Time to stop chasing credit card rewards?

I've been on a relative bender when it comes to acquiring premium credit cards. Relative, I should say, to my own history, though certainly not relative to most of the travel rewards bloggers out there. In 2024, I got a high-fee United credit card, since I knew I'd mostly be flying United out of my new hometown. Racking up United miles became a big motivator for me, since I wanted to be able to travel more easily to visit family and vacation with my own.

Then just this past summer, I was suckered in by the sign-on bonus for the Chase Sapphire Reserve card. I knew our family would be flying to Europe over Christmas, and I thought those points would easily go toward that trip. Therefore, they would more than cover the high annual fee of yet another premium card.

Well, last week, I finally bought our family's tickets to Switzerland. I did not use those Chase points. Nor did I use United miles. There were no deals to be had, which made using my rewards pointless (😉). The painful part of this is not only the money I've spent on these premium credit cards, but also the amount of time I sunk into figuring out the best way to pay for flights: do I take my points and transfer to a preferred travel partner? Do I book with money using the Chase travel portal so I can 8x the points I get? Do I book direct with United, using my United card, to get 4x the points plus free bags? Do I just search for the best possible deal online and pay for it?

I know that the credit card rewards game is just that, a game. People who win have put a ton of time and money into playing the game. And I think the players who are actually winning are the big-time bloggers who are getting mega kick-backs from these credit card companies. They get tons of referral bonuses, especially when they create content like "See how my family flew to Singapore in first class for just $200!".

The problem with thinking we can get loads of free travel from our credit card companies is mostly that it's not true. Some people travel a lot for work and earn tons of miles that way, and that's a benefit when they can use those miles for personal trips. But for most families, racking up enough points for a free vacation requires a ton of spending. That's not free travel! Why do credit card companies offer so many rewards? Because they know that deep down, even when you're the most disciplined credit card user, you're justifying, even seeking out, certain credit card purchases because it could get you closer to the next reward bonus. On top of your additional spending, those credit card companies are collecting annual fees from each account. You might be thinking "my fee just covers all these benefits", but actually, credit card companies are profiting in a huge way off of these annual fees (on top of their swipe fees they charge to vendors, and on top of interest they collect). Visa's latest net profit margin is an astronomical 51.2%.

But, let's say you always pay your credit card bill in full and never over spend on account of wanting to hit a credit card bonus. It's still worth being wary of the credit card rewards game. Here's why:

The annual fees far outweigh their benefits

The Chase Sapphire Reserve, for example, justifies its $795 annual fee by toting various statement credits that cardholders can use by shopping with different vendors, and with some free memberships. In my case, having a free Doordash membership helps with nothing because I never use Doordash. I get a $200 statement credit for certain luxury hotels which I'll never book because they never cost less than $700/night.

They add complexity to your life

Figuring out when and how to use the points is a research quest alone. I can see that someone might hone their skills enough to have a reasonable system, but that still is a huge time warp. If you truly enjoy figuring out these puzzle pieces and don't mind the time to put into it, then I think it makes the rewards game much more viable.

Points aren't guaranteed currency

Having a huge point balance might feel good, but it's not totally safe. Points devalue over time and the flexibility you have to use those points is likely to diminish. This makes accumulating points a risky game if you're in it for the long-term.

So, is the credit card rewards game worth it?

In most cases, I'd argue that the best way to play the game is to opt for cards with the highest cash back and the lowest-cost. For someone who travels a lot, having a high-premium credit card might be worth it if it's easy to score award travel, and they've figured out the system that works best for them.

I'm personally figuring out what works best for our family. I think getting the Chase Sapphire Reserve card was a mistake for me. I'll plan to cancel that card before the next annual fee is due. I still do pay a high annual fee for my United Infinite card, but I get some benefits out of that card that I think are worth it: I have access to more discounted award travel, and I get free bags when I travel. It also doesn't hurt to have access to the United lounge, especially when I know I'll almost always have a layover in Denver based on where I live. So, free food (and coffee) at the airport can add up. The system that works for me in taking advantage of points is that I always look for flights on the United app (United is effectively the only airline that flies out of my county). Even still, it takes time for me to think through the miles vs. money scenarios and I'm not sure that amount of time is worth any savings I get from miles-maxing.

My hope for you is that you forgive yourself if you feel you're not taking full advantage of the credit card rewards game. In fact if you feel this way, you probably are among the true winners of the even bigger game of personal finance. Spending without the influence of reward partners is likely to set you up for the best long-term financial health.