Every issuer wants its card to be “top of wallet,” the only card you use to make purchases. But if you want to earn the most rewards from your credit cards, you’ll quickly discover that each has different bonus categories that let you earn extra rewards on purchases. So you might need to use one card to earn extra rewards for gas, another card for groceries and a third for everything else that doesn’t earn a bonus.
Sounds confusing, right? As a credit card expert, I study this stuff all day long. But with over a dozen active accounts, even I get confused sometimes.
Thankfully, there’s a simple, old-school trick to organizing all of your credit cards, and choosing the right one for each purchase type.
Keeping your cards organized
Every time I make a purchase, I choose the best credit card for the task, based on its rewards and benefits. Think of the credit cards in your wallet like the tools in a handyman’s tool belt. Each one has a specific purpose, and you wouldn’t use a screwdriver to pound a nail.
While it may be easy enough to stop and think which card lets you earn the most rewards when you're shopping online, it can be much more stressful when you're at the checkout counter with a line of people waiting for you to decide which card to use. I use this simple solution.
Place a small piece of masking tape on the part of the credit card that sticks out of your wallet. Then, write the type of purchases you plan to use that card for, such as “Groceries,” “Gas,” “Travel” or “Dining.” For uncategorized purchases, label one card “Non-bonus” or just “Everything Else.”
How many cards are too many?
The most important piece of advice I can give is that you should never have more credit cards than you can manage responsibly. That means that you pay your bills on time and avoid debt.
Having multiple cards can actually help your credit score because each new card increases your available credit if you keep your balances low (reducing your credit utilization). And on-time payments for each card can boost your payment history, the most important aspect of your credit score.
Depending on how well you can manage payments and avoid overspending, the ideal number may be one -- or none. For some, it could be more than a dozen.
If you can manage multiple accounts responsibly, you can use credit cards to maximize your rewards.
And with just a little bit of planning (and some masking tape), you can make sure you come out a winner.
