THE GAME
So what is the credit card rewards game? To me, the game is navigating the field of seemingly endless credit card products, matching a set of cards (or maybe just a single card) to both your goals and spending habits. From there, optimize, optimize, optimize to squeeze every last penny of reward out of your credit card purchases.
CAVEAT
The one caveat I would offer up is that to the degree the credit card rewards game makes sense, it never does unless you pay off your monthly balance in full. If that’s not currently your financial situation or your not disciplined with your spending and paying off your cards, you’ll never come out ahead playing this game. Stop before you start.
WHAT IS YOUR END GAME?
Your strategy in this game will be driven by your end game. Basically the question comes down to whether you’re interested in points or cash back? Points might be in the form of airline miles on the airline program of your choice, or hotel points at your favorite chain, or credit card points with the issuer, like American Express or Chase. Cash back is much simpler. Cash back cards will, as the name suggests give you some percentage of spend back to you in cash. Income will be a factor here. If you don’t have discretionary dollars to spend on travel, then you’re likely going to be much better off with a cash back card. It will also be difficult to get meaningful reward points to do anything with if you have a sub optimal spend every month. Conversely, with enough discretionary spending, it might make sense to have a credit card portfolio that includes both reward points, and cash back options.
Until I started making significantly over 100k per year, I basically had two cards: The AmEx business Delta Gold, and the old Chase Premier Marriott Rewards Visa. It was simply set up, and got me rewards on the airline I most often flew on, and the hotel chain I most often used. I had the Chase Marriott card for a LOT of years – long enough to qualify for Lifetime Gold Status with Marriott. I eventually product changed (that’s when you change from one credit card offered by your provider – AmEx in this case, to another card) away from the Business Delta Gold card, as it got increasingly less valuable over the years.
Probably the next card I added to my wallet was the Amazon Prime Chase Visa. It came out in 2017 and I believe I was one of the first in line to get one. It’s one of those cards that is probably going to be useful for a large segment of the population. It’s essentially a cash back card, but the cash can only be spent at Amazon. 5% back on all Amazon and Whole Foods market purchases. And technically speaking, it doesn’t have a annual fee, but of course you have to be an Amazon prime member to be able to get the card so you have the Amazon prime annual fee so I sort of lump it all in together. But I spent enough on Amazon that I get back the Amazon prime fee using the card and then some.
In 2019 I added a fourth card to my wallet when Apple launched the Apple Card MasterCard. Why? Partly because I’m just a huge Apple nerd and have pretty much every Apple product that Apple manufacturers with the notable exception of the Apple Watch. And partly because it really did allow me to get rewards, albeit cash back rewards, optimized in a rather high spend segment for me. And it’s been pretty easy to justify keeping because it doesn’t have an annual fee, And allows me to get 0% financing on my big ticket Apple purchases. Once offered, I added the Apple savings account and have really done quite well with it. Since its inception, the Apple Savings account has been one of the highest yield savings account available on the market.
In 2023 is when I really committed to playing the game hard core. I really wanted to travel and I wanted status when I traveled. When you reach this stage in the credit card rewards game, you really have to decide which ecosystem you want to be in – AmEx, Chase, Citibank, etc. In my situation, American Express made the most sense. I already had a relationship with them for years. I first signed up for the Gold Card, getting a strong sign on bonus. Shortly after I picked up the Platinum Card with another very strong sign up bonus. To complete my “trifecta” for earning AmEx points, I product changed my old American Express Delta Business Gold to the American Express Business Blue. It’s a great utility player that can help fill in points earnings gaps in both the Platinum and the Gold card. You basically get 2X membership reward points on everything that you purchase up to $50,000 of spend annually. The AmEx Platinum Card really isn’t a card you’ll use much on a daily basis because it’s only 1X points on pretty much everything but travel related purchases. The Gold Card has one of the best point multipliers in the industry for restaurant and grocery purchases – 4x restaurants and delivery, and 4x on groceries up to $25k per year. So the AmEx Business Blue basically lets you get 2x on everything else. Granted, depending on the spending category 2x may not be the optimal choice for that category. But 2x isn’t bad at all. Particularly if you don’t want to get a “specialty” card to optimize you’re spending. For example, you could easily use the Business Blue as your gas card. Will you get as much return on your spend and rewards as you would if you had a branded gas card for the station you use most? No. But by using the Business Blue, you are getting a nice reward and it’s helping to consolidate your spending to accumulate more AmEx points.
Honestly? With the above portfolio of six credit cards, I really should be more than covered. It’s a nice combination of reward point accumulation in broad spending categories, and optimized cash back in specific high spend categories. And I never have to worry about not having an acceptable credit card given that I have a mix of AmEx, Visa, and MasterCard. And yet… I find myself having two additional Reward credit cards in my wallet, each with a significant annual fee. At this point, I’ll have to give the advice of do as I say not as I do.
