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My Credit Card Strategy

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Every savvy consumer these days should have several credit cards with each card earmarked for specific spend purposes based on their rewards programs. With the ever changing landscape of offers, it is impossible to find all of that in one single card. For me, I had the Citi Platinum Select, the American Express Costco True Earnings for 2% on travel and 1% at Costco (Costco only takes debit or Amex), and Citi mtvU for 5% for restaurants, bookstores (Amazon.com counts), record stores, movie theaters, and video rentals. After Citi ended the Dividend Select’s 5% on gas stations and supermarkets, I swapped that card out with the Citi Drivers Edge Card because it’ll give me 6% at gas stations and supermarkets for 12 months.

How you structure your strategy depends on how you spend and I know that I spend a lot on gasoline and supermarket purchases (6% Citi Drivers Edge) and on textbooks and eating out (5% Citi mtvU) so I found cards that gave me high returns. You will have to build your strategy based on your specific needs but below I’ve listed cards that give off the beaten track cashback rewards so that you can build your strategy. (All cards below have $0 annual fees, unless otherwise noted) If I’ve missed a good card that you currently use or know of, please do let me know!

Also very much worth reading, Samerwriter goes one step further in discussing his strategy, he tracks his spending and his % cash back and discusses his numbers.

If you’re looking to pick the best card for your spending, check out this list of the best cash back and reward credit cards currently available.

{ 15 comments, please add your thoughts now! }

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15 Responses to “My Credit Card Strategy”

  1. prlinkbiz says:

    There are so many PF Bloggers who will hunt for a sale, a deal, or another o% cc- it seems like a lot of effort without that great of a payoff (rewards?). What if all that time and energy was put towards looking for income producing assets to purchase?

  2. Dus10 says:

    It would be interesting to see what credit cards will give you checks that you can use for payments. I would love to use these rewards for paying my mortgage, but the mortgage company charges $35 to accept a credit card, so it is not worth it in that case. But, if I could get a check for the credit card (which some offer, and probably most don’t… and for those that do, the rewards may work differently than otherwise), I could send that check to the mortgage company, and to Capital One for my two vehicles that I am quickly paying off, then that would be a sizeable amount of rewards.

  3. samerwriter says:

    I don’t agree that every savvy consumer should have several credit cards. I think a savvy consumer should simplify their financial structure. Maximizing credit card rewards is for personal finance hobbyists.

    Anyway, a couple more thoughts; you don’t mention the Chase Rewards card, but it’s a virtual clone of the Citi Dividend card but, unlike the Citi Dividend card, Chase hasn’t yet changed their program to be uncompetitive.

    The Costco Amex TrueEarnings card also gives 3% cash back at restaurants. My wife travels a lot for work; so this card has come in very handy.

    Most of the rebate cards (at least the cash rebate cards) have ~ $300 limits. So to maximize our rebates we only put purchases that get more than a 1% rebate on those cards, and put everything else on our Amazon Visa (which as far as I know has no rebate maximum). We buy a lot from Amazon, so their rebate (which comes in Amazon gift certificates) is as good as cash to us, and you get 3% back on Amazon purchases.

  4. Jeremy says:

    I think you are right in that if you are smart in choosing cards with different reward structures you can benefit greatly. I would caution against getting too many cards for too many reasons though, as that could make things a bit confusing and it may take longer to accumulate points/rewards because they are spread out on different things.

    Also I would like to mention that many check/debit cards now offer the same rewards that many credit cards offer, and in my opinion, those could be a much better alternative by eliminating debt all together, depending on your situation and purchase habits.

    I personally use a 3 card strategy for maximizing rewards:

    1. Chase ATM/Debit Rewards
    2. Chase rewards Visa
    3. Chase United airline miles card

    The debit card gets the most use and is used for all daily spending, groceries, etc. In 6 months we typically rack up rewards worth upwards of $200 in value or cash. The rewards visa card is more or less for gas purchases. And all travel related and more expensive purchases typically go on the airline miles card.

    It is a good idea for everyone to review their cards though and maximize the benefits available to them.

  5. jim says:

    My logic in getting a few cards is that you’re getting maximizing % cashback. I agree that there is a point where you simply have too many cards (I think you should have basically three) and it is counterproductive (though for different reasons).

    You can even go as far as to put stickers on your cards to remind you what the card is for (5% gas/grocery).

