I always thought that going out for a meal was a much better social gathering than other types of get-togethers because of the social interaction involved (required). A few days ago, my luncheon with a friend confirmed this idea further.
He told me that he uses many credit cards in order to “snipe” the best rewards from each one. Naturally, the conversation sparked an interesting debate since I’m the type that thinks having even two credit cards can be confusing.
So let me ask you, do you study credit card rewards so much that you might as well work for those companies that issue them?
Before you answer, let me tell you what my friend does in more detail.
- Every time he gets a chance, he applies for those 0% balance transfers credit card offers (some I recommend are at that link). He doesn’t use it to pay off debt or anything that I suggest. Instead, he uses the cards to buy big purchase items to act as an interest free loan. Pretty clever idea but a little over the top I must say as he has 4 cards just based on these offers.
- Then he has his rewards. He’s got the American Express True Earnings Costco Card that gives him 3% cash back on gas, which he uses for in addition to his Costco expenses.
- He’s also got a Charles Schwab 2% unlimited cash back Visa card that he currently uses for pretty much everything else.
- My friend also has a Citi Forward card just for Amazon purchases, because he gets 5% back from it.
- Let’s not go into more details, but he actually has 6 other credit cards (or so he claims) he’s received over the years for a total of 11 cards.
My Take on Building the Credit Card Empire
I don’t know why he’s able to get approved for so many cards, as his potential credit risk must be extremely high. Aside from that, I also don’t think having that many cards is really beneficial because carry so many credit cards must be cumbersome (let alone remembering all the payment due dates).
Another detail he’s forgetting is the affect this has on his credit score. While his utilization score must be top notched, I can’t help but think that his average account age is very short, given that he always applies for new ones.
Another, and perhaps the killer for this approach – the time it takes him to study all these rewards and how he can benefit. He doesn’t seem to keep track, but I bet that it’s like a part time job just to keep all the cards paid, all the reward programs organized and stay up to date with the latest in the reward structures. It works for him, but definitely too much work for me.
On the plus side, my friend does seem to get more in terms of rewards this way compared to my basic one credit card approach. Instead of the 1% of every purchase that I get, he gets 2% more for gas and 4% more for Amazon. On top of that, he gets 1% more with his Charles Schwab card. Hmm, maybe I should look into getting a few more cards to get more free money?
So, is credit card mania worth it? Do you do something similar (or will you try it)? Let me (and my friend) know!
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{ 16 comments… read them below or add one }
Although I don’t have quite as many cards as your friend, I do have quite a few and I use them in much the same way.
One benefit I reap that you didn’t mention is staggered due dates. By spreading my monthly purchases out on separate cards, not only do I maximize my rewards but I, in essence, get a 30+ day interest-free loan on each purchase and not all of the bills are due at the same time.
I have three cards that I use on a regular basis: one I use for all grocery and dining purchases; another for all of my gas, Costco, and drug store purchases, and a third for all household expenses. Child expenses, such as activity fees and clothing tend to go on the household card but I spread them out if it’s a particularly heavy-expense month.
I keep a fourth card for unusual expenses. It doesn’t earn rewards but I keep it because I’ve had that account since I was 18.
My husband has way more cards than I do. Probably more than your friend. He has no trouble keeping up with all of the payments for his cards and mine. Each and every card is paid in full the day after the bill is received. My credit is excellent; his is through-the-roof, off-the-charts impeccable.
Keeping multiple cards isn’t for everyone but it is a system that works well for some. Credit cards are not inherently evil nor is having more than one a universally bad idea. If having more than one card is stressful or overwhelming, stick to one. If maximizing rewards or spreading out due-dates sounds good, try adding another card to your wallet.
Spreading out due dates is a great idea. Thanks for the tip!
I have 5 credit cards but use only 1 or 2. I, like MoneyNing, tend to forget the due dates if there are too many and end up paying overdraft fees constantly. Well, I get the overdraft fees waived by my banker but I’m sure if it happens too often he will stop doing it for me.
This post got me interested though. I wonder how many cards other people have?!?
Definitely get the Schwab card. I use this and the 2% cash back is great! You just have to keep $1000+ in a non-retirement investment account at Schwab. I consolidated all my various investment accounts over to Schwab to take advantage of this.
-Erica
I seriously need to look into this card. I’m not too fond of paying $12.99 a trade for the Charles Schwab experience (when others are charging nothing) but the 2% rewards is VERY tempting.
