Credit Card Optimization: What’s Currently In Our Wallet

As a follow-up to my previous post regarding credit and debit cards, here’s a brief overview of the cards we currently have, their benefits, and what we use them for:

  • Citi DoubleCash
    • Our use:  All purchases (including recurring bills) that don’t go on one of the other credit cards
    • 2% cash back on all purchases
    • No annual fee
  • American Express Blue Cash Preferred
    • Our use:  Groceries (up to the $6k limit), gas, department stores
    • 6% cash back on groceries (up to $6,000/year), 3% cash back on gas and at department stores
    • $95 annual fee
  • Citi Prestige
    • Our use:  Hotel stays of 4 nights or more, airfare (however, see post below regarding American Express Platinum)
    • $450 annual fee
  • Chase Sapphire Reserve
    • Our use:  Dining, hotel stays of fewer than 4 nights, non-airfare travel  expenses (including tolls and rental cars)
    • $450 annual fee
  • American Express Platinum
    • Our use:  Centurion lounge access, hotel elite statuses, dining reservations, airfare (see post below)
    • $450 annual fee
  • Chase Freedom
    • Our use:  Rotating categories
    • 5% cash back on quarterly rotating categories (up to $1,500 per quarter)
    • Transfer points to Chase Sapphire Reserve for redemption bonus
    • No annual fee
  • Charles Schwab (Investor Checking) Debit Card
    • Our use:  Getting cash fee-free at home and abroad
    • No annual fee

As you can see, we have quite a few cards.  And, we’ll probably rotate through (“churn and burn,” as it’s referred to) several more as the years go by.  The credit card industry has become even more competitive in the past several years, and now is a great time to re-evaluate what you have in your wallet.  The sign-up bonuses on some cards alone can make the switch more than worthwhile.

We are actually fairly new to the multiple credit card optimization game.  Up until a few years ago, we used the American Express Gold Preferred Rewards card exclusively.  We ditched it because it was simply outmatched by the competition, especially for our spending habits (in the interest of full disclosure, the benefits of this card have since changed for the better).

And, without giving away the ending, that’s the whole optimization game:  Evaluating your spending habits (by category), researching credit card offerings, and picking and choosing which card or cards will net you the most benefits.

Like I mentioned in my previous post on this topic, this decision-making process is personal and will vary from person to person.  With that said, here are the cards that are currently in our wallet:

Citi DoubleCash:  I’m starting with this particular card because I think it’s a good idea to establish a baseline or fallback card.  By that, I mean a card that maximizes your miscellaneous expenditures that don’t fit into specific card categories, such as the electric bill or the dentist’s office.  This is exactly how we use this card.  It gives you 1% cash back when you make a purchase (statement closes) and then another 1% cash back when you pay your bill, for a total of 2% cash back.  The great part about this card is that it has no annual fee.  We also like the Citi Price Rewind feature that searches for a better price for an item you purchased for a period of 60 days.

American Express Blue Cash Preferred:  I almost put this card first because of its incredible 6% cash back on groceries (on up to $6,000 a year) and 3% cash back on gas and department stores (unlimited).  But, I hesitated because I know not everyone spends that much on groceries (on average, $500 a month).  If you do, though – or close to it – then this card must be added to your wallet because no other card will give you a 6% return on groceries.  Doing some quick math, 6% back on the maximum $6,000 per year spend on groceries alone is $360 cash back.  Add in whatever you spend in gas and at department stores in a year – say, $3,000 – and you’re up to $450 cash back.  This card has an annual fee of $95 (just increased from $75), which cuts into the return (netting an annual return of $355 in the above spend scenario), but we still think it’s a great value.  For the sake of comparison, if you put all the expenditures above ($9,000) on the Citi DoubleCash card instead, you would earn only $180.

Citi Prestige:  Everyone was talking about this card when it came out, and we have gotten many benefits out of it over the past year and a half.  The main draws for us were the 3x points on hotel and airfare, 2x points on dining, American Airlines Admiral’s Club access, $250 annual travel credit, and unlimited 4th night free hotel stays at almost any hotel worldwide.  When redeemed for American Airlines flights, points were worth 60% more (1.6x), thereby increasing the 3x earnings rate for flights and hotels to a very high 4.8x and 2x earnings rate for dining to 3.2x.  Living in Dallas (American’s headquarters), this increased redemption bonus made this card a no-brainer for us.  If you didn’t frequently fly American, though, this card obviously wouldn’t be as lucrative, providing a bonus redemption of only 1.3x on non-American flights.  Regardless, we (and many others) have found the main benefit of this card to be the 4th night free benefit.    It’s a bit of an annoyance to call and book the hotel through the Citi concierge (and we’ve had a few problems with 4th night credits not posting in a timely manner), but it’s certainly worth it in the long run.  This year, we will have saved over $1,500 just from this benefit alone (used 5x times).  Stories abound of people saving several times that amount due to the credit.

