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Reader Neverspring asked the following question on the “Ask Lucky” page of the blog:
I’ve read a lot of your reviews lucky. Great site. I just have a simple question regarding cards that you’ve reviewed. Where do you rank them and how much money should you spending on them to make it worth having? A top 5 would be amazing. Thanks Lucky!
It’s a great question, though it’s anything but “simple” to answer. 😉
Generally speaking, there are three reasons I consider applying for cards:
- They offer huge sign-up bonuses which in and of themselves are worth acquiring the cards for
- They offer lucrative anniversary bonuses, whereby it’s worth paying the annual fee just for the anniversary bonus offered by the card
- They are rewarding for everyday spend, so are worth holding onto to maximize the points you earn for the money you spend
There’s no “one size fits all” approach towards credit cards, and for that matter there’s not really a right or wrong approach (though I’d argue some approaches are righter than others). 😉
That being said, I did recently write some posts addressing what I consider to be the best credit card options available at present:
- Best credit card sign-up bonuses presently available
- Best credit card anniversary bonuses presently available
- Best credit card bonus spend categories presently available
With the above in mind, what should you be considering when you’re thinking of applying for a credit card?
Would you rather earn cash back or miles/points? If the latter, are you looking to travel as far as possible at the cheapest price, or looking for “aspirational” travel, whereby you want to redeem for first/business class and five star hotels? Do you prefer to earn flight or hotel rewards?
How much do you value annual perks at? Things like annual hotel free night certificates, elite status, etc.?
How much do you spend on credit cards a year? Enough so that it could be worth paying an annual fee so you earn bonus points in the categories you spend the most in?
Hopefully the above at least points Neverspring in the right direction.
So where am I directing most of my spend nowadays?
Here’s what my money clip looks like right now (as a reminder, I put the cards I use most in my money clip, while I have a wallet with the secondary cards I use):
And not to make y’all jealous, but here’s the view from which I took the above picture:
So while I have 20+ credit cards open at a given time, the four cards I’m using the most right now include the following:
- Chase Sapphire Preferred® Card
- Citi ThankYou® Premier Card
- Amex EveryDay℠ Preferred Credit Card
- Starwood Preferred Guest® Credit Card from American Express
The cards at the top of my wallet are constantly changing, but here’s why the above four are there right now:
This has been my “go to” card for a long time, given the long list of benefits this card offers.
Between double points on dining and travel, no foreign transaction fees, great auto rental coverage, etc., this has sort of been my default card for a long time.
This is a card I acquired during my last round of credit card applications, and one I’m very excited about. One reason I have the card at the top of my wallet is to knock out the minimum spend on it.
This card is undergoing some changes as of April 19, 2015, which I’d consider to be a net positive.
Right now this card is where I’m putting my dining expenses, though starting April 19 I’ll be putting all my travel expenses on the card, which I’m excited about.
This is another card I picked up during my last round of credit card applications, and one I’m very excited about. For the months I’m in the US, this is my go-to card for everyday, non-bonused spend (I don’t use it abroad because it has foreign transaction fees).
That’s because when you make 30 transactions on the card during a billing period you earn 50% extra points. That means you’re earning 1.5 Membership Rewards points per dollar spent, which is an amazing return. That being said, some months I’m only in the US a few days, so it’s not practical to make 30 purchases. Those months I probably won’t use this card very much.
Back in the day this was the absolute best card out there. It’s still pretty awesome, though as you can see there are quite a few cards which give the SPG Amex a run for its money.
I consider Starpoints to be the single most valuable points currency, and value them at ~2.2 cents each. So for big, non-bonused purchases (like tax payments), this is still the card I’ll often use.
Ultimately there’s no right or wrong approach to credit card spend. And ultimately even my strategy varies quite a bit. Sometimes I put a cash back credit card at the top of my wallet, while other times cash just seems boring, and earning miles seems more fun.
But as a general rule of thumb I’m using my Chase Sapphire Preferred® Card and Citi ThankYou Premier for all my non-US spend as well as bonused US spend, while I’m using the Amex EveryDay Preferred as my go to card within the US. And then at the moment the SPG Amex is sort of my backup card.