STATUS CHASING
Another reason to play the credit card rewards game is to obtain status that would be difficult to impossible to obtain otherwise. The Platinum Card is a perfect example. I only use that card for purchases, maybe four times a year. The real reason I have that card is because of the status provides. Access to Centurion lounges in airports. Car rental status. That sort of thing. I previously mentioned that I had lifetime gold status with Marriott Bonvoy. But looking at my account, I realized that if I could obtain six more years of Platinum status, then I would bump up to lifetime Platinum. But in recent years, Marriott has made it more difficult than it used to be to obtain platinum status in any one year. I simply don’t travel enough to get anywhere close. Which is why I got the Marriott Bonvoy Brilliant American Express card. Yes, it has an annual fee of $650 but it gives me the Marriott Platinum Elite status I need to hold onto for the next six years to bump up to lifetime. It would cost me much much more than $650 a year to try to “organically” hit Platinum status every year through hotel stays at Marriott properties. So for me, in my particular situation and goals, it makes sense to carry this card.
Then There’s the Chase Ritz Carlton card. Why do I have this card? Well, I was already paying an annual fee on the Chase Marriott card that I had for years and the only real benefit I was getting from it was a pretty minimal free night credit on Marriott properties. The Ritz Carlton card has a significantly higher $450 annual fee, BUT It does pay for itself. You get a $300 annual travel credit which can be used for pretty much everything travel related – because Chase is very liberal with this credit I have no problem using it. And you get a substantial 85,000 free night award up to 85,000 Marriott points which is worth at least $300 a year. And the card gets you, Chase Sapphire, lounge access. This card has a ton of really cool benefits, and I could probably write an entire article of this card. It’s probably my favorite card in my wallet. And part of the “cool” factor comes from the fact that this card is no longer open to new applicants so it’s very exclusive. The only way that you can get it is by doing a product change on another Chase card that has a credit limit of $10,000 or more, and that you’ve had for one year or longer – which my old Chase Marriott card qualified for on both counts.
THE COSTCO FACTOR
Over the last couple of years, I’ve pretty much shifted about 75% of our grocery shopping, and about 90% of my gas purchases to Costco. And that throws a big kink in my reward strategy because Costco doesn’t take American Express. Or MasterCard for that matter. They only accept Visa. Which is another big reason why I hang onto my Chase Ritz-Carlton card. If I used my Chase Amazon Prime I would only get 1x points, whereas I get 2X points with my Ritz Carlton Visa. The obvious question here is why not just get the Costco Visa card? The easy answer is I don’t like the Costco card. It has a great cashback on Costco gas at 5%. But the rest of the spending categories and associated rewards are pretty anemic. Worst of all? The cash back redemption is provided one time annually as a reward certificate in your February billing statement redeemable for cash or merchandise at US Costco warehouses. That’s a pretty inflexible reward and I’ll trade a point or two of cashback redemption for the flexibility of being able to accumulate more Marriott Bonvoy points.
UPCOMING CHANGES
In some cases, you will get credit cards and not be certain as to how long you will keep them – particularly when they have significant annual fees. As I review my credit card portfolio, I’m pretty well convinced that I’m going to downgrade my Amex Gold Card. When I do the cost benefit analysis of the “coupon book“ of benefits of this card, they simply don’t measure up to the recently increased annual fee of $325. My AmEx Brilliant gives me 3x Marriott points on food, and I can get 2x AmEx points with my Business Blue. 4x on food is nice…But not enough to justify keeping the card. So outside of AmEx, giving me a good retention offer, I will product change away to a no annual fee option. That will help me with the following annual fee cards in my portfolio:
- American Express platinum card – $695
- American Express Bonvoy Brilliant card – $650
- Chase Ritz Carlton Card – $450
TOTAL ANNUAL FEES: $1795
Ouch. That’s a big total spend on credit card annual fees. But believe it or not, the value I get from the above 3 cards does indeed outweigh the annual fees I’m paying. And when you’re considering any annual fee card, it’s important to determine if the value you get from the card outweighs the annual fee:
Note that each of these cards provides more benefits than what I’m listing. But for the most part I’m only counting benefits that I use and therefore receive actual value. Based on my analysis of the value I get from each card, the Platinum Card is costing me $5 a year, the Ritz Carlton Card actually provides $150 of value over and above the annual fee, the Brilliant card costs me $50 a year, and the Gold Card costs me $105 per year. So you can see why I’m going to downgrade the Gold Card. For a while at least.
So there’s my deep dive into my credit card strategy. Now, only one question remains: What’s in your wallet? Leave me a comment and let me know.
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