Maximize! my credit card spend
September 26, 2014 3:35 PM Subscribe
I have three credit cards, and this is probably one too many. Help me figure out how to manage my credit card spend and maximize rewards.
(This question isn't about managing debt, as I pay off all my credit cards completely every month.)
I have three credit cards:
- Chase United Mileage Plus
- Citibank Thank You Card
- Fidelity Investment Rewards Visa
My question is around how do I manage my spend on these three credit cards? I don't really want to close any of them since they are all relatively new and don't want the hit to my credit score.
If it was up to me, I'd probably close my Chase United Mileage Plus since it has a $95 annual fee ($75 of this is reimbursable through work), but it has the highest credit limit and I'm about 10,000 miles away from getting roundtrip tickets.
I love the idea of the Fidelity Investment Rewards Visa since I get back 2% and can use that to directly fund my Roth IRA with Fidelity. This is my newest card, I don't really use it very much yet since I'm still in the habit of putting everything on the United card.
I barely use the Citibank Thank You Card (except for my recurring MeFi subscription!) nowadays, but it is my oldest card, and I loved it when I could buy things from Amazon with the points.
How do I figure this out? What do the rest of you do with more than one credit card?
(This question isn't about managing debt, as I pay off all my credit cards completely every month.)
I have three credit cards:
- Chase United Mileage Plus
- Citibank Thank You Card
- Fidelity Investment Rewards Visa
My question is around how do I manage my spend on these three credit cards? I don't really want to close any of them since they are all relatively new and don't want the hit to my credit score.
If it was up to me, I'd probably close my Chase United Mileage Plus since it has a $95 annual fee ($75 of this is reimbursable through work), but it has the highest credit limit and I'm about 10,000 miles away from getting roundtrip tickets.
I love the idea of the Fidelity Investment Rewards Visa since I get back 2% and can use that to directly fund my Roth IRA with Fidelity. This is my newest card, I don't really use it very much yet since I'm still in the habit of putting everything on the United card.
I barely use the Citibank Thank You Card (except for my recurring MeFi subscription!) nowadays, but it is my oldest card, and I loved it when I could buy things from Amazon with the points.
How do I figure this out? What do the rest of you do with more than one credit card?
Best answer: I've got one that gives decent rewards on everything for most spending, and another one that I use in situations where it gives rewards that are higher than my other card (3% on restaurants and travel) and a third that I don't actually carry but has all my recurring stuff (power, cable, cell, internet, electric, etc.) on it.
In your case, I'd use the mileage card for all your recurring bills and the Fidelity for everything else. That way you'll eventually get to the roundtrip tickets, but you'll also steadily be building your retirement fund.
In my experience, Citi won't close your account until you haven't used it for YEARS so just throw a charge on it once every couple years and otherwise don't use that one.
posted by rabbitrabbit at 3:44 PM on September 26, 2014 [2 favorites]
In your case, I'd use the mileage card for all your recurring bills and the Fidelity for everything else. That way you'll eventually get to the roundtrip tickets, but you'll also steadily be building your retirement fund.
In my experience, Citi won't close your account until you haven't used it for YEARS so just throw a charge on it once every couple years and otherwise don't use that one.
posted by rabbitrabbit at 3:44 PM on September 26, 2014 [2 favorites]
What do the rest of you do with more than one credit card?
I have 3 no-fee cards: one main card (best cashback, adequate limit), one backup card that I keep a low recurring bill on to keep it active (1% cashback, high limit, longest credit history by far), and one card just for travelling (zero foreign exchange fees instead of the usual 2.5%, low limit, 1% cashback). My main card got compromised recently so it was vital to have the backup card for the few weeks until I got a new card shipped. I hear they cancel cards if you don't use them often enough, so I'll probably either put another low recurring bill on my travel card, let it die, or make a note to use it once in a while.
I wouldn't keep any card with an annual fee unless it has enough extra rewards with your expected spending level to justify it over a no-fee rewards card (and in that case I'd use it for everything). Whether your Chase card meets that standard or not, I can't say.
