I must have at least a dozen credit cards that I’ve applied to over the years. Many people do not realize that having a high number of credit cards is actually good for your credit score (assuming that you have a low total utilization). The age of credit card accounts is also factored into your credit score, so it’s best to keep accounts open for a long time (as long as you aren’t paying annual fees).
Cash Back Optimization Method
One of the benefits of having different credit cards is that cash back rewards can be optimized based on your particular spending habits. You can use one card for 5% back on groceries, a second card for 3% cash back on gas, another card for 4% off pet supplies (not sure if such a thing exists), etc.
The problems with this strategy are carrying all of the cards with you, remembering which card to use for each purchase, paying all of the bills, and finally juggling the redemption of the cash back rewards before they expire.
In the past I would use the cash back optimization method to ensure I was getting the maximum amount of rewards. If you don’t mind dealing with the hassle of this method it’s a great way to increase your savings.
Over the years I have gotten tired of having to worry about which card to use for every purchase. Occasionally I still use a different card if the cash back or purchase amount is high. For the most part though I have shifted to my next method.
All Around Cash Back Method
Rather than using a different credit card for every type of purchase, you can pick one all around cash back credit card that gives you high rewards based on your typical spending patterns. Most credit cards will give you at least 1% back for all purchases, regardless of category.
It used to be easy to find 2% back credit cards, but there are not many left and they don’t typically last very long. Sometimes American Express and Discover offer these type of rewards but they cannot be used everywhere which is another hassle.
The best all around cash back cards usually start at 1% back on all purchases and have higher percentages for other categories including grocery stores, restaurants, gas stations, wholesale clubs, department stores, etc.
If you analyze your spending patterns you can determine which general card will give you the most cash back.
My Favorite All Around Cash Back Credit Card
This leads me to my favorite all around cash back credit card. I don’t spend much at department stores so those aren’t a big consideration. The majority of my purchases are grocery stores, wholesale clubs, gas stations, and restaurants. My favorite card is the Bank of America Cash Rewards credit card.
The current offer for new cardholders is $150 online cash rewards after making $500 in purchases within the first 3 months of account opening.
Minimum Cash Back Amounts:
- 3% cash back on gas*
- 2% cash back at grocery stores and wholesale clubs*
- 1% cash back on everything else
*on your first $2,500 in gas/grocery/wholesale club purchases per quarter, then 1% cash back
Bank of America will give you an additional 10% customer bonus if you deposit the cash back into a Bank of America checking or savings account.
Preferred Rewards Program
If you are a member of the Bank of America Preferred Rewards Program you get even higher bonuses (instead of the 10% customer bonus).
- Gold: 25% points bonus = 3.75% on gas, 2.5% on grocery stores and wholesale clubs, 1.25% on everything else
- Platinum: 50% points bonus = 4.5% on gas, 3% on grocery stores and wholesale clubs, 1.50% on everything else
- Platinum Honors: 75% points bonus = 5.25% on gas, 3.50% on grocery stores and wholesale clubs, 1.75% on everything else
I entered my spending patterns into the sliding scales on the Bank of America site and since I am a Platinum Honors member my estimated total cash back came out to 2.55%.
Before doing the analysis I knew I was getting a good deal, but I’m happy to know that my total cash back is higher than 2%. Another benefit of this card is the cash back rewards can be setup to automatically deposit into one of your accounts so there is no redemption hassle. This card is great since it is flexible enough to use for the majority of my purchases. I encourage you to do a similar analysis to determine if this is the right card for you.
Readers, what is your favorite all around cash back credit card?