Over the years, I’ve simplified my credit-card usage to just a few reward cards. My main goal was to rake up rewards as much as possible, without having to remember a complex algorithm to decide which card to use when.
Not that I’m too stingy and trying to collect changes, but I dislike leaving money on the table, especially when a couple of one-time habit-changes/steps can increase annual cash-flow by at least several hundred dollars, if not more. At the same time, neither I nor my family members (additional card-holders) are inclined to carry a lot of cards together with a mini-manual. I use cards heavily for over 80% of my total expenses (notable exceptions being the property tax and a few small recurring/annual payouts).
I wanted to share what I do and also get input from others as to what they follow:
- All gas purchases anywhere are with a card from penfed.org. 4.25% or more cash value depending on how one redeems
- All travel-related expenses and restaurant/dining-out are with Costco Citi Visa card): 3% cash-back
- [Under Consideration] Amazon Prime Visa card (5% cash-back), given our increased purchase from Amazon.com
- Fidelity Card for most everything else (including #3 at this moment): 2% cash-back
Notable choices made:
- I used to have a Shell card for 5% cashback at gas stations, but discontinued it since this is available only at Shell gas-stations
- The switch from AMEX to VISA has simplified this further as AMEX is still not accepted in a few merchants we use
- Stopped using “rotating reward category” cards (e.g., Chase gives 5% on 3 category of expenses, but the categories change frequently).
- I prefer getting cash or equivalent as reward than “in-kind”, due to the flexibility
- I learnt that x% reward does not necessarily mean x% cash. The reward points may be diluted depending on what is being redeemed
- I noticed that over the last few years, many online payments, including most utilities, are now accepting credit card auto-payments without any extra fee. Previously only a bank account was possible.
- I’ve left the other cards as is, and use them sporadically if needed (e.g., foreign travel)
What do you think? Anything you’d like to share from your experience?
Great Point Jimmy! Thanks!
Yes there is an implicit assumption in this post that “use of credit card” is not leading to unneeded spending. I agree that the mere convenience of using credit card, together with sign-up and ongoing rewards can actually be a path towards more spending. For the purpose of this discussion, I’m assuming that the buying habit stays indifferent/independent of the payment method (cash, card, check, paypal, etc.).
Whenever I see an item is on sale with 60% discount, I remind myself that I still need to pay the 40% and whether I really want to spend on it . This is the reason I avoid store cards too. What I do notice in my spending behavior is that, when I’m using up a “reward” (e.g., a amazon gift card that was redeemed for a reward-point), I tend to be more lenient. Strictly speaking, I shouldn’t be, but I don’t mind this conscious indulgent of mine. Most of spending actually gets categorized under my “hobby” budget since I buy lots of books.