If your rewards usually take a long time to build up enough to "cash out", I'd be wary of splitting your purchases too much between different cards, since you might never get to claim those great rewards if it takes you too long to get there - your card could get cancelled, the company could change the rewards structure, you could switch to a better rewards card, etc etc.
posted by randomnity at 4:06 PM on September 26, 2014
I have 3 no-fee cards: one main card (best cashback, adequate limit), one backup card that I keep a low recurring bill on to keep it active (1% cashback, high limit, longest credit history by far), and one card just for travelling (zero foreign exchange fees instead of the usual 2.5%, low limit, 1% cashback). My main card got compromised recently so it was vital to have the backup card for the few weeks until I got a new card shipped. I hear they cancel cards if you don't use them often enough, so I'll probably either put another low recurring bill on my travel card, let it die, or make a note to use it once in a while.
I wouldn't keep any card with an annual fee unless it has enough extra rewards with your expected spending level to justify it over a no-fee rewards card (and in that case I'd use it for everything). Whether your Chase card meets that standard or not, I can't say.
If your rewards usually take a long time to build up enough to "cash out", I'd be wary of splitting your purchases too much between different cards, since you might never get to claim those great rewards if it takes you too long to get there - your card could get cancelled, the company could change the rewards structure, you could switch to a better rewards card, etc etc.
posted by randomnity at 4:06 PM on September 26, 2014
We tend to shift our spending around depending on: a) which card gives us the most points for a specific purchase, and b) which card's type of rewards is most appealing to us at that point in time. So, if you're really hot to earn those free tickets on United, put most of your purchases on that card until you get the tickets. Then perhaps you're feeling an urge to build up your IRA, prompting you to use Fidelity card. The only other consideration is that, when making a really large purchase, I may use whichever card is furthest from the closing date so I have maximum time to corral the money I'll need to pay the balance.
posted by DrGail at 4:08 PM on September 26, 2014 [2 favorites]
posted by DrGail at 4:08 PM on September 26, 2014 [2 favorites]
One useful point about the United card is that earning miles on it counts as "account activity" as far as keeping your miles from expiring. So even if you don't fly that much, I would probably keep using that at least until you get the miles for a free ticket and then book that ticket.
But I think basically you want to pick one card that has rewards you really like, and put the bulk of your spending on that. Unless you're such a big spender that you run into caps the card companies have on rewards you earn in which case I guess max one out, then the next and so on. I also like the idea of having a card which is never used in the wild, only used for recurring payments.
posted by ktkt at 4:24 PM on September 26, 2014
But I think basically you want to pick one card that has rewards you really like, and put the bulk of your spending on that. Unless you're such a big spender that you run into caps the card companies have on rewards you earn in which case I guess max one out, then the next and so on. I also like the idea of having a card which is never used in the wild, only used for recurring payments.
posted by ktkt at 4:24 PM on September 26, 2014
Best answer: I would encourage you to stop mentally associating points with emotions/ideas, and start associating them with dollar value. That will make your decision a lot easier.
posted by acidic at 4:38 PM on September 26, 2014 [1 favorite]
posted by acidic at 4:38 PM on September 26, 2014 [1 favorite]
From what I've read, four is actually the optimal number of cards to have to maximize your credit score. So don't close any of them.
If you decide not to use one or more for regular spending, set it up to autopay some minor monthly bill (e.g. Netflix, Hulu, etc.) and then set it up to be autopaid in full every month. That way that card will report your utilization every month as greater than 0% but less than 10%, which will also boost your credit score.
posted by Jacqueline at 5:26 PM on September 26, 2014 [1 favorite]
If you decide not to use one or more for regular spending, set it up to autopay some minor monthly bill (e.g. Netflix, Hulu, etc.) and then set it up to be autopaid in full every month. That way that card will report your utilization every month as greater than 0% but less than 10%, which will also boost your credit score.
posted by Jacqueline at 5:26 PM on September 26, 2014 [1 favorite]
Best answer: Assuming you have already met the minimum spend requirement, the Fidelity card effectively gives 2% cash back on all your purchases. This is better than most uses of Citi Thank You Points, UNLESS you are talking about spending in a category that gets you 5x points. It's been a while since I've used my own Citi Thank You card -- the math usually doesn't work out for me.