  6. xdancer says:

    I have the same set up as Jeremy, above — the Cash Plus Rewards Visa is to my knowledge the best, and I have a United Mileage Plus Visa, the new (& worse) AT&T Universal Yes Network (1%) card & an AMEX cash rebates card.

    so far it is all working quite well.

  7. Savvy Ssamurai says:

    I use the Citi PremierPass that gives you 1 flight point for every mile that you fly. If you travel a decent amount its also a good credit card strategy. Plus if you sign-up right now you can get 15,000 Thankyou points.

  8. Paul11710 says:

    Nice article. I’m a current user of the Citi dividends card, thinking about looking for other options now that the rewards structure has changed. What surprises me about this article and the comments left is that no one is concerned with how this affects a credit score. This, and many other articles make it sound like you can just shop away for the best credit card deals… like shopping for a good deal in a store.

    The constant applying for, switching, or cancelling of cards can’t look good. They also make your average time for having open accounts shorter which isn’t good either. If you’re not cancelling your old cards then you might have too much credit and be over extending yourself. I’ve heard that opening up new accounts can drop a credit score as much as 20 points!

    For example do you think that say, upgrading from a citi dividends card to a drivers edge card for a few extra percent here and there is worth the hit to the credit score? I’m not sure myself.

    How about the cancel vs keep decision on cards you’re not using? What do you guys think about that? I’d be interested in your opinions

    -Paul

  9. jim says:

    Paul, I have a post coming up (sometime this afternoon) that talks about what to do with old unused credit cards. As for opening a lot of new lines of credit, it’s bad for your score so I would avoid doing it too often because lenders see it as you needing lots of credit, not as you trying to get the best cashback %. One of the dings on my report when I applied for a mortgage was ‘too many recent credit inquiries’ (or something like that) which decreased my score, luckily it didn’t decrease it enough to affect my interest rate.

    I’d say to be wary if you plan on get a mortgage within a year and you’ve applied to a lot of cards already, otherwise I wouldn’t worry.

  10. Jeremy says:

    Paul, I definitely do not advocate constantly switching cards to get the hottest new rewards card. I would suggest though is that if you do use a credit or debit card, you make sure it is working for you. So if your cards do not have any rewards and you’ve had that account for many years, then no don’t close it just to get a new one, rather find a solid rewards card and just leave your old account open.

    Once you have your cards setup, don’t switch them. You shouldn’t need to unless they stop offering rewards or change the system. But even then, most companies will add the rewards feature to your existing account even if it isn’t specifically meant for that reward. I know chase allows that for most cards. I have a generic card but I recently switched from the basic rewards program to the leisure rewards. Card and account stayed the same, but I’m in a different reward program.

    So that is your first choice, is if you already have a card with a company that has other reward cards, call and see if you can have it setup to your existing account.

  11. Paul11710 says:

    Thanks Jim & Jeremy. Those are some excellent suggestions about trying to convert rewards and roll balances instead of outright getting new cards and dropping your average card holder time. I hadn’t even thought of those options before.

  12. Steve says:

    I agree with one of the first comments. Strategies for generating more income, can be time well spent. If your business is big enough and it there is a real strong financial benefit, then have an employee hunt out the deals.

  13. Babette says:

    I read the Citi Drivers card information carefully and found that you can only use the rebates to pay for a new car, car repairs or gift reward items. THIS IS NOT A CASH REBATE card that lets you spend the money on anything you please and/or to pay your card’s balance.

    Did you notice that?

  14. Ron says:

    Has anyone had experience with a Cash Rebate bait and switch? I applied for a card with a 5% cash rebate. I used the card for several months thinking I would get the rebate. When it failed to appear on my statement I called and was told the application was received too late to get the rebate. My wife applied later for the same card. It was an online-only offer. When she received the card she called to verify that she would receive the 5% rebate. They said no, that she had applied by phone. I know she applied online. After I complained to the bank whose name is on the card the online offer vanished from their website.

  15. samerwriter says:

    Money Magazine this month had a short blurb on rewards cards. One they mentioned that I’d not heard of was the HSBC Direct Rewards card:

    http://www.directrewardscard.com/

    This card gives you 5% back on gas, drugs, and groceries and 0.5% back on everything else. Once you exceed $3,000 charged you get 1% back on everything else.

    The nice thing is the maximum annual rebate is $500, while most of the other rebate cards I’ve used have a $300 maximum.


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