For as long as I can remember, my parents never had credit cards. Heck, my dad didn’t even have a bank account until 2020 just so that he could have somewhere to deposit his unemployment checks. We’ve all seen the movies or heard the stories of people going into crazy amounts of credit card debt. That’s how they get you. If it’s not the IRS, it’s the banks. If there’s anything I learned about financial institutions, it’s that interest rates are everything. And boy, when they compound, they comPOUND. Call me cynical, but these institutions are not made for people like us, with backgrounds like us. Let’s be real- the financial stability that comes with being a doctor is a definite plus, but just like any bread-winning profession, it’s gonna cost ya.
However, if you promise to be careful and are intentional about playing the credit card game, you might be able to use those points to save some money on flights for interviews.
Disclaimer: I am not a financial expert, but I do have some experience credit churning. Although I did not use my points to travel to my interviews, I did use my points to fly internationally every year for free since I had the cards. Everything laid out in this blog post is a recommendation or a recounting of the current cards I own and how I would’ve used them to pay for my interviews. This system might not work for or apply to everyone. RTM and its members are not liable for any consequences that may result. ← Please be careful! Only you know what your financial situation is and what your limits are. Do not bite off more than you can chew!. DO NOT GET A CREDIT CARD IF YOU CAN'T PAY IT OFF.
Other warnings: Opening multiple credit cards within a short span of time can knock significant points of your credit score or could alert credit card companies that some fraudulent, stolen identity shenanigans might be happening. Please also be aware of rules that some credit card ecosystems have like Chase’s 5/24 rule- you cannot have opened more than 5 credit cards within the span of the last 24 months. For more on this rule click here.
THE PLAN
During undergrad: Start to build credit. This is essential as many of the travel credit cards that you will use later on are mid-tier and usually require income or prior credit history.
Here are some ways to start:
Authorized User Card
An authorized user card is a card with YOUR NAME on it, but the account belongs to the person that authorized you. You will actually have the same credit card numbers and your charges show up in their statements. You might not be able to log in to the online portal, so you would have to keep tabs on how much you spent and pay back that person each month through venmo, etc.
It is actually one of the few ways someone younger than 18 can start building their credit.
Be aware that if the person that owns the account closes it, it can impact your credit score if it is the oldest form of credit for you (age of accounts)
Be sure to choose someone that is responsible, who you don't mind seeing your charges, and will be a constant presence in your life.
2. Secure Credit Card
Almost like a debit card and is best for people who need a solid limit per month.
You can go to your banking institution and request one. Afterward, you will have to deposit x amount into your account. That amount constitutes your limit. Spend and pay off the balance each month= building credit.
3. Student Credit Card
I actually started with a student credit card. My personal recommendation is the Discover It Credit Card. Other recommendations can be found Here. The Discover It Credit Card has no annual fees, quarterly cashback, and has incentives for getting good grades.
You might be thinking, how will they approve me if I have no income?
“Income” is a little bit looser or laxed for students. When I was an undergraduate, I was on a full-ride scholarship. Whatever amount that was refunded to me (that includes leftovers from FAFSA, etc) I considered as “income.” This also applies to student loans if you borrowed up to the full cost of attendance. Whatever is leftover can be counted as “income.” Consider stipends from work-study or summer programs as income too.
If you are still wary of credit cards, know that you pretty much can spend as little as you want and pay it off monthly. This still counts as building credit and can even help your score because you used so little (utilization rate) however, you may miss out on some rewards if you spend minimally. For example, when I applied for the Discover It Credit card had a promo offer that would match my cashback purchases by the end of the year.
Calculations:
The credit card has a 5% cashback (up to 75$) with certain categories per quarter and a 1% unlimited cashback on everything else. For example, from Jan-Mar, I can earn 5% cashback on groceries. To go up to the full amount, I would need to spend $1500 in groceries those three months ( a bit unrealistic tbh for a student.) What you can do is ask your parents, siblings, or friends if you can use your card and have them pay you back.
Since it’s a quarter system, I’d have to spend $6000 total (within the respective categories). I will receive a cashback of $300. If I spent nothing else, at the end of the year, the card will match my $300 for a total of $600 that I can use for a flight, etc. Don’t worry if you can't meet these spending limits for that year. It’s a bonus if you do, but the main point is to start your credit.
How credit card interest works (4min video): https://www.youtube.com/watch?v=_HfXfKLYV68
During Gap Year/Year that you apply to medical school: Apply to more credit cards and continue to meet spending requirements for promotional awards. Below are tips on how you can ensure that you meet those requirements.
