Dear Clever Credit,
I’m new to credit cards and want to earn rewards. But it’s way more complicated than I expected! Between all the categories, different rewards rates and annual fees, I’m getting dizzy. How is someone supposed to play the credit card game without getting a headache?
Signed,
Credit Card Migraine
Dear Migraine,
So the credit card game is exhausting. If you want to get the most out of your rewards, you need to do math, have multiple credit cards so you can take advantage of transfer partners and supplemental rewards earning, and keep track of rotating/custom categories. It also helps to scour Reddit forums for tips on sign-up bonuses, card pairings and more. It truly is like having a part-time job.
If you think that sounds way too tiresome, you’re not the only one. Earning rewards on your credit cards can be simple — you just have to look at your spending.
[Read: Best Credit Cards.]
How Many Credit Cards Should I Have?
If you don’t want to overload your wallet, my rule of thumb is no more than three or four credit cards. And give each of them a job. Match each to your spending habits, not the other way around. Ask yourself where you spend the most.
Do you DoorDash every weekend, or do you prefer to cook at home? Do you buy most of your things online and want to earn rewards on those purchases? Because you can! What about bills you don’t really think about, like utilities and subscriptions? Yup, there’s a credit card for that, too.
What Credit Cards Should I Get?
This answer is going to be different for everyone. For example, I would never recommend a credit card with an annual fee to someone who just wants to earn cash back.
Figure out what type of rewards you want to earn — cash back or points and miles — and then give them jobs. These are the jobs I like to give my credit cards:
— Food. There are two types of food when it comes to credit cards — dining out and groceries. Sometimes you’ll get lucky and find a credit card that earns the same in both categories — like the American Express® Gold Card — but it’s not necessary if you favor one over the other.
— Travel. If you only travel a handful of times a year, you don’t need a premium travel card with an exorbitant annual fee. The Chase Sapphire Preferred® Card, for example, lets you earn five points per dollar on travel purchased through the Chase Travel? portal and comes with an annual fee of $95.
— Everything else. This is basically where I put my flat-rate cash back credit card, like the Wells Fargo Active Cash® Card. It earns 2% cash back on every purchase, so it requires zero brain power (making it my favorite).
Credit Rules to Live by
These are just some general credit rules to live by as you get started on your credit journey:
— Treat your credit card like your debit card. Only spend when you know you have the cash to back it up. Otherwise, it’s a slippery slope into credit card debt.
— Use your credit card for purchases you were already going to make. A lot of consumers can see that line of credit calling to them and may want to make a large purchase they wouldn’t normally make. By giving your cards a job, you can mitigate that.
— Keep your credit lines open. If you have a credit card that doesn’t earn much in the way of rewards but you’ve had it open for a while, don’t close it. Put your monthly subscriptions — like Spotify, Book of the Month and any others — on that credit card. This way, activity is still being logged, and you’re not spending extra to do it.
[Read: Credit Cards With No Annual Fee]
Just take things one step at a time and start with your costliest category. Once you get your biggest spend category out of the way, you can fill your wallet with supplemental credit cards that keep you earning on every purchase. Good luck!
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Here’s How You Should Play the Credit Card Game Without Overloading Your Wallet originally appeared on usnews.com