As you may already know, Becky and I have a lot of credit cards. We’ve acquired the majority of them over the past few years by taking advantage of large signup bonus offers with the goal of heavily subsidizing our travel expenses.
With 70 new credit cards between us and several million points and miles earned over the past few years, you might wonder which ones we actually use on a regular basis.
This post will dive into which cards actually make it into our wallets and how we optimize our return on various types of purchases.
Signup Bonuses Are King
Over the past couple of years, we staggered our new card applications in such a way that we were almost always working towards a spending requirement of a signup bonus. This had the duel effect of making our choice of card for any purchase easy (just use the newest card) and kept our return on spending optimized for all types of spending.
To give an example of what I mean, let’s take a look at a typical signup bonus of 50,000 points after spending $3,000. By dividing the reward by the spending requirement (50,000 / $3,000), we get nearly 17 points per dollar. Now add in the typical point per dollar you always get with the card and we’re up to 18 points per dollar! Even at a conservative estimate of a point being worth 1 cent (they are often worth more), that’s an 18% return on every purchase you make towards a signup bonus.
This blows the typical bonus spending categories of 2-6% out of the water!
The decision of what card to use is simple if you are organized enough to always have another signup bonus in the pipeline for when you finish the current one.
In practice, this is fairly difficult to pull off, especially over the long term, so it’s worth looking at how to optimize spend beyond signup bonuses.
The Primary Cards in Our Wallet
These are the cards that have set up shop permanently in our respective wallets and cover the majority of our purchases.
1. The Chase Sapphire Reserve
At least as long as we’re on the road, this is the first card out of our wallet in most cases. The bulk of our spending qualifies under either the “Restaurants” or “Travel” categories that offer 3x Chase Ultimate Rewards (UR) for every dollar spent.
URs have many different uses, but are worth at least 1.5 cents each towards travel as long as we have this card. In practice, we end up transferring most of our points to Hyatt at a 1:1 ratio and are currently averaging just over 3 cents of value per point used (on the ~200k Hyatt points we’ve redeemed this year).
Even at a more conservative 2.5 cents per point value, this means we’re getting ~7.5% back on all of our eating out and “travel” purchases by using our Sapphire Reserve card.
This card does come with a hefty annual fee, but I broke down why it made sense for us to keep one of them in a related post:
2. The American Express Blue Cash Preferred
I actually opened the no annual fee version of this card (The Amex Blue Cash) for a $250 signup bonus at the end of 2016 and stopped using it after reaching the minimum spend. Because there was no annual fee, I didn’t bother cancelling the card and Amex surprised me with an upgrade offer a few months ago of waiving the annual fee on the Preferred card and offering a $150 bonus.
I accepted the upgrade offer which means we have a free Blue Cash Preferred to use for the next year or so.
The primary benefit is 6% cash back on grocery spending. The usual $95 annual fee doesn’t offset this benefit for us, but we’ll take advantage of it before the annual fee comes around.
Related Post: Getting Creative to Maximize Return on Grocery Spending
3. The Chase Freedom and Discover It
Both of these no annual fee cards offer 5x back on a different category each quarter of the year. For example, in Q3 of 2018, the Chase Freedom is offering 5x UR back for every dollar spent on Gas Stations, while the Discover It offers 5% cash back on Restaurants.
5 Ultimate Rewards are worth at least twice as much as 5 cents for us, so the Freedom card has a much better return than the Discover It. In fact, despite the Discover It offering 5% cash back on restaurants, we prefer to use the Sapphire Reserve card mentioned above to get 3x UR instead.
These cards don’t get used year-round, but can boost our earning on everyday spending if they happen to line up with the right categories during the year.
4. The Chase Freedom Unlimited
This no annual card is the catch-all for most spending that doesn’t fit in the categories above. With an earning rate of 1.5 UR for every dollar spent, we are getting an effective return of ~3.75% back on the rest of our spending.