Note: If you currently have no credit history please start with the above advice on how to start building. However, if you are currently working there is a chance you might be qualified for a higher tiered credit card with better words vs an introductory credit card like Discover.
1. Know when you are going to make a big purchase.
I.e. MCAT Prep Course, Secondaries, Black Friday shopping, Laptop you’ve been saving up for, etc. You can also ask your family or friends if they are making a big purchase and ask them to pay it back.
2. Recognize which travel ecosystems/partnerships work best for your life or the schools you apply to.
If the thought is that you’re going to keep these cards for a long time and not just for interview season, it is important to know what airline partnerships work best for you. For example, my home is 8000 miles from the mainland US and because of that, I travel with United Airlines A LOT. For this reason, I chose Chase’s United Card to be my 2nd card after Discover. It is also why I ended up applying for the Chase Sapphire Reserve as my 3rd card.
If you are using the card just for the flights and will cancel it later (which I don't advise because your score does take a small dip but if you’re fine with that then you do you girl), pay attention to the cities/airports that are around the schools you apply to.
Check out this link: https://www.johnnyjet.com/best-credit-cards-for-travel-miles/ to see which airlines are partners with what respective credit card.
3. Apply to credit card(s) at least 3 months in advance prior to big purchase.
Most credits will give you 3 months to spend x amount to get the reward points. Usually the better the rewards, the more you’re gonna have to spend. Refer to #1.
4. Recruit your friends
What I am about to tell you sounds like an MLM pyramid scheme ( I do not condone scams), but you’ll know what I mean by the end of this. Many credit cards offer points as an incentive to refer other people to get cards of their own. I have mostly seen referral bonuses ranging from $50/5,000 points up to $200/20,000 points per person you recruit. Usually, you are limited to bonus referrals of up to 5 people per year. If you know someone who is looking to open the same credit card anyway, encourage them to use your referral link- maybe buy them lunch-it can be worth as much as one round trip ticket. If you can get 5 people to use your referral link, you can be looking at up to 100,000 points/$1000 cash, or ~3-5 round trip flights.
5. Assess the flight’s worth vs point’s worth
It would be a waste of points if you use them for flights that cost less than the points’ value.
Let’s do a little exercise. A trip from New York to Los Angeles in February 2021 (pandemic prices) costs anywhere from $78 with Spirit Airlines to $289 with United/Delta/JetBlue.
A round trip ticket through the United website using points costs 16,000 points (it can cost up to 25k within the continental US) or $160 (if you turn your points into cash via Chase Rewards portal). Do you think it’s worth spending the $78 or the 16,000 points? Heck, you can even convert 7,800 points to $78 so you can buy that Spirit Airlines flight!
Let’s do another one. New York to Seattle costs $220-378. Do you:
Take the L and buy the ticket
Convert 37,800 points to $378 to buy the ticket
Spend 16,000 points to buy the ticket.
And that my friends, is why it’s so important to know when and how to use your points to save the most money.
During medical school and beyond:
1. Do I keep the cards or cancel them?
That really depends on you, your lifestyle, and whether or not there is an annual fee.
If the card has no annual fee: keep it, especially if it’s your oldest credit card.
If the card has an annual fee: depends on what the card is mainly used for. For example, I still hold on to my United card ($95/yr) because it’s the only airline I can travel back home with.
2. What if I want more credit cards?
Know what you spend a lot of money on. For me, it’s food. If that’s never gonna change, choose a card that is gonna reward you for having a black hole as a stomach.
3. Remember to pay off your bills every month!!
Do not let the man keep you trapped in the snowball garbage can that is credit card debt. I laugh every time I remember that my credit card companies do not make a cent out of me. I just go on about my day, buy what I can afford to buy, and then use their points to go on a trip to Japan.
IN SUMMARY
Looking back, if I had to do it all over again with the cards I currently have and taken the 2 gap years, I would have:
Applied to Discover It Credit Card during freshman year. ~$600/two round trip flights
Applied to Chase Freedom Unlimited during junior year ~20,000 points/$200 cash/one round trip flight
Applied to Chase United Credit card during senior year or first gap year ~50,000 points/$500 cash/$750 of travel credit/two round trip flights
Applied to Chase Sapphire Reserve during application cycle/second gap year ~50,000 points/$500 cash/$750 of travel credit/two round trip flights
TOTAL :$1800 cash or 7 roundtrip interview flights + give/take 1-2 more flights due to the points I am accumulating by spending my gap year salary.
Now THAT is a lot easier said or written down on paper than is actually done. Life gets in the way and hey, that overseas trip for your mental health might just be worth more than interviews that may or may not happen a year later. The point is- there are ways to finesse the system. Be smart and savvy. Now is the best time to start working on your financial health.