Now, you may have noticed most of the above paragraph was written in the past tense:  The reason is that Citi recently announced several changes to the Prestige card (effective for existing cardholders on July 23, 2016).  They are doing away with the Admiral’s Club access and reducing the redemption bonus to 1.25x for all airfare, regardless of airline, and changing the way the 4th night free is calculated (based on the average nightly rate instead of the actual 4th night rate and taxes are no longer included in the credit).  Reducing benefits is never good (especially since the card is relatively new), and Citi’s devaluation of the Prestige card was irritating, to say the least.  We had been using the Prestige for airfare, hotel, and dining due to the redemption bonus, but now since the effective earning for airfare and hotel will be 3.75x and dining will be 2.5x, we will be using the Chase Sapphire Reserve, discussed below, for all such purchases (great timing, Chase!).  Even though we won’t be using the card for the foregoing categories, we will keep it for the 4th night credit.

Chase Sapphire Reserve:  You’ve probably read stories about how this card essentially “sold out” within a few days of being released (Chase ran out of the metal cards) and how it has been dubbed “the best travel credit card” by almost all credit card review websites.  The 100,000 point sign-up bonus aside, the Reserve offers 3x points on travel and dining and a $300 yearly travel credit.  And, Chase’s categorization of “travel” is very broad.  For instance, my toll tag bill and Uber rides both count as travel.  Further, like the Prestige card, the Reserve offers a redemption bonus, but the Reserve’s redemption bonus is 1.5x and applies to any travel redemption – not just airfare.  Since the Reserve’s earning and redemption is better than the current Prestige’s for dining and non-airfare or hotel travel purchases, we are now putting all such purchases on the Reserve card.  And, once the aforementioned changes to the Prestige card take effect, the Reserve’s earning and redemption for airfare and hotel will be better, and we’ll begin putting all airfare and hotel purchases that are less that 4 nights on the Reserve card.  The Reserve does have a $450 yearly fee, but that is essentially immediately offset to only $150 by the $300 travel credit.

American Express Platinum:  Ah, the Platinum card.  It’s a love and hate relationship.  What is frustrating, and takes some time to get used to and understand, is that the Platinum card is not an earnings card (but keep reading) – you are not going to earn points.  Well, you’ll earn 1 point per dollar for normal charges and 2 points per dollar for travel booked through American Express.  These are measly numbers when compared to the Prestige and Reserve cards discussed above, especially considering all three carry a $450 annual fee.  What the Platinum card is, though, is a benefits card.  It gets you Centurion lounge access (which are awesome), American Express Concierge (which is great at securing reservations at top-rated U.S. restaurants), Hilton Gold Status, SPG Gold Status (which now gets you Marriott Gold Status), Fine Hotels & Resorts (with some properties having 3rd or 4th night free), among other benefits.  The Platinum card does have a $200 yearly airline credit, which brings the annual fee down to $250, even though it’s more cumbersome and restrictive to use than that of Prestige and Reserve.

Until recently, we have been on the fence as to whether the benefits we normally use – the Centurion lounge access (there’s one at our home airport, DFW), and the hotel statuses that we otherwise wouldn’t achieve on our own – are worth the annual fee.  Very recently, though, American Express announced that any airfare booked directly with the airline or through American Express charged to the Platinum card will earn 5x points.  This change makes the Platinum card better than both the Prestige (4.8x with 1.6x redemption bonus) and Reserve (4.5x with 1.5x redemption bonus) for airfare purchases.  So, we’ll have to consider this when booking flights.  The only drawback would be having a few thousand random points on the Platinum card account since we would not be using it for many, if any, other purchases.

Chase Freedom:  This is a recent addition to our wallet due to our addition of the Chase Sapphire Reserve card.  Let me explain:  Points earned on the Freedom card can be transferred to the points program for the Reserve card and then redeemed at the Reserve’s 1.5x redemption bonus.  There is no annual fee for the Freedom card, so it’s not costing us anything to have it.  It earns 5x points on categories that change quarterly, up to $1,500 maximum spend per quarter (then 1x thereafter).  So, again, some quick math:  If you max out the $1,500 quarterly spend at 5x, this will net you $75 worth of points, which you can then transfer to the Reserve card and redeem at 1.5x, being worth $112.50.  Over a year, this no-fee card could net you a cool $450.  Even if you didn’t have the Reserve card to boost the redemption, the Freedom card could be useful due to its no annual fee.

Charles Schwab Investor Checking Debit Card:  While we try to put as much as possible on a credit card, sometimes you simply need cash.  This is especially true when traveling abroad, where many countries and towns are still very cash-oriented.  We looked for a while trying to find a checking account that had no minimum balance, deposit requirements, or fees and that did not charge international ATM fees.  The Charles Schwab Investor Checking account met this criteria, and we have been very pleased with it.  Any ATM fees, whether incurred domestically or internationally, are automatically reimbursed within a few days.  When traveling abroad with our previous account and debit card, we would try to get as much cash at a time as possible so as to avoid paying another ATM fee, which made us uncomfortable to carry around a bunch of money.  Now, we can get what we need – or what we think we’ll need for a few days – without worrying about incurring another ATM fee the next time we need cash.  If you travel abroad frequently, I’d suggest you look at this account and debit card option.

Two final comments:  Changes and devaluations are inevitable, so it pays to stay up-to-date on the current credit card offerings and not anchor yourself to a card that is no longer your best option.  Additionally, spending habits may change, so it’s important to reevaluate on a regular basis whether your credit cards are still a good fit for your spending, the benefits you want, and your goals.

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