You’re (And I Was) Overthinking Your Credit Card Strategy

Now is the time of year where people write about credit card strategies. I’ve done this in the past, but in 2013 I had an epiphany about credit cards, and I realized I’m juggling way too many for very little benefit (or the benefits I was getting were silently costing me money). Yes – feel free to get credit cards for their bonuses and then cancel after 11 months. That’s not what I’m talking about here. This is my strategy for everyday spending.

Here’s my foolproof, so-easy-your-spouse-won’t-hate-you credit card strategy:

1) Ask yourself these 2 questions:
– Do I primarily redeem my miles/points for international business class travel?
– Do I primarily redeem my points at Starwood properties?

If the answer to either of those questions is yes, then you should get the Starwood Preferred Amex and use that for your everyday spend.

2) If the answer to those questions is no, then you should get a cash back card. You have 2 options here: If you ever travel anywhere, then I recommend the Barclays Arrival since it pays 2.2% cash back towards travel, though you’re paying an annual fee. If you really don’t travel, get the Fidelity Amex – it’s 2% cash back with no annual fee, but the money sits in a Fidelity account which, unless you have it in a money market, isn’t particularly liquid. I like the idea of using the cash back toward travel so I put all my spend on the Barclays Arrival.

I also get the Amex Blue Cash Preferred because it earns 6% cash back (up to $6500 spend) at grocery stores and 3% cash back at gas stations. That seems like easy money.

That’s it. Simple, right?

If you want to get one level more complicated, and I would really only recommend this if you’ve gone the Amex SPG route above, get the Chase Ink Bold and set it up for autopay for your cellphone, cable and Internet. The 5X Ultimate Rewards points will cover the cost of the annual fee – and you don’t even have to carry the card anywhere with you. Then you can get the NO FEE Chase Sapphire card (NOT the Chase Sapphire Preferred card). That card will earn 2X points at restaurants (so you’ll just use it at restaurants) and because you have the Ink card, you’ll earn them as Ultimate Rewards points. You don’t need to pay the annual fee on a Chase Sapphire Preferred card if you have the Ink Bold – use that no-fee Chase Sapphire card.

Now THAT’S it. Is this 100% perfect for everyone? No. But it’s probably the right call for 90-95% of people. If you’re a heavy United flyer and you want lounge access, perhaps getting the MileagePlus Club card would make sense for you. But I don’t think it’s worth, for example, getting the Amex Premier Rewards Gold and spending $30,000 to earn 15,000 extra Membership Rewards points. That $30,000 spend would earn you $660 cash back – I’d rather have that than 15,000 MR points.

If you fly Delta and you want lounge access, getting the Amex Platinum card may make sense since you’ll get $200 in airline credit to offset the $450 annual fee, which means lounge access is basically costing you $250, which seems pretty reasonable.

But like I said, the strategy above will serve most people well, and will remove most of the complexity from this operation. Plus, all those annual fees start to add up quietly — once you start to look at the true cost of paying fees on a whole bunch of cards, I’m not sure the benefits outweigh the costs of my simple Cash Back or SPG strategy.

Happy New Year.

(I didn’t bother linking to all those cards – you can find my links if you’re so inclined on the Best Credit Card Offers page.)


  1. Nice piece. I’d take the arguement a step further and add in a piece about everyday spending threshold – say if your annual everyday spend isn’t above something like $40k then just get the Arrival. You’re not able to earn enough UR/MR/Starwood points with $40k everyday spend to make a huge difference in your points portfolio (assuming you’re getting signup bonuses).

  2. Excellent advice, but I don’t think the Blue Cash Preferred has a bonus for drug stores, and the grocery store limit is $6,000. Perhaps you were still thinking about the old Blue Cash card that you also wrote about?

    • My bad, I meant gas stations (I updated the post). Thanks!

      • I only noticed because I have the Blue Cash Preferred and just maxed it out for 2013, but now I’m going to have to consider swapping to the older one. My drugstore spending increased significantly last year. Or maybe I’m just one of the people who is overthinking all of this. Thanks.

  3. You make some good points, but I have to disagree with you on the Amex Premier Rewards Gold card. While I would also rather have $660 than 15,000 MR points, you need to compare apples to apples. The $30,000 spend that generates $660 on the Barclays Arrival card would produce a lot more than 15,000 MR points. My $30,000 in spending last year on the Amex PRG generated over 75,000 MR points (a lot of airfare, gas and groceries). And I’d take that over $660 anytime, even with the ~$85 higher annual fee.

  4. The new GM Flexible Earnings Rewards card is also noteworthy if you’re saving up for a brand-new GM/Cadillac/GMC/Buick/Chevy. 5% cash back on first $5000 in purchases a year and then 2% after that + no annual fee. You can even use redemptions for a brand-new Cadillac.

    Spreading the goodwill.