joelmeulenberg
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The short answer is the use the calculator tool at http://www.creditcardtuneup.com/ to determine the best rewards card(s) for your spending profile. For more details, read on...
Here are the strategies I suspect are most universally applicable.
Best Single Card
Because most people spend quite a bit on gas, groceries, and drugs (i.e. "EDP" (Every Day Purchases)) and there are several cards that offer 5%+ on EDP, usually a card that offers a 5%+ on EDP and 1%+ on non-EDP will be the single best card. Examples of such cards are the Driver's Edge (6% on EDP for the first year), AmEx Blue Cash (5% on EDP after $6500 YTD spending), and Citi Diamond Preferred Rewards (basically 5% (in ThankYou points) on EDP for first year).
Two-Card Strategy
For someone who's willing to manage two cards, usually the best card to supplement the 5%+ EDP card will be a card that pays 1.5%+ on *all purchases*. For example, the 1.5% Fidelity Visa card.
Three-Card Strategy
If you're willing to manage three cards, then the third card to add to your portfolio will depend on the categories in which you spend the most money. Well, really that's true for even the first and second cards, but the advice I've given up 'til now is *often* optimal, but not always -- it always depends on your spending profile.
Anyway, if you spend a lot at restaurants, then you'll probably want something like the Citi Professional card which pays 3% back at restaurants. If you spend a lot on utilities (and can do so through your credit card), then you might want to check out the Citi Home Rebate card (6% on utilities for the first 12 months). If you spend a lot on home improvement, the Chase Home Improvement Rewards card pays 3% back on home improvement. If you travel a lot, there are other good cards. If you spend a lot on office supplies, other choices. If you spend a lot on internet/web/advertising, still other options. And the list goes on.
Optimal N-Card Strategy
Figuring out the optimal 1 card, 2 cards, 3 cards, etc. for your spending profile actually requires a lot of research and math. The calculator tool at "Credit Card Tune-Up: Maximize Your Cash Back Rewards" ( http://www.creditcardtuneup.com/ ) will do the number crunching for you. It'll estimate your earnings from the best 1 card, best 2 cards, best 3 cards, etc. Then you can decide on the "sweet spot" for the rewards/hassle tradeoff. |
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