Regarding the United card, if you're not aiming for a particular redemption reward (or saving up for one), or you're not planning on needing extra spend to hit the 10k miles for $25k spend annually, then I'd keep the card in your wallet.
Unless you're planning on redeeming for overseas travel, the flat 2% cash back will likely exceed the value of the United miles to you. Do the math on your planned United redemption; if the value of the flight to you -- AFTER FEES -- is less than $0.02 per mile, you're better off keeping your spend on the Fidelity card.
And I wouldn't worry about having the "unused" card in your wallet, or tucked away someplace. It takes a lot of inactivity for Chase or Citi to close a line, and having the multiple lines opened (and unused) helps your credit.
posted by QuantumMeruit at 6:09 PM on September 26, 2014
Regarding the United card, if you're not aiming for a particular redemption reward (or saving up for one), or you're not planning on needing extra spend to hit the 10k miles for $25k spend annually, then I'd keep the card in your wallet.
Unless you're planning on redeeming for overseas travel, the flat 2% cash back will likely exceed the value of the United miles to you. Do the math on your planned United redemption; if the value of the flight to you -- AFTER FEES -- is less than $0.02 per mile, you're better off keeping your spend on the Fidelity card.
And I wouldn't worry about having the "unused" card in your wallet, or tucked away someplace. It takes a lot of inactivity for Chase or Citi to close a line, and having the multiple lines opened (and unused) helps your credit.
posted by QuantumMeruit at 6:09 PM on September 26, 2014
I have a few (5) credit cards because I really like rebates. My choices are strategic based on where I shop the most and what % back I get. For example, I recommend...
Chase Amazon Visa: the greatest card ever for me. 3% off Amazon purchases plus a bunch of other stuff, 2-3% off dining, 1% on everything else, etc. This card is phenom because I buy a lot of stuff through Amazon so it's my main squeeze.
Target: immediate 5% back at every check out! So wonderful! Target is my Disneyland! What I can't get on Amazon I get here. Perfect match.
Discover: Next logical choice for me because of its rebate rotations. 5% back on gas, restaurants, movies, etc throughout the year. Easy to switch to as needed for key routine purchases.
Then I have one card that gets me 6% on groceries. This one is somewhat obnoxious in terms of when rebates are given, but still... I buy a lot of groceries, so I get a lot of money back at the end of the year.
Start thinking strategically. If you can play the game, which for me is maintaining a spreadsheet of what card is earning me $$ for each purchase, you can have many credit cards and really rock the $$ back. I say look for other credit cards to maximize your % back because right now you're getting pretty low returns when you could be getting 3-5% back on most purchases.
posted by Hermione Granger at 6:23 PM on September 26, 2014
Chase Amazon Visa: the greatest card ever for me. 3% off Amazon purchases plus a bunch of other stuff, 2-3% off dining, 1% on everything else, etc. This card is phenom because I buy a lot of stuff through Amazon so it's my main squeeze.
Target: immediate 5% back at every check out! So wonderful! Target is my Disneyland! What I can't get on Amazon I get here. Perfect match.
Discover: Next logical choice for me because of its rebate rotations. 5% back on gas, restaurants, movies, etc throughout the year. Easy to switch to as needed for key routine purchases.
Then I have one card that gets me 6% on groceries. This one is somewhat obnoxious in terms of when rebates are given, but still... I buy a lot of groceries, so I get a lot of money back at the end of the year.
Start thinking strategically. If you can play the game, which for me is maintaining a spreadsheet of what card is earning me $$ for each purchase, you can have many credit cards and really rock the $$ back. I say look for other credit cards to maximize your % back because right now you're getting pretty low returns when you could be getting 3-5% back on most purchases.
posted by Hermione Granger at 6:23 PM on September 26, 2014
Best answer: For the United card, assuming you fly at least once a year and check a bag, the annual fee pays for itself and then some with the free checked bag, especially in your case where your company pays $75 of the fee. I suspect that is the reason why they reimburse you, since it saves them money when they fly you somewhere.
