• Do you pay your bill in full at the end of each month? If not, stop. You may not want a mileage-earning card. At a minimum, miles probably shouldn't determine what card you choose. Instead, you want a card with the lowest interest rates. Perhaps you have balances already, look for a card with 0% balance transfers (and then pay very close attention to the card's terms and conditions in order to retain that 0% rate.)

• How much spending are you going to put on the card? Signup bonuses aside (I'll talk about those shortly), if you aren't going to put more than $1000 a month on the card on average, it may not make sense to get a card with an annual fee. For instance, many airlines have free cards that offer 2 miles per dollar spent. At $12,000 in annual spending, that's 6000 fewer miles but you'll save $60 - $80. You're basically buying those miles at 1 to 1.25 cents apiece. At lower levels of spending you're buying the miles at a higher premium. The enhanced earning that comes from cards with an annual fee may not make sense unless you're putting substantial charges on the card.

• Are you striving for elite membership in a program? Check whether that program's co-branded credit card will help you get there.
  • Many hotel programs give you their lowest level of status for taking their program's credit card. The Hilton Visa gives you silver status the first year, enough to qualify for their elites-only awards. The Hilton American Express offers silver status as long as you hold the card and Gold status for spending $20,000 on the card in a calendar year. Both cards are free. Starwood gives you 'Preferred Plus' status for taking its credit card, basically Gold without the bonus points for spending money at their hotels. Marriott gives you Silver status for taking its Visa card as well.

  • The new United Visa Signature Platinum Class offers up to 15,000 Elite Qualifying Miles in the first year of cardmembership based on a combination of spending and United purchases (up to 10,000 qualifying miles in subsequent years). The Delta Skymiles Platinum American Express comes with Elite Qualifying Miles, both with first purchase and based on annual spend. In the past the USAirways Visa Signature has offered miles towards elite status based on annual spend, though I don't think that's currently the case. However, the USAirways card does offer some of the benefits of first-tier elite status such as preferred checkin and boarding along with the occasional upgrade.

• Do you spend a lot with 'everyday purchase' retailers like grocery stores, restaurants, or the US Postal Service? If you do, consider a card that offers bonuses for that kind of spending. Consider both the Delta American Express and the Hilton American Express. Since my primary mileage accumulation isn't in a Delta account, I choose to hold the no annual fee Hilton card and I use it specifically at grocery stores and restaurants.

• Do you fly a particular airlines? Miles towards elite status aside, there are some cards that offer specific benefits which are useful when traveling with their co-branded partner. Without these types of benefits, I'm not a fan of picking a credit card based on the airline that you fly. You're already earning miles with that airline and if you have enough of a balance to claim the awards you want it's better to diversify into other programs. That makes things much easier when it comes time to try to redeem -- if your main program doesn't have availability, perhaps your second or third program will. That said, some cards like the Alaska Airlines Visa Signature offer nice benefits to customers that fly the airline such as an annual $50 companion ticket (unlike most companion tickets, this one can actually be used -- on any published fare), lounge passes, and day of departure upgrade certificates.

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General advice

If you pay your bill in full every month, charge a decent amount to the card, and don't have special needs like help making elite status, then some general advice is probably most useful.

The best general, all-purpose rewards card is the Starwood American Express card.

It's free the first year and $30 thereafter, comes with a signup bonus of 6,000 points with your first purchase and up to 6,000 more for hotel stays, and offers points which can be used for hotel nights or converted 1:1 into most airline programs.

The card isn't a good option for earning United Airlines miles, though, because the points only transfer at a rate of 2:1. BankOne, which issues the United Visa, provided lots of money when United went into bankruptcy and doesn't like the competition from this card.

When you covert 20,000 points at a time into airline miles Starwood gives you 5,000 bonus miles -- which means you're really earning 1.25 miles per dollar on most every carrier, better earning than most airlines' own co-branded offerings. The flexibility, though, is the best benefit. With, say, an American Airlines Mastercard you're stuck with American Airlines miles. With the Starwood American Express you earn whatever miles you want and you don't have to decide until later.

An example of the power of this card -- spend $50,000 on the United Visa or American Mastercard, and you have enough miles for a coach ticket to Europe. Spend $50,000 on the Starwood American Express, and you can transfer those 50,000 points to Cathay Pacific in exchange for 60,000 Asia Miles which are enough for a business class ticket on British Airways from the East Coast of the U.S. to most destinations in Europe.

Be aware, though, that transfers from Starwood into an airline program are not instantaneous so you may not be able to reserve your award before making a transfer on carriers that don't let you hold awards (e.g. Northwest) or that don't permit you to hold them for very long (e.g. United at 72 hours).

Still, with Starwood I can stay at some of the top hotels in the world and my airline mileage earning is supersized, 25% better than airline cards themselves. This is by far the best all-around mileage earning card.

I also carry a Diners Club card and a Hilton American Express.

The Diners Club card is now a Mastercard, so it's accepted universally. I use the card with merchants that don't take American Express. Their points program offers transfers into most airline and hotel programs. I can even launder United or American miles into other programs through this program (with some devaluation).

Since Diners Club became a Mastercard, it lost some of its unique features -- such as two billing cycles to pay and a lower than usual foreign currency conversion charge. But it maintains its primary insurance coverage on rental cars, and since it's a Mastercard it's useful for airline and hotel promotions that require payments with that brand of card (such as Hyatt's outstanding Faster Free Nights promo).

Downsides to the card are a charge for transferring points to airline miles (95 cents per 1000 miles) and a $90 annual fee. I rent cars enough to make this worthwhile.

