.

[00:13:24] These are huge kind of palaces of consumption.

[00:13:26] They’re in part marketing themselves on the availability of credit.

[00:13:31] Why pay cash?

[00:13:33] This popular store affords you an opportunity to make your selection of its immense stock of wearing apparel at any time you wish.

[00:13:41] And to take advantage of our liberal credit system, paying the account by the week or month.

[00:13:47] Ad for the National Outfitting Company, 1910.

[00:13:50] You initially get something called like a credit token.

[00:13:53] They eventually are cards.

[00:13:54] They have your name, your account number, your address embossed on them.

[00:13:59] And this connects with a kind of mechanical billing system that then creates your bill that goes to your house.

[00:14:06] Department stores after World War Two begin to expand outside of the central cities.

[00:14:11] They begin to compete with small local merchants.

[00:14:13] The modern department store with a great variety of merchandise from all over the world.

[00:14:18] One of a million bargains at Alberts during their anniversary sale.

[00:14:22] And so it begins to happen in the 19th century.

[00:14:24] The 1950s and then the 1960s is banks get into the credit card market and they do so because they’re making loans.

[00:14:33] They’re dealing with businesses and in this case, small retailers who feel the competition from the department stores that can offer credit.

[00:14:41] And what the banks do is they go around to the small stores and say, listen, we can pull you all together into a centralized credit plan and then you’ll be able to offer credit that competes with department stores.

[00:14:51] The Bank America card will soon be coming to Southern Ohio.

[00:14:54] As another service of the Citizens National Bank of Ironton.

[00:14:58] At the same time, there’s the development of what are called travel and entertainment cards.

[00:15:02] So you have business executives who need to wine and dine clients who are traveling all the time.

[00:15:07] For them, it’s cards like Diners Club and American Express.

[00:15:11] Wherever business takes you, Diners Club can help.

[00:15:14] American Express. It’s the only credit card you really need for travel and entertainment.

[00:15:19] Which are really built on enabling you to more easily manage your expense account.

[00:15:24] To entertain clients, to impress people that you have, you know, a gold American Express card.

[00:15:30] Swipe.

[00:15:32] In the 1950s and 1960s, banks are increasingly looking to consumers as a new source of making loans.

[00:15:39] So making home mortgages or auto loans.

[00:15:42] But if you’re the biggest bank in Chicago and all of the affluent customers are moving out to the suburbs, you have a problem.

[00:15:49] Banks under state laws in some states couldn’t build more than one branch.

[00:15:53] So.

[00:15:54] All the biggest banks are built in the city center where the businesses are.

[00:15:57] And so banks like Continental Illinois, like the First National Bank of Chicago, all begin to see credit cards as a way to attract these affluent customers to get them to continue to do their banking with central city banks.

[00:16:14] And so it’s really about kind of like suburbanization.

[00:16:17] It’s about white flight out of cities.

[00:16:19] That is part of what’s driving banks into the credit card market in the 1980s.

[00:16:24] You know, at the moment when credit cards came out, were there any rules around the types of interests that could be charged?

[00:16:32] In the 1960s, when a lot of banks really get into the market, one of the reasons why banks find credit cards attractive is because it’s a new technology.

[00:16:40] It’s not regulated.

[00:16:42] Banks were charging very high rates on credit cards.

[00:16:45] Consumers would tend to pay between one and a half and two percent a month.

[00:16:49] And, you know, people are not very good at math.

[00:16:52] So that just that.

[00:16:54] Seems cheap, right?

[00:16:55] Two percent.

[00:16:56] That’s great.

[00:16:57] What happened is in 1968, Congress enacted something called the Truth in Lending Act, which says you have to present interest rates as a simple annual rate.

[00:17:07] It is the purpose of this title to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit.

[00:17:21] And so all of a sudden, then people are seeing.

[00:17:24] Oh, I’m being charged 18 percent or 24 percent.

[00:17:27] And that is a huge shock.

[00:17:29] And so what happens is the states tend to limit rates to between 15 and 18 percent.

[00:17:36] The rules in each state are kind of different and kind of complicated.

[00:17:40] And so as banks are developing their sort of credit card networks, they begin to mail cards across state lines.

[00:17:47] And there’s a big fight centered around a bank called the First National Bank of Omaha, which is still a going bank in Omaha.

