My husband sometimes has to double check with me to make sure he’s using the right credit card before putting gas in the car, because we have specific cards that we use in different situations. It might seem a little complicated at times, as there are four credit card bills to pay each month, plus a debit card that has to be used on a regular basis. But it’s actually pretty easy to stay on top of, especially with online bill pay and statements.
Basically, we’re always making sure that we maximize our credit card rewards. None of our cards have any annual fees, and we always pay our bills in full each month, so we never pay interest on any of the cards (If you aren’t in a position to be able to do that, credit cards in general are probably not a good idea – the rewards are only worthwhile if you’re not paying interest on the purchases you make).
But assuming that you pay off your credit card or cards each month, are you also making sure that you’re using a card that gives you good rewards? Some people like cash or gift cards, some like do-dads, some like airline miles… there are tons of options out there, you just have to make sure that you’ve shopped around to find the ones that work for you.
For our family, our primary card is a Fidelity American Express. We set up a Fidelity IRA a few years ago, and we get a reward that amounts to 2% of everything we spend on that card. It’s automatically deposited into the IRA every time the bonus amount reaches $50. It’s a pretty easy way to add to our retirement savings.
We have another AmEx from Costco (it doubles as our Costco membership card). It pays us 3% cash back on gasoline and dining out, so that’s the card we use any time we fill up the car or eat out. We eat out very rarely, but we do have to fill our gas tank every few weeks, and the extra cash back adds up.
In addition to the two AmEx cards, we have a Visa that we use as a backup card for places that don’t take AmEx. We carry very little cash, so we like to make sure that we have a universally-accepted card on hand too.
We also have a debit card that’s linked to our credit union checking account. The account pays 2% interest on our balance, as long as we make 10 debit card purchases each month. In order to maximize the rewards on the other cards, we only use the debit card for small purchases – usually less than $5. I check the account online throughout the month so that I can keep track of how many purchases we’ve made, and I’ve even been known to divide up a purchase into two separate transactions if we’re getting close to the end of the month and haven’t made ten debit card purchases yet. At first, this seemed like a chore, but we’ve been doing it for four years now and we love the fact that our credit union pays interest on our checking account (our old bank did not). So it’s worth it.
And last but not least, we also have a credit card for our business. Most of the purchases on that card are automatic transactions that go through every month to keep our business up and running. We almost never have to use that card in person, but it’s there if we need it. And we get gift cards to Home Depot or Lowes every time we accumulate 2500 points on that account.
If you don’t already have a great rewards card, start shopping around to find one! As much as we love our cash-back style rewards, I have several friends who swear by their airline miles cards, and my in-laws recently took a trip to Europe using their credit card reward miles. If you’d prefer a card that gives you travel rewards, Nerdwallet has put together a good list of credit cards with sweet sign-up bonuses and rewards that can be redeemed for hotel stays and airline miles. It’s a great place to start if you’re looking for a new card with good rewards.
What’s your favorite rewards credit card? If you have a tip for the rest of us, please share!
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