You only use one credit card? How my multiple-card strategy can make you more money during Cyber Monday and the rest of the year

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It is not uncommon for married couples to fight about finances. In my case, the arguments are rarely about how much my wife and I spend, but rather which credit card she used.

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You see, I have a system. If the fee is for eating out, it has to go to a card that offers a 4% cash-back reward for that category. If it’s for groceries, it should go to another card with a 3% reward for supermarket spending. And if it’s for… you get the idea.

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In short, I am an award junkie. And yes, my wife thinks I’m crazy. (And she often disregards the “rules.”)

But I am not necessarily alone. Many of us try to maximize the cash-back dollars or points or miles we can earn through our credit-card use. After all, there’s money to be made — in my case, the annual reward is easily upwards of $500 — or the equivalent of flights, hotel stays, or merchandise and gift cards. This is especially true during the holidays when our spending naturally rises (Cyber ​​Monday is coming, after all).

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And that’s to say nothing of the fact that the card issuers are a fresh push Let us apply for new cards, with sign-up offers, as we continue to emerge from the darkest days of the pandemic – some of us overflowing with savings. Rewards are also becoming a bit more generous: a recent Wall Street Journal article noted that cash-back cards now cost an average of 1.11% per dollar, which is the highest mark since at least 2010. (Miles and points cards have also climbed to their highest figure — 1.2 miles, or per dollar spent — in more than a decade.)

So, what’s the best way to reap those rewards? I’ll tell you how I do things, and also share some tips from experts.

Don’t think about rewards if you don’t pay your bill in full every month: The key to any rewards strategy is to reap as much as possible, but that’s hard to achieve if you’re paying 16% in interest on your balance every month (and that’s just NS Average Rate of interest, according to Bankrate’s CreditCards.com site.) Similarly, if getting a rewards card is going to tempt you to charge you more, forget about it. “You definitely need to understand your spending habits before you get involved,” said Roger Tran, a certified financial planner at virtual advisory firm Face Wealth.

Find out if you’re a cash-back or miles/points person: There are two very different approaches when it comes to credit cards. If you love to travel, you’ll want to go the mile/point route, especially with a card associated with a preferred airline or hotel chain. But if you’re more of the stay-at-home type like me, cash-backs may be the way to go. In general, miles/points cards offer more bang for the buck – and The Points Guy website provides a useful (and regularly updated) guide cash equivalent value of miles and points. But cards also present their own challenges, especially in an age when airlines and hotels make it difficult to use miles and points to their maximum value. “We’ve seen a lot of devaluation,” said Ted Rossman, a senior industry analyst at CreditCards.com. Oh, and don’t forget: Many points/miles cards have an annual fee, so this should be considered when weighing their value.

You can benefit from having more than one card: You can mix-and-match cards to boost your potential rewards – as I mentioned with my strategy of using one card for restaurants, another for groceries, etc. With some cash-back cards, spend categories offering the highest rewards (say, 5%), from dining out to gym memberships, change quarterly. Or the card may require that you choose from a list of categories every three months. As a rule, I like to use a cash-back card that has a 2% reward—there are plenty that fit the bill for my daily spending, notes Rossman. Then, I sprinkle in others depending on what I’m buying. For that matter, it cannot be said that you cannot mix-and-match cash-back and miles/points cards as well.

Grab those bonuses: Your biggest advantage with credit-card rewards is often the front-end — namely, the sign-up bonus. Typically, these require spending a certain amount of money, such as $1,000, in the first three months to earn additional rewards. This means that if I have a new card with a bonus, it takes priority over the other cards in my wallet – at least until I hit the required spending mark. It’s also worth noting that you can double-dip your spouse by applying for a card. But there are reasons to be careful when applying for a new card. that brings me…

Warning: Experts warn that you can push the envelope too far in playing the prize and bonus games. They suggest going easy on those card offers, because Grabbing too much can hurt your credit score, “It’s one of the basic rules: Don’t apply too often for too much credit,” said Matt Schulz, chief industry analyst at LendingTree. Plus, card issuers often reject applications from people who keep applying – they’re wary of “churning out” as people like me are called (and trust me, I’ve had my share of rejections). found more).

Ultimately, there’s another risk: The more cards you have, the harder it is to manage them. I’ve learned that it helps if you set all your cards to automatic payments, but even so, I haven’t made the first payment on the new card because I was less than settled. I also agree that there are people who don’t want to spend a part of their life worrying about the extra percentage they get in rewards; People like my very sensible wife. Speaking of which, I have to remind her again which cards to use for our holiday shopping…

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