Choosing the Right Card for Your Spending Habits
Ken Book
Jul 26, 2024
Advertiser Disclosure
Pointwise is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.
Introduction
More than 4,000 credit cards are available in the US, but realistically, you can only get a small fraction of them. Correctly choosing one card over 3,999+ other cards is time consuming, overwhelming, and difficult, if not impossible.
Each card might have a unique welcome offer, different categories that give elevated earning rates, different credits to help offset an annual fee, a different annual fee, and not to mention each credit issuer has their own application rules that can impact the order in which you should apply for cards and whether or not you’re even eligible for them.
Needless to say, it’s not easy.
How People Currently Choose Cards
You’d be surprised to learn how little research goes into such a complicated decision for most people. Most people don’t do very much research when deciding which credit card to get.
The most common answers people give me when I ask them how they chose to get their current credit cards are some variation of the following:
“I fly this airline a lot, so I thought I should get their card to get their miles and status.”
“I asked my friend//relative which credit card I should get, and they’re really into credit cards, so I took their advice.”
“I saw a high welcome offer for this card, so I just got it.”
“I shop at this store a lot, and at checkout they said I’d save 10% if I got this card! Such a good deal, right!?”
“I spend a lot in this category, and this card gives me 3x back in this category, so I got it.”
Let’s take a deeper look at each of those responses:
“I fly this airline a lot, so I thought I should get their card to get their miles and status.”
This answer sometimes makes sense, but most of the time it highlights the lack of knowledge most people have about credit cards. That’s because of two reasons:
Most people who fly an airline a lot still don’t fly that airline enough to get status from their flights alone.
The cheapest way to book most airlines with miles, especially US airlines, is not with that airline’s own miles, but by transferring points from major credit card issuers (Chase/American Express/ Etc.) to one of that airlines’ partners, and by booking it in the partner airline’s points currency.
On occasion, if you’re someone who travels with a big family, and routinely checks many bags, or you’re a consultant who travels the same route weekly for work, then the airline specific cards might make sense as one of your first cards. But for most people, airline specific cards are not worth considering until you’re much further along in your credit card journey.
“I asked my friend//relative which credit card I should get, and they’re really into credit cards, so I took their advice.”
When I hear this answer, I know their head’s in the right place. They know credit cards can be a great source of rewards, and they’ve expressed a desire to earn them, they just also admit they don’t know how to yet. So they do what works in most other areas of life - they ask an expert.
The problem here is that many of the average person’s friends and relatives who claim to know a lot about credit cards don’t know as much as they think, leading to less than optimal advice. There are more than 4,000 credit cards, hundreds of which are fairly popular, and most people who are self-proclaimed credit card enthusiasts can’t name 30 of them. This means they end up recommending the same small handful of cards, which make sense to them based on their relatively limited knowledge of the options available, but are not nearly as good as an all-knowing expert or advisor.
There are those who do sincerely know a lot about credit cards, and their advice would be much better than average, but they don’t see your spending patterns, so even if they know credit cards perfectly, they only know half of the equation: your spending patterns are equally as important.
There’s also more than one way to skin the credit card cat: there are several different strategies and everyone prioritizes things slightly differently. We’re a very opinionated community, and that credit card expert you know can be prone to projecting their own preferences and opinions on what to focus on onto you - even if that doesn’t make sense for your personal spending patterns and goals.
“I saw a high welcome offer for this card, so I just got it.”
Believe it or not, this is the answer that makes the most sense of those we’ve gone over so far. That’s because welcome offers usually account for so many more points than you’d get from using the card to actually buy things once you’ve qualified for the welcome offer already.
Think of this simple example:
One card has no welcome offer, but gives you 1x back on everything
Another card has a $500 welcome offer, but gives you 0x back on everything
Now assume you spend $2,000/month on the card. After one year, the first card will earn you $240 worth of rewards (1x back on $24,000), while the second card will earn you $500 in rewards after one year. It takes more than 2 years without getting any other cards for the first card to be more valuable than the second card. But if you get more than 1 card every 2 years, if that card has a welcome offer, it will take even longer for the first card to be worth getting.
