When it comes to earning rewards, most of us are looking for one specific credit card that can help us get the most cash back or travel points for our spending.
I’ve tried a number of different rewards credit cards on their own before discovering that a combination of two or three cards gave me the best results. Here’s why:
The key to maximizing your rewards is to understand your spending habits and then determine how you’d like to be rewarded for that spending.
Then you need to figure out which credit cards will give you the most cash back or travel points in the categories which you spend the most.
You see, rather than giving us a straight 2 percent cash back on all our spending, most rewards cards use a tiered approach where they offer a higher percentage back on certain spending categories like groceries or gas.
But with a combination of credit cards you can earn up to 2 percent (or more) on your total spending. That beats the interest rate on most savings accounts these days.
Let’s use a practical example to show how you can earn more cash back on your spending by using a combination of rewards cards.
Here’s FrugalTrader’s household budget broken down into conventional credit card rewards categories:
|Category||Monthly spend||Best rewards card||Annual Cash back|
|Groceries||$600||Scotia Momentum Visa Infinite||$288|
|Costco||$300||Capital One Aspire Cash World*||$54|
|Gas||$280||Scotia Momentum Visa Infinite||$134.40|
|Bills||$125||Scotia Momentum Visa Infinite||$30|
|Restaurants||$125||TrueEarnings Card from Costco||$45|
|Travel||$0||Capital One Aspire Travel World||$0|
|Other||$2,316||Capital One Aspire Cash World||$416.88|
*Credit card hack – Costco only accepts American Express credit cards but you can go to Costco’s website and order gift cards using your Visa or MasterCard. The gift cards get mailed to you within a few days and then you have to call to activate them, so weigh the hassle against earning a few more bucks in rewards.
FT could earn 2.15% back on his spending by using a combination of the Scotia Momentum Visa (for groceries, gas and recurring bill payments), the TrueEarnings Card from Costco and American Express (for restaurants), and the Capital One Aspire Cash World MasterCard (for everything else).
But wait; let’s not forget the Scotia card comes with an annual fee ($99) so we’ll have to deduct that from his annual cash back rewards. That brings the total down to $869.28, for a 1.93% return on spending. Still not too shabby!
That’s $420 per year more than you’d get back with a standard 1 percent rewards card like the PC MasterCard. It’s meaningful when you consider the lengths we can sometimes go to save a few bucks on a purchase.
Using multiple cards can be a bit of a pain because you have to stop and think about which card to use whenever you’re out shopping, plus you’ve got two or three credit card bills to pay each month instead of just one.
But I like to think of earning cash back rewards as a hedge against inflation, and I smile whenever I put another $50 back into my pocket.
- Scotia Momentum Visa Infinite review
- Capital One Aspire Travel World review
- Capital One Aspire Cash World review
- Top Cash Back Credit Cards in Canada