Most of the other "Rewards" cards are going to pay you back about 1-2% on everything. Some have more for certain things but they are usually capped in their total (as seen in some examples above). The problem with quantifying the United card rebate is your rewards are variable. The reward value is based on a random time based cash value of the fights you redeem your points for. In my case, the cost of an advance ticket from my current city to my home town is $1000-1200, which is higher than most flights. On short notice the price goes up to $1800-2400. With United miles, that flight could be 25k miles with the saver pass, which I have often gotten next day or with a few days notice. That is spending $25,000 to get those points. Since you still have to pay some fees, assume I would save $2,000 by using my miles, that is 8% cash value back to me. If you spend $25,000 in a calendar year on the card, you get a 10,000 mile bonus, which brings the "cost" of your 25k mile to under $18,000. That would bring the cash value of my flights to 11%. To get that same flight with a CapitalOne card, I would have to spend over $200k.
For a $1,000 flight, the cash value would be 4% (or 5.6% with the yearly bonus). A $500 flight would bring you down to 2%, which for you might be better to use your Fidelity card. This is probably a more realistic number for the average flyer within the US. In my case, I wouldn't use miles if I could buy the ticket for less than $1,000 as I would be potentially wasting $500-$1000 if I need to fly back to the homeland in a hurry. For you, I would look at what flights you would consider trading your miles in for, and how much they would realistically cost you out of pocket to calculate what percentage you get back.
As someone else mentioned, having periodic purchases with the United card keeps your United miles alive as it resets the clock on their expiry. Also, United has recently changed the way it allocates miles for actual flights, following many other airlines. Instead of awarding miles based on flight length as traditionally done, they will be awarding based on ticket cost. So if your flights are mostly discounted tickets from travel sites, the regular miles will become more valuable for traditional frequent flyers as they will be harder to earn.
posted by Yorrick at 10:45 PM on September 26, 2014 [1 favorite]
Most of the other "Rewards" cards are going to pay you back about 1-2% on everything. Some have more for certain things but they are usually capped in their total (as seen in some examples above). The problem with quantifying the United card rebate is your rewards are variable. The reward value is based on a random time based cash value of the fights you redeem your points for. In my case, the cost of an advance ticket from my current city to my home town is $1000-1200, which is higher than most flights. On short notice the price goes up to $1800-2400. With United miles, that flight could be 25k miles with the saver pass, which I have often gotten next day or with a few days notice. That is spending $25,000 to get those points. Since you still have to pay some fees, assume I would save $2,000 by using my miles, that is 8% cash value back to me. If you spend $25,000 in a calendar year on the card, you get a 10,000 mile bonus, which brings the "cost" of your 25k mile to under $18,000. That would bring the cash value of my flights to 11%. To get that same flight with a CapitalOne card, I would have to spend over $200k.
For a $1,000 flight, the cash value would be 4% (or 5.6% with the yearly bonus). A $500 flight would bring you down to 2%, which for you might be better to use your Fidelity card. This is probably a more realistic number for the average flyer within the US. In my case, I wouldn't use miles if I could buy the ticket for less than $1,000 as I would be potentially wasting $500-$1000 if I need to fly back to the homeland in a hurry. For you, I would look at what flights you would consider trading your miles in for, and how much they would realistically cost you out of pocket to calculate what percentage you get back.
As someone else mentioned, having periodic purchases with the United card keeps your United miles alive as it resets the clock on their expiry. Also, United has recently changed the way it allocates miles for actual flights, following many other airlines. Instead of awarding miles based on flight length as traditionally done, they will be awarding based on ticket cost. So if your flights are mostly discounted tickets from travel sites, the regular miles will become more valuable for traditional frequent flyers as they will be harder to earn.
posted by Yorrick at 10:45 PM on September 26, 2014 [1 favorite]
Check with your card, that 2% cash back may have a cap on the amount reimbursed. Mine is $250 per year I believe.
posted by St. Peepsburg at 4:37 PM on September 27, 2014
posted by St. Peepsburg at 4:37 PM on September 27, 2014
This thread is closed to new comments.
I think keeping a third hot is a good idea, because when you're out in the world and that non-recurring card gets skimmed, you still have a working card. So keep the CitiBank for things like low-value web sites and as your backup card, and use one of the other ones for recurring bills, and the other for regular purchases.
posted by straw at 3:42 PM on September 26, 2014 [1 favorite]