Chasing rewards, I ended up with too many credit cards
It might surprise you to learn that someone who writes about personal finance for a living carries 10 different credit cards.
Aren’t credit cards evil?
Don’t they charge horrendous fees and sky-high interest rates?
In fact, aren't they designed to encourage consumers to spend beyond their means?
Yes, yes and yes.
I haven’t been a victim of these practices.
I’ve only paid a credit card bill late twice in my life. I’ve always paid my bills in full. I also have a budget.
The reason I carry so many cards is because of the sign-up bonuses and ongoing rewards they offer — benefits that really pay off if you’re super-organized and financially responsible.
This strategy can earn you hundreds, if not thousands, of dollars a year.
Rewards Card Details
|Blue Cash Everyday from American Express||3% cash back from supermarkets; 2% on gas and department stores; 1% on everything else|
|Capital One Cash Rewards||1% cash back; annual bonus of half of previous year's earnings|
|Citi ThankYou Card||1 point for every $1 in spending|
|Chase Freedom||5% cash back on rotating categories; 1% on everything else|
|Discover "it" card||5% cash back on rotating categories; 1% on everything else|
In the last six months, I've earned more than $2,000 in rewards.
Among the top bonuses I've won:
- 5% off all my Target purchases
- $400 in free airfare on Delta
- $200 in Amazon gift cards
- $500 in statement credits
- 50,000 British Airways miles (redeemable on American Airlines)
- $280 in Gap and Home Depot gift cards
And I’m still working (err, spending) toward bonus rewards on three cards.
I’ve used my rewards to buy gifts, fill my gas tank, fly to a friend’s wedding, update my bathroom and treat myself to plenty of goodies.
Another bonus: credit card rewards aren’t taxable as long as you receive the rewards after making purchases; that's one reason why sign-up bonuses are contingent on a minimum amount of spending.
Yet, I’m kind of over it.
I have trouble keeping track of which card is best used to buy what.
Is my Discover card offering 5% back on gas right now, or was that last quarter? Do any of my cards pay bonus rewards on groceries? Which one should I use at Amazon? When is that deadline for spending $1,000 in my first three months as a cardholder to get that sign-up bonus? How much have I spent toward that amount so far?
Managing all of these cards means logging into 10 different accounts at least twice a month to check my balances and make sure my bills get paid before their various due dates.
Each time I get a new card, I have to add a new payee to my online bill pay system.
When I want to redeem my rewards, I often spend at least an hour figuring out which reward offers the best bang for my buck.
All of this management takes up time — time that might be better invested in my business.
As Dave Ramsey says, no millionaire has ever told him that it was the AmEx rewards points that made all the difference.
Ramsey advocates paying for everything in cash.
In fact, if you try to buy any of his books or classes from his website, you’ll see that the only accepted payment methods are debit card or bank draft.
Maybe he’s right. Maybe even those of us who think we’re winning the credit card game would be better off without them.
I want to find out.
But not until I earn the rest of those rewards.