Credit Card Rewards

Like many people, most of the expenses that my wife and I have are paid using credit cards. We follow a budget, and pay off each account in full every month. Once we got married and combined our credit accounts, we had to make a decision about which cards to keep and which to use as our primary cards. That was mostly for me, since I don't want a fat wallet.

Since we pay off the cards completely, the interest rate on the card becomes a secondary consideration. The additional benefits offered by each card become the criteria by which we decide. There are plenty of credit card comparison sites around the Internet, so I though I'd just post about my year-end review.

We didn't end up canceling any accounts, since we both wanted to keep our credit history. The four cards that we currently use each month, in combination, are the Citi PremierPass Mastercard, the PenFed Visa Platinum Cashback, the Chase Freedom Visa, and the Costco TrueEarnings American Express. Except for the PremierPass, all of the cards have a rewards floor of 1% cashback. The PremierPass provides ThankYou points as rewards, and if we use the points to pay off our mortgage, the cashback rate is effectively roughly 0.8%.

But each of the cards provides a specific increased benefit.

The PenFed card provides 5% cashback on gas, and until this month, 2% cashback on groceries. We had a retention offer from Citi on the PremierPass card for six months that raised our reward rate to 4% on everything. Plus, we get ThankYou points for every mile we fly on tickets bought with the Citi card. The Costco AmEx provides 3% cashback on restaurants. For the past four months, the Chase Freedom card has provided 5% cashback on groceries. I've also had an AT&T credit card since college that gives us 5% rewards for all of our phone bills.

So with smart spending, we're able to increase the cashback rate from each card. We're not ticky-tack with this, since neither of us wants to have to remember a long list of which card do I use for this purchase?. But remembering which card for groceries and which for restaurants is easy.

It takes about 15 minutes each month to look at each credit card statement and pull out the closing balance and reward balance and put those numbers in a spreadsheet. I just combined the last 12 months, and our effective credit card reward rate for the year was 3.4%! I'm pretty darn happy with that!

By far, the bulk of the spending was with our Citi PremierPass. We did some remodeling in the spring and paid most of that with the credit card, since we were earning 4% back at the time.

We're not spending any more than we would have, but we've been able to earn 3.4% overall that we wouldn't have gotten otherwise! I'd say that makes good sense!