[00:17:54] But the First National Bank of Omaha begins mailing cards into Iowa and they’re mailing cards into Minnesota.

[00:18:02] And the interest rates in Nebraska are not especially high, but they’re a little bit higher than what’s allowed in Iowa and what’s allowed in Minnesota.

[00:18:11] But from a consumer’s perspective, if you live in Iowa and you only ever use your card in Iowa, why would you expect that Nebraska interest rates are what would apply to you?

[00:18:23] And the state attorney generals and individual consumers begin to sue the First National Bank of Omaha, saying that they’re charging too much.

[00:18:31] And so this kind of creates a whole slew of legal cases that end up in the Supreme Court.

[00:18:37] Oh, yay. Oh, yay. Oh, yay.

[00:18:39] First of Omaha claims our main office is in Omaha, Nebraska.

[00:18:43] We can charge the Nebraska rate and go anywhere in the country and charge that rate because we’re located in Nebraska.

[00:18:50] The Supreme Court says, well.

[00:18:53] You know, the law is pretty clear.

[00:18:55] The Omaha bank, for the purposes of this statute, was located in Nebraska, therefore authorized to charge the Nebraska 18 percent rate.

[00:19:05] The bank is in Nebraska, so the transactions are in Nebraska, and so Nebraska law applies.

[00:19:11] So the Supreme Court rules that it’s where a bank is based that all of this is factored on, not where the customer is?

[00:19:18] That’s right.

[00:19:19] A bank can then locate itself in whichever.

[00:19:23] Whichever state has the most favorable regulations and then solicit cardholders across the country.

[00:19:30] South Dakota didn’t have any restrictions on credit card interest rates.

[00:19:34] Citibank relocates to South Dakota and then is able to charge whatever interest rate they want.

[00:19:39] Delaware enacts a law that enables the same thing, so most big banks actually move their credit card operations to Delaware.

[00:19:45] And that, in turn, leads to things that we recognize where it’s really hard to get a card with a decent interest rate.

[00:19:53] And banks have the freedom to change those rates as they will.

[00:19:57] I’m curious.

[00:19:58] When I don’t pay my credit card in full and I got to pay that interest, where does that interest go?

[00:20:04] What’s it spent on?

[00:20:06] It goes to the banks.

[00:20:07] So the first thing is that credit card lending is consistently one of the highest profit areas for banks.

[00:20:14] And you see that banks that specialize in credit cards make much more money than banks that don’t.

[00:20:20] So part of it is just like profits to stock.

[00:20:23] And then there’s all sorts of things like credit card points, which help the most affluent people just get further rewards for spending money they were already going to spend.

[00:20:35] A lot of it goes to advertising.

[00:20:37] So a lot of the interest that you’re paying as a consumer just goes back into a system that advertises to you again the credit cards that you’re using to go into debt.

[00:20:49] So there’s this kind of circuitry to it where you are paying for advertising.

[00:20:53] You’re paying for advertising to encourage you to do the thing that you probably don’t want to do.

[00:20:57] But the banks would say, if people who have lower credit scores, if we’re going to grant them credit, they’re riskier.

[00:21:05] And for the most people to have access to credit, we need to charge them higher rates.

[00:21:10] What you see if you look at U.S. history over the last 70, 80 years is the economy runs on household borrowing, right?

[00:21:19] Mortgages, car loans, credit cards now.

[00:21:22] Buy now.

[00:21:23] Pay later.

[00:21:24] You see that household debt goes up and up and up and up.

[00:21:28] You add student loans into that mix.

[00:21:30] And people feel, you know, they feel that precarity.

[00:21:34] They feel that risk.

[00:21:35] They feel the weight of all of that debt.

[00:21:37] But it’s the most affluent, the people who have access to the airport lounges, who have the high points cards, who get all the benefits and the rest of us pay all the costs.

[00:21:53] There are some benefits the rest of us can access if we know how to play the game.

[00:21:59] That’s next.

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[00:24:39] It’s Explained.

[00:24:39] It’s me.

[00:24:40] I’m JQ.

[00:24:41] So if you have a credit card, interest rates are just going to be a fact of life.

[00:24:45] And you got to build a credit score if you want to get a loan for a car or to qualify for that dream apartment.

