As the reward card contributor to this blog, I receive many questions regarding the best reward strategies. Here are a few of my most recent inquiries.

Every time I go to the store, I get an offer to save 10% by applying for their credit card. Is this worth it?

In a perfect world where we had unlimited credit and we didn’t really care about our credit scores, the only downside would be the time and hassle filling out the application. I was amazed the other day when I was offered a discount at Target if I filled out a credit application when I was only purchasing about a hundred dollars worth of merchandise. As usual, I said “no thanks” and put the purchase on my Starwood American Express, where I hope to earn points towards hotel or travel rewards worth perhaps %5 of my purchase. While tempting, I have to realize that if I were to apply for a card from every retailer I visit regularly, I might have a wallet that weighs a few pounds! My strategy is to stick to cards where I get a large reward and a large sign up bonus.

For example, I recently purchased a $600 digital camera from Sony’s online store. They offered me a $150 purchase credit, essentially 25% off, plus 12 months free financing, plus enough “Sony Points” to earn a $25 off of my next purchase. Since I will likely need additional lenses and accessories from Sony in the future, I felt that I was getting both a reasonable reward, and a large sign up bonus. In addition, the shipping costs were almost precisely offset by the lack of sales tax.

Ultimately, you do not want to risk your credit score by opening up too many cards or cancelling them too quickly. You also do not want to become too overwhelmed by statements and offers from too many reward cards.

What Reward Cards Do You Currently Use?

My primary card these days is the aforementioned Starwood American Express. This works for me and my family as it is flexible and offers a high rate of return of 5% or more when used for premium international airline travel and Starwood hotels. I recently got a American Express Platinum Business card in response to an unbeatable offer I received. It gives me 5% cash back off of gas, wireless bills, and office supplies, %3 off travel, and 1% off everything else. So far, I have only used it in the 5% cash back categories.

Of course Amex is not accepted everywhere, that is why I have the Capitol One rewards Visa. With it, I get about 1.5% cash back, which is not bad for a Visa/Mastercard. I also take pride in the fact that I do not pay any foreign currency exchange fees when I make purchase in other countries. While I would love to say that i am a jetsetter who spends big money across the globe, I am afraid my travels are more modest. Nevertheless, I hate paying exchange fees as a matter of principal, even if they would not have added up to much.

I also have my Internet bank’s debit/ATM card. This is great for cash and as a backup in case my other Visa is lost or stolen. Finally, I guess I will soon be adding the Sony card to my collection as well.

These cards work for me and my wife, because of our particular travel and spending habits. Everyone’s lifestyle is different, so don’t expect to maximize your rewards by replicating my wallet.

Can I get a business card, even though I do not own a business?

Of course you can. Everyone is qualified as far as the card issuers are concerned. My Amex Platinum Business card was no more difficult to receive than any other card. Some people who really need the sign up bonuses will even apply for the business card in addition to the regular card. In extreme cases, it might even make sense for a husband and wife to both get the standard and the business card, quadrupling their rewards!

You write a lot about Visa, Mastercard, and American Express. What do you think of Discover and Diner’s Club?

I don’t hold either one, but I know some people who do. I have seen some pretting good reward offers from them, but so far, I am not sold. The problem is that they are not accepted at many merchants. Discover has a reasonable number of merchants that accept it, but it still trails even American Express by a wide marging. Diner’s Club is even less accepted than Discover. It is hard enough hearing that your Amex is not accepted as often as you do, and I just don’t want to flip out so many cards that I feel like a dealer in Vegas everytime I purchase something. Until their networks increase, or their rewards become irresistable, I will be sticking with the big three. I will keep my eyes open though.

This entry was posted on Friday, October 10th, 2008 at 03:57 and is filed under Maximize your Credit Card Rewards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.