Build credit, get free stuff. Sounds pretty good, right? Credit cards can be an excellent way to meet both of those objectives, but as they say, with great power comes great responsibility.
Today I’d like to share what’s in my wallet and why. I’ll also share the rules you absolutely must follow if you want to optimize the credit card game (i.e., get free stuff).
Sam’s Club Sam’s Plus MasterCard
I know it’s not sexy, but we do the bulk of our food and household supply shopping here, and the rewards accumulate in two ways: Points earned on purchases exclusively in Sam’s Club, and points on any other purchases outside of the store. For the former, the points are tracked by Sam’s Club, converted to their cash equivalent and then applied to future Sam’s Club purchases. For the latter, the points are tracked by Synchrony, converted to cash their cash equivalent and we are mailed a check once per year. Specifically, we earn 5% cash back on gas, 3% on dining and travel, and 1% on everything else, so it’s a decent return compared to other cards. I will add, however, that we only have this card because we have an upgraded Sam’s Club membership and the rewards far exceed the cost there. This doesn’t make sense to do if you don’t shop at Sam’s Club often, but there is probably a Costco or BJ’s equivalent, so check it out!
Amazon.com Rewards Amazon Prime Visa
Generally, if I’m not shopping at Sam’s Club, I’m shopping on Amazon. You can pretty much buy everything there and we have a Prime account, so this card absolutely makes sense. We get 5% cash back on Amazon purchases (because we have a Prime account – otherwise, it’s 3%). However, this card only offers 2% back at gas stations, restaurants and drug stores, and 1% on everything else, so it makes more sense to use the Sam’s Club card for the “everything else” and just keep it simple. One massive benefit of this card is there are no foreign transaction fees. I’m pretty sure that’s a new thing. A new thing for which I am extremely grateful! We just booked our massive trip to Africa for the fall and had to pay the deposit in ZAR, so I did a quick check before purchasing to see if there was a benefit to using one card over the other in this case. Our Sam’s Club card has a 3% Foreign Transaction fee, which completely negates the 3% cash back we’d earn for travel costs, so in this case it was better to use the Amazon card. I’m sure we’ll use that throughout our trip as well! It pays to just spot check before blindly paying for things. If you don’t, you’re leaving money on the table. If you don’t shop on Amazon a lot and/or don’t have a Prime account, there are better cards out there for you, and we’ll get there!
Chase Ink Business Cash Card
This is the card I use for all of my business-related expenses as a money coach. There is also a Business Preferred option and while that sounds fancier, it might not make sense for your business. In my case, I got a $300 statement credit for spending $3,000 in 3 months, which I knew I would hit. Please Note: I had already budgeted for those expenses. Do NOT spend money you would not already be spending anyway, just for the sake of hitting a reward threshold. More on this later! Anyway, I earn 5% cash back on business expenses like office supplies, internet, cell phone, and so on. I earn 2% at gas stations and restaurants, and 1% on everything else. You could argue that when I have business-related meals it would make more sense to use my Sam’s Club card and get an extra 1% back, but a key differentiator here is that this card is strictly my business card tied to my business credit rating, which just makes taxes and overall financial management much cleaner! This Business Cash card also has no annual fee, while the Preferred option does. It just came down to running the numbers, and because my business has pretty minimal overhead, I simply don’t spend enough money for that Preferred card to make sense right now. As my business grows, I can reassess, but there is no reason to commit to a fee-based card when the math doesn’t work. Moving on…
American Express Corporate Card
I use this card for all of my travel expenses related to my work as a finance consultant. Because all of my expenses are reimbursable through the firm, this is net neutral for me. I wanted to include it here, however, because of a recent change in policy that probably impacts a number of my readers! In my case, I had a Platinum Corporate Card for years, and the $400 membership fee was reimbursed by my firm annually. The firm recently eliminated the Platinum cards for everyone, including frequent travelers. The horror! I’m not traveling much right now so it’s not worth it to me to pay the fee myself, but it was still a bummer. Once I was finished mourning the loss of the card and its associated benefits, I ran the numbers for our new alternative. Everyone was downgraded, but if we wanted to opt in for membership rewards, we would have to pay the $100 fee ourselves. I calculated that based on my projected travel-related expenses in the year ahead, I would not spend enough money to even offset the cost of opting in for points accumulation, so I chose not to retain it this year. I can always opt in later when it makes sense financially. So just a reminder, there is no need to keep opting in to fee-based cards where the rewards do not offset the costs.
So, there you have it! That’s what I carry in my wallet every day. That said, I know that what works for me won’t necessarily be ideal for everyone, so here are some other options to consider:
Citi Double Cash Card
1% cash back on everything when you purchase, and another 1% cash back when you pay your bill. That’s a crazy good deal if you want to keep it simple and only use one card, because there is also no annual fee!
Chase Freedom Card
1% cash back on all purchases, and a quarterly revolving feature of 5% cash back on certain types of purchases. You have to opt in quarterly, but this can be a good deal if you pay attention. For me, it’s easier to follow the plan I’ve outlined above, but you can certainly get a lot of value out of this no-fee card as well!
One topic I didn’t cover above because it’s not a day-to-day thing for me, is the use of merchant-sponsored credit cards for high-value rewards. We’re really into traveling to cool places for free (or close to free), and credit card points are a huge part of our strategy there! I have found that closer to year-end, many major merchants will bump up their offerings to increase enrollment in their programs. Knowing this, I timed the opening of a Delta credit card and an SPG credit card to earn points on spending that I had already budgeted for. Because those are my preferred travel partners, it was a great deal for me. To give you an idea, I took advantage of a 60K points incentive on my SPG card for a relatively low spending requirement (again, not spending more than I normally would anyway), and that’s pretty much bankrolling an almost-free 8-night stay at the St. Regis on Mauritius when we travel to Africa later this year. Not a bad deal for an oceanfront suite! If you have good credit and pay your bills on time, you can really get a lot of value out of merchant-sponsored cards. Just make sure you cancel them before they start to charge an annual fee (typically waived for the first year), unless it makes sense to retain based on your own spending habits.
And finally, some disclaimers and closing remarks:
Do not spend extra money just to hit a threshold for a reward on a credit card. Can’t stress this enough, people!
Do not charge anything you cannot pay off in full at the end of the month. No exceptions!
Do not open and close a bunch of cards at the same time. Wait at least 90 days between opening or closing any card.
Do not use a fee-based credit card unless the reward wildly offsets the cost of having the card. In some cases, it does. In most cases, it does not.
Please take the time to understand what each card offers. A lot of times, the benefits beyond the cash back can make a massive impact (like no foreign transaction fees, roadside assistance, travel insurance, etc.)
I hope you found this helpful! Once you’re more aware of what you’re using your money for, you’ll be able to really get a lot of value out of leveraging credit cards strategically. Please reach out to me if you’d like support in developing a credit strategy that fits your lifestyle.
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