I’m a strong believer in the “Cash is King” mentality when it comes to optimizing credit card rewards, but our current travel plans allow us to get really good value out of additional UR/Hyatt points. If we were currently living in one place and already had our upcoming travel plans covered on points and miles, then I would switch to the 2.5% cash back USAA Limitless card.
For me, a guaranteed 2.5% cash back beats a future, speculative 3%+ back 9 times out of 10.
The Secondary Cards in Our Rotation
These credit cards don’t make an appearance very often, but do help optimize our spending a little bit more.
5. The Chase Ink Cash
This no annual fee card was downgraded from a Chase Ink Plus and offers 5x UR back on office store purchases as well as phone and cable bills.
The only thing we currently use this card for is our recurring cell phone bill at an effective rate of ~12.5% back. Previously, we also used this to auto-pay our internet bill, but that expense went away when our gap year started. We pretty much never end up at an office supply store, so this card rarely leaves storage.
6. Various Hotel Credit Cards
We’ve opened numerous hotel credit cards, but it rarely makes sense to use them, even when spending at that specific hotel chain! Our current stable of hotel cards includes:
- The Old Hyatt Credit Card – 3x Hyatt Points per $1 (worse than earning 3x with the Sapphire Reserve for flexibility reasons)
- The SPG Business Card – 4x Marriott Points per $1 as of Aug 18th, 2018 (worse than earning 3x UR again)
- The Hilton Aspire Card – 14x Hilton Points per $1 (using the ~1 cent per point we’ve gotten this year, this card does make sense to use whenever we pay cash at Hilton properties)
- The IHG Premier Card – 10x IHG Points per $1 (at ~1 cent per point again, this card barely edges out the 3x UR alternative)
Despite the limited spending we put on these hotel cards, most of them come with hotel status, a free night, and more benefits that offset any applicable annual fees. So even if we aren’t pulling them out of our wallets very often, they do play an important role in our overall travel hacking strategy.
7. The Citi Prestige Card
We opened this card specifically for our gap year adventure, primarily because of the 4th night free benefit on paid stays at pretty much any hotel. The travel credits during the first year offset the annual fee, so any usage we can get out of the 4th night free benefit gives us a huge return (over 25%) on the related spending.
We’ve only used the benefit twice as of the 6-month mark on our trip due to either points or cash stays of less than 4 nights making more sense, but we still have a lot of hotel stays coming up before the annual fee is due.
Summing It All Up
As you can tell, we end up directing a lot of our earning into Chase’s Ultimate Rewards program. We’ve gotten a lot of value out of UR over the past several years and have built up a solid collection of Chase cards that makes our rate of return on most purchases higher than we would get with equivalent cards offering MR, TYP, or even cash back.
Summary of our earn rates on most spending:
- Cell Phone Bill – 5x UR via the Ink Cash = ~12.5% back (would also include cable/internet if we had those expenses)
- Restaurants – 3x UR via the CSR = ~7.5% back (includes fast food, starbucks, and more)
- Travel – 3x UR via the CSR = ~7.5% back (includes hotels, parking, uber, tolls, campgrounds, and more)
- Groceries – 6% cash via the BCP (does not include walmart, target, and some other grocery-like stores)
- (Sometimes) Gas/Restaurants/Groceries/More – 5x UR via the Freedom = ~12.5% back
- Everything Else – 1.5x UR via the Freedom Unlimited = ~3.75% back
All of this combined means we are able to average over 5% back across all of our spending, but it took some time to get to this point. As I mentioned above, signup bonuses typically blow these earn rates out of the water, so that should be your primary focus if you want to optimize your own credit card rewards.
It’s also worth noting that many of the cards we use now aren’t worth opening directly, but make great options to downgrade to after opening the higher end cards with better signup bonuses.
Do you see any major opportunities for us to improve our return on everyday spending? How does our stable of cards compare to your own?
Let me know in the comments below.