https://www.youtube.com/watch?v=dydY-_7PxvwDave Ramsey's daughter (Rachel Cruze) is morally against credit cards because the way in which the companies are able to pay-out the rewards to the responsible users is because of the high interest generated by the low responsibility users that carry a balance (starts at 4:30). It's kind of interesting that she admits that you can win at the credit card game, because Dave claims that you always lose. Even though she believes that you can win, she doesn't do it because it's immoral. She also states that the rewards are not worth the time for her. which can be true, because I'm guessing she is a heavily compensated social media/tv personality.
For me personally, the juice is worth the squeeze. If interested, my personal story is below.
I had an economics professor talk about the personal benefits of a credit card in August 1997 for airline travel. He said that he got enough credit card points to fly from Chicago to Europe 2-3 times/year. I didn't have a personal credit card from age 18 to age 32 due to the fact that I was low income (undergrad and graduate school) and if I ever got behind on my payments, I would have no chance of getting caught back up. As a result, I avoided it completely.
At the age of 35, I finally took the plunge and got the Alaska Airlines credit card mostly because my wife and I moved to Kauai and Alaska Airlines had a yearly one-time companion fare for $99. We each got the card so we had two yearly companion fares. A round trip fare from Kauai to Denver was around $800 and the companion fare ended up being $150 with fees. We saved $650 twice a year ($1300). We would then acquire enough points/miles to get another 3 one-way flights for free in one calendar year. Savings on flights was around $2500/year. We also got 2 free bags every flight, which averaged $400/year of savings. The credit card fee was $99/year for each card, so our total savings was around $2700/year.
At the age of 41 with a 3-year old kid that is no longer free to sit on your lap on the plane, we switched our primary card from Alaska Airlines to Southwest. Now with the Southwest companion fare, we have unlimited companion flights for free. It actually costs $5.60 for each one-way flight. I just checked mint and in 2022 we spent $3110 on flights and credit card fees. Average is probably around $2,000/year spend for airline tickets. You only qualify for the sign-up bonuses once every two years. As a result, our yearly spend is typically $1,000 in year 1 and then $3,000 in year 2.
I count the annual fees for the credit cards as a travel cost and part of my travel budget. My ball-park estimate for the actual retail cost of the flights is around $10,000. In 2022, we saved around $7,000 on airline tickets. Below is the quick math.
We probably average around 180,000 points/year from sign-up bonuses, referrals to friends and family, regular spending and miles flown in the air for paid flights. This has a cash value around $2568. However, when you add the companion fare, the cash value is around $5136. If I spend another $2500 on flights, I get another $2500 for free with the companion fare, so total savings is around $7,636. We had $436 in credit card annual fees for Southwest, so the final total is $7200.
I think 2022 was kind of a unique year. Flights very expensive and we flew more than normal. For 2023, I'm predicting a spend of around $1,500 based on $6,500 worth of flights for a savings of $5,000 in 2023.
Another thing to consider is that in order to pay the additional $5,000 for the flights, we would probably need about $7,000 of income. After taxes, our $7,000 of income would produce $5,000 of cash to pay for the additional costs of the flights.