This web page was initially printed in early 2023 and displays the creator’s monetary selections throughout that point. The remainder of the article has since been up to date.
I view money again bank cards as an effective way to get a reimbursement on purchases I might have made anyway. I take advantage of bank cards for as a lot of my spending as I can and ensure to pay in full to keep away from curiosity. In 2022, my complete rewards haul was $1,701 ($1,606 should you take out the $95 annual charge I paid for a kind of playing cards). That works out to a median return of two.1 % on each greenback I spent (1.9 % should you subtract the annual charge from the worth of the rewards).
Right here’s a breakdown of my technique for the 12 months, in addition to what I plan to do in a different way:
My bank cards technique: Maximizing money again in my highest spending classes
My technique facilities round solely two bank cards lately, down from a excessive of six at one level. The Blue Money Most well-liked® Card from American Categorical is my favourite, since my household of 4 spends lots on groceries. This card offers:
- 6 % money again at U.S. supermarkets (as much as $6,000 in annual purchases, then 1 % money again after that)
- 6 % money again on choose streaming companies
- 3 % money again on U.S. gasoline station purchases and public transit
- 1 % on the whole lot else
My common return per greenback spent on this card was 2.2 % in 2022 (1.9 % should you subtract the annual charge ($0 intro annual charge for the primary 12 months, then $95) from the rewards).
I additionally actually like my different card, the Chase Freedom Flex®*. Its greatest promoting level is a collection of rotating 5 % money again classes. This 12 months marked my favourite set of 5 % classes. I maxed out three of the 4 quarters (totally on groceries, reside leisure and PayPal purchases) and got here shut within the different quarter, which featured Amazon.com.
Freedom Flex cardholders additionally get 5 % money again on journey booked through Chase Journey℠, 3 % money again on eating and drugstore purchases and 1 % money again on the whole lot else. In 2022, I acquired a median of two % money again on each greenback I spent through my Freedom Flex card.
The most important gap in my technique: Not maximizing miscellaneous purchases
An apparent manner I may increase my total money again return can be so as to add a card with higher rewards on my “the whole lot else” spending, which is a big quantity. Two good no-annual-fee candidates are the:
Curiously, my present two-card technique is netting out with barely lower than a 2 % total return. I’m incomes extra on some purchases and fewer on others. For this reason I believe a flat-rate 2 % money again card is a surprisingly favorable possibility for many individuals. Somebody who needs to maintain their card technique quite simple and nonetheless earn a stable return may use this as their solely card. If you wish to pursue an excellent larger rebate, you possibly can use the two % card as a basis and complement it with different playing cards that provide higher rewards in key classes.
What’s holding me again from getting one other card?
If I stored utilizing the upper Blue Money Most well-liked and Freedom Flex classes however changed my 1 % earnings with 2 % payouts, I might earn one other $667 per 12 months, which might convey my private common return to 2.7 %. Actually, I most likely ought to. The mathematics actually provides up. I might do even higher in 12 months one due to the sign-up bonus.
Why haven’t I? A few years in the past, I went on a card canceling spree after feeling like increasing to six playing cards was too many. A number of of the advantages overlapped, I used to be paying three annual charges and my spouse, specifically, was having a tough time following when to make use of every card for max impact.
I’ve to say, I do benefit from the simplicity of a two-card technique, and the 2 playing cards that I take advantage of additionally present many extra advantages. As I’ve grown older, I’ve come to understand these intangibles much more.
Different issues I like about my playing cards
Good customer support makes a giant distinction to me, and nobody does it higher than American Categorical. They’ve topped the J.D. Energy U.S. Credit score Card Satisfaction record in 12 of the 16 years it has been compiled, with second-place finishes on the opposite 4 events.
Chase got here in fourth in 2022, however personally, I’ve discovered them to be superb at customer support as nicely. The Freedom Flex has robust journey insurance coverage protection, which helped me get greater than $1,000 again final 12 months from a canceled lodge keep.
I additionally actually like how each of my playing cards provide beneficiant buy safety and prolonged guarantee advantages. A number of years in the past, Chase coated $299 in damages to my spouse’s Apple Watch.
The right way to optimize your bank card rewards technique now
What works greatest for me might not work greatest for you, after all. Selecting the perfect bank card is a really subjective, particular person resolution. These steps can assist you make that call:
1. Don’t plan on carrying a stability in your card
The primary massive query I’d urge you to ponder is whether or not you carry a stability. Particularly with common bank card rates of interest at simply above 20 %, it doesn’t make sense to pursue rewards should you’re paying that a lot in curiosity simply to earn 1, 2 and even 5 % in money again or airline miles.
When you’ve got bank card debt, prioritize your rate of interest, maybe through a stability switch card with a 0 % intro APR provide.
2. Break down your spending habits
So long as you possibly can pay in full and keep away from curiosity, then rewards are free cash. Bank cards provide far superior rewards packages and purchaser protections than debit playing cards, money and different cost strategies. Take into account the way you spend your cash (since totally different playing cards emphasize totally different rewards classes) and take into consideration how a lot work you’re keen to place in.
3. Determine what sort of rewards you need to earn
Take into consideration the way you need to use these rewards, too. Money again is mostly easier and affords common enchantment, whereas journey rewards are doubtlessly extra profitable (particularly should you’re keen to leap via some hoops to search out the perfect offers and journey on the optimum dates).
4. Take into account what number of playing cards you propose to make use of
I do know some people who find themselves blissful to juggle 30 totally different bank cards and others who’d relatively keep on with only one or two. I ought to level out that should you plan to amass many alternative playing cards, it’s greatest to take action regularly, as a result of making use of for too many playing cards briefly order can damage your credit score rating.
The underside line
It’s a good suggestion to check playing cards at the very least every year as a result of your life-style adjustments and the market does, too. Including a card with a profitable sign-up bonus may put a whole bunch, perhaps even 1000’s, of {dollars} again in your pockets. Particularly with inflation persevering with to run sizzling, that’s welcome information. One of the best of each worlds is when you possibly can mix a lofty preliminary bonus with a card that additionally meshes nicely along with your ongoing spending habits.
Have a query about bank cards? E-mail me at ted.rossman@bankrate.com, and I’d be blissful to assist.
