How to Maximize Credit Card Rewards
Updated: Jun 3, 2023
*Not financial advice - your money, your choice*
Some vocabulary to know before we start:
Credit Limit/Credit Line: This is the amount that you can spend on a particular card. For example, if the credit limit is $1,000, you can only make $1,000 in purchases (the $1,001st dollar will decline).
Annual Fee: An annual fee is exactly what it sounds like. You pay each year that you have the card open. Sometimes the annual fee is waived for the first year but not all credit card issuers do that. Fees can range from $30 to $700 but not all credit cards have an annual fee.
Grace Period: This is the amount of time from your statement date that you have to pay off your card (usually about 3 weeks). If you pay off your card in full during the grace period you will owe no interest. Do this always. This essentially turns your credit card into a free short-term loan.
Annual Percentage Rate (APR): This is the interest rate you’ll pay if you don’t pay off your balance in full during the grace period. Most APY rates are around 20% for credit cards right now and credit card interest usually compounds daily (makes for a fast-growing debt snowball).
Variable Interest Rate: Some credit cards have variable interest rates which means that the interest you pay on credit card debt changes based on what is happening in the economy and what the Federal Reserve Bank does to raise or lower the Federal Funds Rate.
Chart from fred.stlouisfed.org
So, you're here because you wish there were a way of optimizing credit card use and points so you don’t have to have 30 cards? Good news, there's a great way that requires only two cards.
The first of the two is the Chase Sapphire Reserve. This card is for those who love to travel and dine out (in comfort). You’ll earn…
5x points on travel purchased through the Chase Travel portal
10x points on hotel reservations and car rentals through the Chase Travel portal
3x points on dining and other travel purchases
1x points on everything else
$300 travel credit
This brings the effective annual fee down to $250!
Access to 1,300+ airport lounges worldwide through Priority Pass
Reimbursement for Global Entry, TSA Pre-check, or Nexus up to $100 every 4 years
Plus, when you redeem your Chase points through the Chase Ultimate Rewards portal, they’re worth 50% more! That’s like getting 50% off on your vacation bookings. Who doesn't love a deal?
The second of the two is the Fidelity Rewards Visa Signature Card. This is a must for those who want plain and simple cash back. You’ll get…
2% cash back on everything you buy - no categories, no hassle.
Your rewards can be deposited directly into your Fidelity investment account helping you build wealth while you spend!
If you’d prefer to optimize your system for Chase Ultimate Reward points, take a look at the Chase Freedom Unlimited card. In addition to what the Chase Sapphire Reserve gets you, from the Chase Freedom Unlimited you’ll also…
Earn 3% back at Pharmacies/Drug Stores
1.5% back everywhere else
PLUS you get the 50% multiplier if you convert that cash back to Ultimate Rewards points so that 1.5% > 2.25% and 3% > 4.5%
If you prefer the American Express ecosystem (and are okay with 3 cards instead of 2) then you can pair the American Express Gold Card and the American Express Platinum card for benefits similar to what the Chase Sapphire Reserve offers.
The American Express Gold Card (referral link gets you 15k more points than the conventional offer but also be sure to check your offer from CardMatch) is perfect for Foodies who want to earn rewards while enjoying their favorite restaurants and grocery stores. You’ll earn…
4x points on dining, takeout, and delivery
4x points on groceries at US supermarkets (no Costco, Sams Club, etc)
Up to $25k/yr
3x points on flights booked directly with airlines or on AmexTravel.com
1x on everything else
$120 per year in Uber Cash ($10/month)
$120 per year in GrubHub Credits ($10/month)
Shows up as a statement credit
Annual Fee: $250
Because The Points Guy (TPG) values AMEX points at 2 cents per point (same value as Chase Ultimate Rewards points btw), this is like getting 8% back on your dining, takeout, delivery, and grocery purchases, 6% back on travel, 2% back on everything else, plus that $240 in Uber/Grubhub.
The American Express Platinum (Resy offer will get you 20k more points than my referral link) is a luxury card with some great benefits. If you do decide to get this card, the CardMatch tool may have an offer that is 25-50k points more than the Resy offer above. My personal favorite is the Clear Credit which lets me skip lines at most airports in the US; a membership I’ll hold onto it even if I close/downgrade this card. The whole package offers…
5x points on flights booked directly with airlines or through the AMEX Travel Portal
5x points on hotels and car rentals through the AMEX Travel Portal
$189 Annual Clear Credit (skip the line at the airport)
$200 per year in Uber Cash
$200 hotel credit for the Fine Hotels and Resorts collection (1-night min) and The Hotel Collection (2-night min)
$100 resort credit to be spent at a Fine Hotels and Resorts collection or The Hotel Collection hotels
$100 for TSA Pre-check or Global Entry every 4 years (renewal period for those programs)
Access to 1,300+ Priority Pass Lounges globally
Access to all The Centurion Lounge locations
Elite status with major hotel chains
Elite levels with car rental companies (skip the lines)
Annual Fee: $695
There you have it! The optimal credit 2-3 card strategy with minimal effort. With these cards, you’ll be earning rewards like a pro without the headache of managing a dozen cards and having to keep track of opening and closing, and using each one. Who knows? Maybe you’ll rack up enough points to book that dream vacation, build up your investment portfolio, and enjoy a fancy meal or two along the way.
Remember to always use your credit cards responsibly (ideally like a debit card) and to only spend what you can afford.
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