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Thursday, May 1, 2008

Maximizing rewards

Over on The Simple Dollar, there is a post about using a portfolio of credit cards for specific purchases, a way to try to maximize rewards and benefits on cards.

The "ideal" portfolio described seems like a lot of work to me - not in remembering to pay the bills, but simply in remembering which card to use when.

I currently use two main cards - an Amazon Visa from Chase and a Discover card. I use the Amazon Visa for most of my purchases - I get 3% back on Amazon.com purchases and 1% on other purchases. Everytime my rewards hit $25, I get an Amazon.com gift certificate in the mail. Given the myriad of things you can buy on Amazon.com, this has been a great rewards program for me.

I only use the Discover card for their 5% cash back bonus offers - every quarter, Discover sets up a few categories where all your purchases in that category gets you 5% cash back. Last quarter, it included things like travel and hotels. This quarter includes clothing and department stores. Take note people - next quarter includes gas purchases. To keep track of which things I should buy with the Discover card, I put a Post-It note on the card with the categories very clearly listed. Discover allows you to take your rewards as cash back or in the form of gift cards, and you often get a little bonus if you take the gift card - $20 will get you a $25 gift card from certain stores, for example.

I also have a few store credit cards, mainly because of the coupons provided. These are stores I shop at regularly, so the rewards and coupons are worth it. They don't get much use though.
Again, I never carry a balance on any of my cards, which makes the rewards worth it. And also makes me a drain on the credit card companies, if you think about it! I'm happy with my current use of credit cards. I'm careful to keep track of what I've charged on each of them, and I can't say that I've spent more just because I'm using multiple cards. Over all, it's a good system that works for me. Of course, as with everything, your mileage may vary.

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