Getting The Credit You Deserve

Using my credit cards to my advantage is a concept I only became familiar with in 2019. Coming into an MBA at the Wharton School of Business I was surrounded by 2 types of students. Those already familiar with the American credit card game, and those who weren’t. Majority of the 2nd group were expats, and even years later, too many of them are still not optimizing their credit card use.

I was lucky. My learning came as a combination of an American-born friend who guided me, and by reading The Points Guy.

The Points Guy (TPG) is an American travel website and blog that educates readers on means of accumulating and using credit card points and airline miles. It also includes guides on being strategic about your spending habits, detailed credit card reviews, and even a credit card matching tool to help you find the best card for you.

Brian Kelly started out as a Morgan Stanley campus recruiter. Gaining an outrageous amount of points from his corporate card, he perfected the art of optimizing credit card usage. And what started as a daily blogging practice grew into a 20 full-time employee travel media company.

Relearning what’s a credit card

Coming into the US at the age of 30, I was at a disadvantage. I had the spending habits of an adult with the credit score of an 18-year-old immigrant. What does it matter that I was an immigrant? Well, I had no US based parents to help me build my credit history. But even more importantly, I had no understanding of how credit cards actually worked.

Side story time. I grew up in Israel with a very different credit card system. Most Israeli cards involve no actual credit. If I was to over simplify things, in the US, when I buy a cup of coffee, the merchant gets paid immediately and I effectively get a loan from the credit company which if I pay on time involves no interest. Where I came from, everything was different (even the coffee, which was usually better). Depending on their credit terms, merchants get paid 30/60 days after the transaction takes place, while consumers pay at the end of the month no matter what. The card is connected to your bank account so the credit company always gets paid. The result – minimal risk to the credit company, but what’s almost offensive is that credit card perks are basically nonexistent. Curiously, it’s just the way the industry is structured in Israel.

I grew up thinking points and miles are basically useless, that no one really uses them, and that the whole thing is a plot to make you spend more money. 

Starting To Get The Point

In their beginner’s guide, TPG explains how one of the easiest ways to earn points and miles is through spending on a credit card.

“the majority of the miles we earn these days are not through flying — they come from using our credit cards. Not only can you receive a substantial head start from the welcome bonus you can earn when you first get a card (depending on the card, it can be worth $1,000 or more in travel!), but you can also accrue points by charging everyday purchases (think: grocery runs, car insurance payments, doctors visits, cellphone bills, gas fill-ups and more) to your cards …

We recommend using a rewards-earning credit card for as many purchases as possible, as they'll do more than give you valuable rewards. These cards also offer more consumer fraud protections than debit cards. Plus, they help you build your credit score”

Learning this was incredible. This was hacking the system. Creating value out of thin air. I was already spending all this money, why not get a reward from it? By following TPG I learned how it wasn’t about spending more (like I was led to believe), but rather spending right. For each expense I had, I quickly learned which card would be ideal. Flights, Ubers, groceries, even dining – all started generating value.

Trying to make sense of all the options wasn’t easy. But TPG made it doable. From their writing I learned I should choose my cards based on my spending habits and goals. As an expat (who loves to travel) I realized that accumulating points and miles will bring me more value compared to trying to optimize for cash back benefits (receiving a small set percentage of your credit spend in the form of cash deposited back to your account). For me, cash back was a way to save money. Points were how I was going to upgrade my lifestyle.

In 3 years of living in the US, I visited Israel 7 times, all roundtrip flights were paid using points (average at 900$ per trip). Moreover, I managed to save even more on travel insurance, car rental insurance, and even enjoy airport lounges whenever I traveled. All of that just by being strategic.

Getting by with a little help from my friends

Starting out with no credit history and a low credit score wasn’t easy. My first card was a Bank of America card which didn’t require a credit score and had a 1,300$ monthly limit. But then an old trusted friend helped me out. I became an authorized user on one of his premium Amex cards.

“An authorized user is a person who has been added to a primary credit cardholder’s account. Authorized users receive cards with their names on them, linked to the primary cardholder’s account. They’re able to use those cards to make purchases just like they would with their own cards” (TPG’s guide on authorized users)

“If you're lucky enough to get added as an authorized user on a credit card … you will likely inherit that individual's credit history” (TPG’s guide for developing a 5-year credit card strategy)

Within months I had a credit score within the range of ‘Good’ (not yet excellent) which allowed me to climb the credit card ladder faster than any other expat around me. Becoming an authorized user shouldn’t be done on a whim. As an authorized user of someone you effectively bind your credit profiles together. As uncle Ben said, “with great power comes great responsibility”.  

Soon enough I had my first premium card, the Chase Sapphire Reserve. With this card I started to accumulate serious points. But that was only the beginning.

Being an expat in NYC means I get to hang out with a lot of visitors. Especially Israeli visitors. Imagine a constant parade of friends and family coming to visit, all carrying Israeli credit cards which not only have no reward programs but also charge a hefty fee for currency conversion. The opportunity became clear. I started making it a habit of paying for friends’ expenses and having them pay me back at the end of their trip. Other than making tons of extra points, this had a wonderful side benefit. See, I’m still paying off a student loan taken in Israel, in Israel’s currency. By getting my friends to pay me back in Israeli currency, I created a win-win. They didn’t have to pay any exchange rate fees, and I found a way to convert my earned dollars into Israeli Shekels to pay off my loan.

Seeing how well this worked, I started thinking about what else I could do. It’s one thing to pay for a bunch of dinners or Broadway tickets, but why can’t I finance my friends’ whole vacation? For the first time, I decided that I’ll create my own authorized user. Enter my wife’s sister, her husband, and their adorable twins. When they said they are coming to the US for 6 weeks I immediately called them to discuss whether they would be interested in having their own card to avoid any exchange fees. And just like that, another win-win, and almost 50K in points that could have gone to waste (a roundtrip New York → Tel Aviv United flight averages around 86K points).

Credit where credit is due

I still have so much more to learn about the credit card game, and with this piece I don’t presume to summarize everything expats should know once they move to the US. But if you’re an expat in the US then hopefully I managed to convince you to be more strategic about your spending habits.

Expats, even if they don’t realize it, are perfectly situated to take advantage of credit card travel perks. We travel to visit our families and we often come in touch with tourists traveling in the US. Just this past year my wife and I hosted friends and family for a total of 3 months. We’re doing it anyhow, why not be conscious of the potential benefits? But more importantly, as expats we have more at stake. Starting out with no credit history, we are fighting an uphill battle. Sites like The Points Guy can not only help us win the battle but do it in style.

If you liked this post from Or’s Newsletter, why not share it?