For many people, one credit card is plenty. But those who can responsibly handle a few find that more can be better. While a single card can earn you hundreds of dollars per year in cash back, the right combination can earn you hundreds more.
To determine the optimal mix, CNBC Make It looked at 50 popular cash-back cards. We considered annual fees and ease of use, since rewards structures can get complicated, and ultimately decided on four cards that offer top savings rates across every major spending category: dining, travel, gas and grocery shopping.
Here are our picks:
Using a sample budget based on spending data from the Bureau of Labor Statistics, we determined that, by using these cards strategically, the average American consumer, each year, could make $665 in cash back.
That's assuming you spend about $21,200 on the cards in a year. By contrast, if you just use the flat-rate Citi Double Cash, you'd earn $425 per year, which is $240 less.
If you manage to qualify for each cards' one-time sign-up bonus, you'll earn an additional $500 in total.
To maximize your earnings, you simply need to take advantage of what each card offers.
When you go out to eat or order in and use the Uber Visa, you get 4 percent back. You can't find a higher rate of cash back on dining. Users who spend $500 in the first three months after they get the card also get a $100 bonus.
The Blue Cash Preferred is great for grocery shopping. Users earn 6 percent back on up to $6,000 in grocery purchases per year. The card does have a $95 fee, but it offers a $200 bonus if you spend $1,000 in three months.
For gas, the Propel has the best deal: 3 points per dollar. You can redeem points for cash at a value of 1 cent per point. This card also offers 3 points for popular online subscription services, such as Netflix and Spotify. And if you can manage to spend $3,000 within three months on this card, you'll get 30,000 points (equal to $300).
When you're booking a flight or a hotel, you can use the Propel or the Uber Visa, since they both reward travel with 3 percent back. And neither card has a foreign transaction fee, so they're both good choices for when you're spending outside the U.S.
And for all the other purchases you make, you can use the Citi Double Cash. Users get 1 percent back when they buy and another 1 percent when they pay off their bill at the end of the month.
The only card included with an annual fee is the Blue Cash Preferred. If you want to go no-fee entirely, American Express also offers the Blue Cash Everyday, which rewards grocery spending with 3 percent back, rather than 6 percent. The Everyday is the better choice if you spend less than $3,167 on groceries per year. Only once you hit that level of spending would the extra 3 percent back you get with the Preferred justify the $95 annual fee.
We recommend the Preferred as the better choice because, according to the Bureau of Labor Statistics, the average American spends $4,363 on groceries every year. But you can decide for yourself which card suits you best based on your spending.
Depending on where you shop, you could also benefit from adding other cards to your repertoire. The Amazon Prime Rewards Visa Signature Card, for example, offers 5 percent back on purchases you make on Amazon and at Whole Foods for Prime members.
If you decide you want to maximize rewards with a combination of cards, here are some things to consider.
To maximize your earnings, pay off your cards in full. Carrying a revolving balance will cost you in interest. If you're intimidated by the prospect of having to deal with four different card bills, set them up so you can pay them at the same time.
"Most major credit card issuers allow you to change your credit card due date online, so you can easily adjust due dates to either all fall on the same day or space them out according to your monthly cash-flow," John Ganotis, founder of CreditCardInsider.com, tells CNBC Make It.
Applying for a credit card triggers a hard inquiry, which can ding your credit score.
"Credit inquiries stay on credit reports for up to two years, and affect credit scores for one year," says Ganotis. "More hard inquiries can make an applicant appear riskier to a lender. If you've been denied due to too many inquiries, it would be a good idea to wait for some of those inquiries to fall off your credit reports before applying for another card."
Plus, since you need to reach a spending threshold with a single card to qualify for its bonus, it can benefit you to wait before you apply for a new card.
"Having multiple cards can be great for your credit score, since more available credit can help keep utilization low. Utilization, or the percentage of your credit limits that you're using, is a big factor in credit scores," says Ganotis.
You can figure out your utilization ratio by adding up your monthly spending — the balances on all your cards — and dividing that number by the sum of your limits. For example, carrying a balance of $200 and having a credit limit of $1,000 would give you a utilization ratio of 20 percent.
FICO found that cardholders with scores above 800 — the excellent range is 750 to 850 — had an average of three open cards. If you include both open and closed accounts, they'd had six cards in total.
If you do decide to pick up more than one card, note that some issuers will close your account if it's inactive for a while. To stay on the safe side, Ganotis recommends using each card at least once every six months.
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