I use the Hilton American Express only for things where I earn bonus points. I use it at the grocery store and at restaurants and my cell phone bill is automatically charged to the card. I run no more than $1000 or $1500 a month on this card. If I ever run out of Gold status with Hilton, I'll probably notch up the spending to reach $20,000 to retain my status.

Full disclosure, I also carry other cards that stand apart from this general advice. For example, I have an American Express Platinum card with Membership Rewards because it provides a greater credit line than traditional points-earning cards. It's useful to me for charging large events, and has lots of extras like lounge access (Continental, Delta, and Northwest), elite status with Starwood and Avis, and the Fine Hotels and Resorts program which offers extras at properties like Ritz-Carlton and Four Seasons. It's expensive at $395, so not useful for most.

The Membership Rewards program offers transfers to a variety of airlines and hotel programs, but it's been eroded over the years. Marriott dropped out last year. No replacement was ever made for Northwest or TWA (when the latter was acquired by American). But it works for me, because I couldn't otherwise put such large charges on a single card. And a seven figure membership rewards balance is certainly better than paying by check!

If you don't charge enough to warrant an annual fee card, consider a free card.

The Amtrak Mastercard gives one Amtrak point per dollar spent. The value in this card is that points can be used for train travel or transferred one-to-one into Continental, and Midwest Airlines and one-to-two into Hilton. You can transfer 25,000 points out of an Amtrak account each calendar year (elite members can transfer out 50,000 points.) The Amtrak card also offers redemption for gift certificates, generally valuing points earned at one cent apiece. The card offers pretty good earning considering that it's fee-free.

I don't trust the company running the Amtrak program, though. They tend to make changes without notice -- such as imposing a cap on points transferred out (it used to be unlimited) and ending transfers into United.

The Hilton American Express comes with 15,000 points as a signup bonus, Silver Elite status in the Hilton program, and earns 3 Hilton points per dollar spent (or 5 on 'everyday spend' charges like restaurants, grocery stores, and cell phone bills).

Consider also cash rebate cards. Most of them cap the amount of money you can earn, but if you're spending less than $15,000 or so a year that may not be an issue. This type of card is outside the scope of the post. Miles are usually worth more than money in a rewards program, since the latter tends to return only about 1%. But $150 may be worth more to you than 15,000 Amtrak points (though shrewdly used, the Amtrak points can be worth more than the money).

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Stay away from proprietary rewards programs, like the CapitalOne GoMiles card.

Proprietary miles programs have marketing appeal, offering "any seat on any airline" and tapping into the frustration that some feel trying to redeem their miles. But these programs turn the value proposition of miles on their head. Miles are most useful for tickets that would have been too expensive to purchase -- international business or first class tickets, or even last minute transcon flights (which aren't as expensive as they used to be). Proprietary programs generally offer coach seats, which have to be purchased a few weeks in advance, and often cap the amount of airfare that they'll pay.

Furthermore, proprietary miles can be earned only through credit card spending so it may be harding to reach the point of redeeming for a free ticket. Airline and hotel points can be earned through a variety of partnerships, whether it's telephone or internet or mortgage financing, let alone actually flying or spending the night somewhere.

While some may get value from these offerings, my general advice is to avoid them. They more or less amount to a cash rebate card where you can only spend the rebate on specific travel offerings.

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Earning bonus miles from credit card signups

In some cases, depending on the credit card issuer, you can sign up for the same credit card more than once and pocket the signup bonus over and over.

This is especially true for cards issued by BankOne (e.g. United, Marriott, British Airways, Priority Club) and Citibank (e.g. American Mastercard, Hilton Visa).

I'm not a frequent Northwest flyer, so I've used signing up for their credit card three times as my qualifying activity in the annual Fly Free Faster promo. While it's not easy to get a signup bonus from US Bank more than once for the same card, you can sign up for each of their different cards and earn the signup bonus each time. I've gotten the Visa Platinum, the Visa Signature, and the Visa Business card, and each time that qualified me to earn an additional 10,000 miles from the summer promo. (I'd never sign up for the Northwest card unless it qualified me for some other offering, since those offerings come around so regularly and I wouldn't want to blow the chance to use the card as an activity towards the bonus.)

Credit cards generally can offer some of the richest bonuses around.

The American Airlines Mastercard is currently offering 15,000 miles with first purchase and fee waived for a year.

The United Visa is also offering 15,000 bonus miles with first purchase and fee waived for a year. Update 8/28/05: There's also an offer of 20,000 bonus miles with first purchase and fee waived the first year.

The Delta American Express makes that same 15,000 bonus mile with first purchase offer, fee waived the first year. (There are occasionally even better offers on this card as well.)

Both the American and United bonuses can be earned more than once. The Delta American Express doesn't offer similar possibilities, although with all cards you can generally earn miles not just for a personal card but also for a business card. Some issuers require a certain minimum business income to qualify, and some consumers think "I don't have a business." But what if you are looking for consulting work on the side, even if you don't do any such work at this time? Most of us can qualify as "Our Name & Associates" - boom, our own business, and own business credit card with signup bonus.

Be aware that each time you apply for a credit card the issuing bank will pull your credit report. Each 'hard pull' on your report is logged, and too many pulls over a short period of time can temporarily reduce your credit rating. On the other hand, having a decent amount of unused credit can be valuable, a lower percentage utilization of your available credit helps your score. So does having a long average age for your accounts, so cancelling unused fee-free cards may not be wise. Suffice to say that credit score issues are beyond this scope of this inquiry, but be aware that your credit score will affect your ability to obtain credit and the interest rates you'll pay (such as when applying for a mortgage). These are complicated issues worth understanding. Here's a good basic overview. Here's a way to estimate your score for free and play with the different variables.