[00:24:52] So how?

[00:24:53] How can you make that little piece of plastic work in your favor?

[00:24:57] I think of credit card rewards as a way to earn a little bit back for every dollar you spend.

[00:25:04] Sarah Rathner is a credit card expert at NerdWallet.

[00:25:07] 2018 was the year where I went to Australia, New Zealand, and Japan all in one year.

[00:25:14] Oh, that’s cool.

[00:25:15] And that was all on points and miles.

[00:25:16] So my honeymoon to Hawaii was done mostly on points.

[00:25:20] At my peak, my husband and I were taking a trip to Hawaii.

[00:25:23] We were taking international trips around every nine months or so.

[00:25:26] Ooh, okay.

[00:25:27] All right.

[00:25:27] That does sound nice.

[00:25:28] I probably need to learn how to utilize my credit card points.

[00:25:32] Give me a rundown on the types of things you can earn using a credit card.

[00:25:37] So typically, you can earn cash back, which is basically what it sounds like.

[00:25:43] It’s cash back in your bank account or cash off of your next credit card bill.

[00:25:48] So that is pretty straightforward.

[00:25:49] If you have a credit card that offers 5% cash back, for example,

[00:25:53] you can get a credit card for every $100 you spend using that credit card.

[00:25:56] You’ll get $5 worth of points.

[00:25:58] And with those points, you can literally get $5 taken off of your statement.

[00:26:01] So you pay less on your credit card.

[00:26:03] This cash back is generally paid annually, but some cards may pay cash back on a monthly basis.

[00:26:07] Travel rewards are a little bit more nuanced.

[00:26:11] Typically, you earn these rewards, and then you can redeem them toward travel expenses in different ways.

[00:26:17] So if you had an airline or hotel credit card that has the brand or the airline,

[00:26:23] on the card, for those cards, you would redeem for plane tickets, things like that,

[00:26:29] or you would redeem for hotel stays or room upgrades.

[00:26:33] So there are lots of different ways you could redeem these types of points.

[00:26:38] So if I want to maximize my credit card rewards, what’s your advice to do that?

[00:26:44] So it depends on how much complexity you’re willing to handle when it comes to your credit card.

[00:26:49] At the baseline, using a card that earns, say,

[00:26:52] 2%,

[00:26:53] cash back everywhere you use the card is a great way to begin earning rewards in a way that,

[00:26:59] for many people, is the most sustainable because it’s the most simple way to earn rewards.

[00:27:04] But you can also maximize this by having multiple credit cards.

[00:27:08] It doesn’t have to be 20 credit cards at once, but even two or three.

[00:27:12] Different cards earn different rewards rates on different what we call spending categories,

[00:27:17] and that could be broad categories like gas, groceries, restaurants, travel.

[00:27:22] Sometimes,

[00:27:23] you might pick a card that earns the exact same rewards rate everywhere you use it,

[00:27:27] and that’s the simplest thing, and those make a great foundational card.

[00:27:29] And then you could add on to that with cards that earn maybe 3%, 4% or more

[00:27:35] in these very specific categories.

[00:27:38] Right now, this card gets you eight times on dining.

[00:27:40] This one will get you 3% cash back at gas stations,

[00:27:43] but you also get some great rewards such as 6% cash back at U.S. supermarkets,

[00:27:47] and also 3% cash back on transit.

[00:27:50] So really, the key is finding the card or car,

[00:27:53] and finding the cards, plural, that match where your money is going

[00:27:56] so you can earn the most possible every time you use any credit card.

[00:28:01] What about for people who it’s like,

[00:28:03] ooh, I got this credit card debt, like, what do I do?

[00:28:06] Is this a game they should be playing, or is it like,

[00:28:08] worry about that once we have some other things under control?

[00:28:12] I’m going to say this very clearly.

[00:28:13] If you have credit card debt, don’t play the credit card points game.

[00:28:18] At least not right now.

[00:28:20] Because the amount of interest you’re paying on your credit card debt

[00:28:22] is going to wipe out the value of any rewards you would earn

[00:28:25] in as little as a few months.

[00:28:28] One thing I do like to use points for is travel.

[00:28:32] You know, if there’s an emergency family trip,

[00:28:34] I can go ahead and use those points.

