Credit Card Strategy

 | August 18, 2008 7:07 PM

Yesterday we received our Chase Freedom Visa cards which I ordered after reading this column, Chase Freedom Cash Visa: $50 Sign-up Bonus, Up To 3.75% Back On Top Spending Categories.  It basically gives 3% in your top three categories and 1% back on everything else.  If you wait to redeem at the $200 level you get a $50 bonus so it is like you are getting 3.75%/1.25% cash back.

When I went to Chase.com to check on this Visa card I found I had another Visa card.  I was going to close it but the representative told me it was a Chase Cash Plus Rewards Visa card which he said is better than my other card.  It gives 5% cash back for purchases at gas stations, groceries and drugstores and 1% cash back everywhere else.

Finally I have my American Express Blue Cash Card which gives back 1%/5% cash back for purchases at gas stations, groceries and drugstores and 0.5%/1.5% for other purchases.  The higher level of cash back comes after spending $6500 and there is no limit on the amount of rewards you can earn.

One strategy I could employ is this.

  1. Use Chase Rewards Plus at gas stations, groceries and drugstores so you get 5% back.
  2. Use Chase Freedom Visa at other places so you get 3% back on the top three categories.
  3. Use American Express Blue Cash at Costco or for big purchases since the rewards are not limited.

Or I could just do what’s convenient.  Using the Chase Freedom Visa on my other top three categories will save me about $200 * .02% which equals $4 per month or $50 per year.  Is that worth the hassle of maintaining another card?  Maybe not.

In the end I’d rather use one card.  Maybe the best strategy depends on how much I have spent on American Express.  For the first $6500 on American Express (beginning of May):

  1. Use Chase Rewards Plus at gas stations, groceries and drugstores (5% back) plus wherever else American Express is not accepted.
  2. Use Chase Freedom Visa for automatic payments for utilities, telephone, cable to get 3% back.
  3. Use American Express everywhere else.

After I have spent $6500 on American Express (around November):

  1. Use Chase Freedom Visa where American Express is not accepted to get 3% back on the top three categories.
  2. Use American Express everywhere else.

Fortunately Chase has automatic payment of bills.

Too bad Costco only accepts American Express which started me down this crazy path in the first place.  Crazy Costco!  At least Costco Gas counts as a gas station.  And to top it off it was recommended to me by my mortgage broker to use my old Visa every six months because I have the longest credit history on it.

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