Speaking of credit card rewards optimization, I was thinking about how the algorithm might work for me. I’m curious if others have a similar system. Man, I have a lot of cards…
Tier 1 – Special Rotating or Temporary Promotions (5%+ back)
First up, you’d want to check for cards that offer an exceptional bonus cash back. Chase Freedom and Citi Dividend both offer 5% cash back on rotating categories on up to $1,500 in spending each quarter. That’s a possible $75 extra each quarter for each card. Other cards may offer a temporary bonus as well.
- Chase Freedom® – $150 Bonus – 5% purchases can come from gas stations and local commuter transportation 01.01.2016 – 03.31.2016
- Citi® Dividend Platinum Select® Visa® Card – Earn 5% cash back every quarter in must-have categories. Right now, on eligible purchases within the Hilton Portfolio, car rental agencies, movie theaters and theme parks from 7/1/14 – 9/30/14. Enrollment each quarter is quick and easy.
Since I don’t buy that much gas, I would only charge restaurants on the Chase Freedom (but not gas) and airline purchases on the Citi Dividend.
Tier – Permanent Category Bonuses (3%+ back)
Some credit cards offer a year-round bonus on things like restaurants, travel, gas, groceries, and more.
Tier 3 – Everything Else (2%+ back)
Here’s your backup catch-all card. Don’t settle for 1% back here, you can do better.
- Fidelity Investment Rewards American Express® Card – 2% cash back on everything, which transfers to any Fidelity account (non-401k).
- Starwood Preferred Guest® Credit Card from American Express – Up to 5 Starpoints for every eligible dollar spent at SPG Hotels & Resorts, 1 Starpoint for every eligible dollar spent everywhere else.
If you like airline miles or hotel points, here’s where your personal spending habits may also factor in. I value Starwood points at 2 cents or more per point due to their ability to convert to miles and primarily their value in hotel stays (including Sheraton, Westin, W Hotels) so I actually switch between a 2% cash back card and the Starwood depending on my point balance as I like to keep enough to pay for upcoming hotel stays. My Fidelity cash ends up in a 529 so that’s not as much fun. 😉
American Express cards also offer extended warranty protection that I like for larger purchases as their customer service is always the easiest to deal with when you actually need to file a claim. However, American Express cards aren’t accepted in certain cases (like my auto insurance), so you should have a Visa/Mastercard as a final backup.
All in all, it’s not as crazy as it seems. If the Chase/Citi 5% categories aren’t daily-use categories but things like airfare then I don’t keep them in the wallet (0-3 cards). Out of Tier 2, I only keep the Blue Cash AmEx with me (1 card). Out of Tier 3, I actually have a similar-but-grandfathered Fidelity 2% Mastercard and the Starwood AmEx (2 cards). So the total is really about an average of around 4. I’m thinking of switching to an All-Ett “world’s thinnest wallet” which should cut the thickness in half.
“Disclaimer: This content is not provided or commissioned by the issuer. Opinions expressed here are author’s alone, not those of the issuer, and have not been reviewed, approved or otherwise endorsed by the issuer. This site may be compensated through the issuer’s Affiliate Program.”
“The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.”