[00:28:37] Or, you know, when my friends have destination weddings,

[00:28:39] my first thing, I’m like,

[00:28:40] all right, I’ll book this flight to Mexico using points.

[00:28:44] We had listeners call in about points for travel as well.

[00:28:49] Hi, I’m calling about the credit card podcast coming up.

[00:28:52] Me and my wife ended up using it for our wedding,

[00:28:55] where you spend everything you knew exactly where you were going to

[00:28:57] on the credit card, pay it back immediately,

[00:28:59] and all those points afterwards help pay for the honeymoon.

[00:29:03] Paid for flights to Greece from the West Coast.

[00:29:06] Yeah, it was pretty incredible.

[00:29:07] If travel is the main thing I want to use those points for,

[00:29:11] what is the best way to go about getting them?

[00:29:14] For anybody that’s relatively new to this,

[00:29:16] I like to recommend that they have a specific trip in mind.

[00:29:21] So if you know…

[00:29:22] You know where you’re going to go in six months, a year,

[00:29:25] and you also know what airline you’re probably going to fly,

[00:29:29] where you’re probably going to stay,

[00:29:31] whether or not you’d need a rental car,

[00:29:33] you can begin to build your travel itinerary

[00:29:36] and then match credit cards accordingly.

[00:29:39] So maybe a specific airline card has a good sign-up bonus.

[00:29:43] A hotel card could get you, you know,

[00:29:46] enough points to stay for a couple of nights in a specific city.

[00:29:49] Maybe there are free night awards you could tack onto that.

[00:29:52] If you’re a little bit more advanced at this,

[00:29:54] then you can treat your travel rewards points

[00:29:57] almost like a travel savings account

[00:29:59] where you have points and miles saved up

[00:30:02] with a couple of different loyalty programs.

[00:30:04] That makes it possible to take these last-minute trips

[00:30:08] without having to go into debt.

[00:30:10] Okay, so you have your card, you start gathering these points.

[00:30:14] Is it better to save them up or should you just go ahead and use them?

[00:30:18] Spend your points frequently.

[00:30:21] Like, you know, once you’ve amassed an amount,

[00:30:22] you have points that you need to book a trip

[00:30:24] because point values can change over time.

[00:30:27] Sometimes rewards programs will change their terms and conditions,

[00:30:31] making it so that the points that you have

[00:30:33] can no longer be used in specific ways

[00:30:36] or their values are different.

[00:30:38] So you want to save up enough for your dream trip,

[00:30:43] but don’t hold onto them indefinitely.

[00:30:49] I’m curious.

[00:30:50] How many cards do you have?

[00:30:52] Like, how do you keep it all together?

[00:30:56] Oh my God, I honestly don’t know.

[00:30:58] I probably have, I would say,

[00:31:01] anywhere between like five to ten open cards right now.

[00:31:04] If it’s a card I don’t use very often,

[00:31:06] oftentimes I wait for the annual fee to get posted to my account

[00:31:10] and then I decide do I want to keep this card or not?

[00:31:13] And that’s sort of my trigger for getting a new card

[00:31:15] or, you know, do I pay the fee and keep holding the card open

[00:31:18] or do I downgrade the card, do I close the card?

[00:31:22] That’s it for this week.

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[00:31:40] Go to vox.com slash members to learn more.

[00:31:45] We’re working on an episode about spring cleaning and minimalism.

[00:31:48] Is there something that you just can’t get rid of?

[00:31:51] What is it?

[00:31:52] And what is it that you can’t get rid of?

[00:31:52] And why do you hold on to it?

[00:31:54] Or can you just toss things out and not feel a thing?

[00:31:57] Tell us.

[00:31:58] Give us a call at 1-800-618-8545

[00:32:02] or email askvox at vox.com.

[00:32:06] This episode was produced by Peter Balladon-Rosen.

[00:32:10] It was edited by Avishai Artsy and Ginny Lawton.

[00:32:13] Fact-checking by Melissa Hirsch

[00:32:14] and engineering by Patrick Boyd.

[00:32:16] Our executive producer is Miranda Kennedy.

[00:32:19] I’m your host, Jonquan Hill.

[00:32:21] Thank you so much for joining us.

[00:32:22] Thank you so much for listening.

[00:32:23] I’ll talk to you soon.

[00:32:24] Bye!

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