I always wondered about the 2% cash back for gas on credit cards. Seems I could make a decent living if I had a $5K credit limit. My example I could go around town looking for people paying CASH for gas and say I have a gas card with a balance that I need to deplete. They buy my ‘con offer’ and I take there $20 cash and pump them $20 in gas. I do this till the card is maxed at $5,000 and I collected $5,000 cash for the day. Go home pay the card off in full, receive my $100 (2% cash back on gas), repeat the following day.
Granted getting that many people to accumulate $5000 in gas would be a a lot of work, but surely not that much work if you did it over the course of a month.
PS – I would never do this myself, but it is a thought.
That’d work and I’m not sure that would actually be considered as “con”. Interestingly, I was just talking to another friend who said that he wanted to buy a bunch of “clunkers” a few months ago so he can sell to people who were looking for a new car now and grab the difference. The plan was to buy a very old car for say $1,000 and then get someone who was buying a new car for $2,000 just so he can be reimbursed for $3,500 or $4,500.
Re: Clunkers. The person traded in the clunker must have legally owned the clunker/titled it, for the previous year before turning it in. I believe that stipulation was put in there to prevent just such a thing from happening
I think in order for this credit card rewards deal to work, one actually has to spend (buy) to put something on the card. And as I rarely use my cards, let alone buy much, this just isn’t going to convince me to spend money just for the rewards. I make more by keeping my money in the bank making 5-6% minimum… that’s higher than the rewards on the cards.
I’ve got a better deal going now. My boss fills up my truck at least twice a month – I go thru 2-3 tanks a month usually. And he pays for the cell phone. And the medical insurance in full. And the soda pop in the frig at work. And brings in lunch (with leftovers to take home) once or twice a week…. I just am not having much left over to spend $$ on
Your boss is really awesome. He must’ve spend a couple hundred bucks on each employee on top of all the usual salary and benefits.
Just his managers – not every one…. altho everyone gets extra bennies of some sort.
Funny- I actually DID work at a credit card company a few years ago. Just a few thoughts: 1- Many cards actually have a cap on the total value of rewards. So if you get 2% back on gas, its actually 2% up to a certain value (let’s say $1000).
2- Opening multiple cards in a quick timeframe really can damage your credit. However, if you already opened a bunch of cards, don’t close them all at once. That hurts too!
3- I suggest shopping around if you do plan to get a new rewards card. Compare “extra” programs that are in addition to the normal rewards. A few companies have online shopping sites, seasonal programs, and other “extras” that help earn additional points, cash, or miles. You can also find different rates depending where you apply- look in the coupon section in the newspaper, on the Card companies’ websites, Google, and your mail. I would bet they are all different rates and offers! There are also cash back or points sites where you can earn just for opening a new Card.
You can use mint.com nowadays to keep track of when cards are due, this is helpful to keep from forgetting that you used your Kohl’s card to get that extra 30% off to buy basketball shorts and forgot it happened. Aside from the cashback awards some cards offer nice side benefits such as extended warranties, rental car insurance match, concierge services, free credit scores, etc that can come in handy for a specific situation (I think Bank of America cardholders can get access to museums for free this month or something). Not to mention several lucrative sign up bonuses (free t-shirt yeah!). Finally, most credit issuers have a cap on how much exposure they’re willing to give any one customer so having multiple relationships can improve your total debt to credit ratio and in some cases qualify you for higher credit limits than you could afford in your wildest dreams (25% gross annual salary . . cc companies you’re so silly)
I personally own a Citi Forward Card. So far, I satisfied with the bonus points and have already redeemed some goods with it!
I honestly put EVERYTHING on my one personal credit card. Why? B/c I get a 1% home rebate that goes towards paying down my principal i.e. spend 100K, and $1,000 goes to paying of my primary home residence.
Granted, it’s not the best deal at all, but it keeps me disciplined. The main reason I put everything on my card is b/c it helps track everything I spend a month. I set a limit of say $1,500.. and don’t go beyond it. The CC gives me a play by play of what i’ve spent, and how much I have left.
Best,
RB
RB30RB40
I love this post! I admire people who use common sense and have their cards work for them but, you bring up a great point –
When does it just cross the line from common sense to obsession?
Well written and funny
Credit card companies deal in volume. They expect a certain number of defaults and write-offs, its just the cost of doing business.
It does not surprise me at all that this person has all these credit cards. I may hurt later for other types of credit.