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Does It Pay To Optimize Your Reward Credit Cards?

Posted By Jim On 08/27/2012 @ 7:15 am In Personal Finance | 15 Comments

How many reward credit cards do you have? If the answer is more than two, chances are you’re introducing more hassle than it’s worth. If you get into arguments with your significant other over which card they should be using, you may be introducing more strife than it’s worth. When it comes to optimizing your reward credit card usage, you may be making life harder than it needs to be.

Our Credit Card Rewards System

We use two credit cards:

  • Citi Forward Card – 5 points for every $1 at restaurants and entertainment; 1 point everywhere else.
  • TrueEarnings┬« Card from Costco and American Express – 3% on gas, 2% at restaurants or travel, 1% everywhere else.


We use the Citi Forward card at restaurants and movie theaters and the American Express TrueEarnings Costco card everywhere else. Those are the rules, it’s that simple. We actually have a Capital One Platinum card that we use when we travel because they don’t charge a foreign transaction fee [3]. It offers 2% at grocery stores but I don’t keep it in my wallet.

Why don’t I keep the Capital One card in my wallet? Convenience. I surrender the 1% at grocery stores and I don’t need to remember to pay the bill each month, I don’t carry the weight of having to remember to use it at grocery stores (which isn’t a big deal), and it’s one less card in my pocket.

What Rewards Are We Missing?

In aggregate, how much do you spend on your credit cards each month? We spend probably around $1500-2000 a month (except at local small shops, we charge everything to a credit card). If we had a credit card that gave us 5% on all of our purchases, we’d earn, in rewards, $75-$100 in rewards each month. If we only had a credit card with 1% cashback, then we’d earn $15-$20 a month. The spread between the two is approximately $60-$80 a month.

Few cards offer 5% and it’s usually on a few categories. Discover More rotates their categories [4] but there’s typically a limit, which varies from category to category. Through September 2012, the 5% is on gas stations, theme parks, and movies with a limit of $1,500 across the three months (July-Sept). So we’re talking $25 in max rewards a month, compared to $5, and that’s if you were to spend $500 a month in those three categories.

Take a look at your budget and calculate how much in rewards you’re actually earning over a simpler system and see if it’s worth it for you. I did it a few years ago and realized that we were talking less than $10 a month. Even today, I have to spend $1,000 a month on groceries to reach a $10 difference in rewards between the 2% Capital One card and my 1% American Express – we never spend that much on groceries.

Revamp Your System

Once you have the data, you can revamp your system. I recommend picking two, at most three, cards to keep around and it should be so simple that it’s second nature. You shouldn’t have to keep an extra card in your wallet or purse that reminds you. It’s important that you maximize rewards while maximizing your enjoyment of life!

If you do the math and notice that you are earning significantly more, then by all means stick with it. For us, it didn’t make financial sense.

(Photo: I don’t know where it’s from but it was shared here [5])


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[1] Tweet: http://twitter.com/share

[2] Email: mailto:?subject=http://www.bargaineering.com/articles/pay-optimize-reward-credit-cards.html

[3] foreign transaction fee: http://www.bargaineering.com/articles/lowest-foreign-transaction-fee.html

[4] rotates their categories: https://www.discover.com/credit-cards/cashback-bonus/cashback-calendar.html

[5] here: http://www.reddit.com/r/LifeProTips/comments/x3hyg/lpt_too_many_rewards_cards_keep_a_cheat_sheet_in/

Thank you for reading!