Now what if I told you that first card is actually close to one of the most popular credit cards out there: the Wells Fargo Bilt Mastercard®.
It earns 1x back on rent, but because it has no welcome offer, it’s not nearly as attractive as people make it out to be. Assuming that $2,000/month is your rent payment, the Bilt card rarely makes sense as your next card if you’re open to opening more than 1 card every 2 years.
This is all to say - getting a card because it has a high welcome offer is one of the smartest reasons to get a card, without having to learn that much about credit cards, but it’s still far from perfect.
“I shop at this store a lot, and at checkout they said I’d save 10% if I got this card! Such a good deal, right!?”
We’re going right from one of the best reasons to open a new card to one of the worst. If welcome offers are such a valuable source of rewards, then what’s the welcome offer on all of these store branded credit cards? In this example, it’s 10% of whatever your purchases is. If you’re spending thousands of dollars in this one purchase than perhaps that’s a great deal, but if you’re spending $1,000 or less on the transaction, you’re essentially getting a welcome offer of less than $100, which is lower than almost every other welcome offer out there.
Not to mention these cards usually aren’t great for spending outside of that specific store, so unless you already have a solid foundation of cards in your wallet for all your other purchases, it rarely makes sense to make the store-branded card your next card.
“I spend a lot in this category, and this card gives me 3x back in this category, so I got it.”
This makes sense if you want a “set it and forget it” strategy. That means if you want to get a small handful of cards and only use those cards, never opening any new ones, then this is the way to go: you figure out how many cards you’re willing to open, you get 1 general card (most likely a 2% back card), and then you take your highest spending categories and the cards that offer 3-5x back on those categories, and keep getting those cards until you’ve hit the amount of cards you’re willing to get in total.
Most people do some version of this unintentionally, and might pick up a restaurant card if they notice they don’t have one yet, for example. The problem with this strategy is twofold:
Beyond food and gas, it’s not obvious which categories you should prioritize. Should you get a card that gives you 5X back on your phone bill that you know you have every month, or 5X back on travel that costs way more than your phone bill, but you only take 1 vacation a year? While this setup is meant to be one-time, simple, and easy, getting it right is not as easy as it looks.
For very little effort, you can usually earn far more points. That’s because, like we’ve discussed, welcome offers are far more valuable than what you’d earn on most standard transactions.
This means if you plan on having a 5 card setup, if you can get 5 welcome offers each worth $500, that’s $2,500 of value. Assuming those cards each earn nothing on other purchases, which will not be the case, and that you can average 3X back by focusing on categories, then you’d need to spend $83,334 on credit cards to earn more with that setup than from the welcome offer path.
Assuming the high welcome offer cards earn you an average of 2X on all eligible purchases - for example, if one of them is the Capital One Venture X Rewards Credit Card - then you’re really only earning an extra 1X back from focusing on categories over welcome offers. That means you’d need to spend more than $250,000 on credit cards to make the category setup more profitable than the welcome offer setup.
But even the welcome offer strategy leaves many questions left unanswered:
Which welcome offers should you prioritize?
How often should you open a new card?
Should I ever get cards that focus on categories?
Which points currencies are most valuable?
Is there a special order that I have to get the cards in?
How do I make sure I only get cards that I’ll naturally hit the welcome offer for, without increasing my spending and getting myself into debt?
This leads us to the next part of our conversation.
How to Choose the Right Card
Once you’ve decided you want to choose the right card, that you know there are thousands of dollars worth of benefits out there each year for most people if they just get these few choices right, then we can talk about how to make sure you get it right.
It’s a hard question because there are so many different cards out there, because only you actually know your spending patterns, and because each credit card issuer has different rules that aren’t obvious when you’re just reading the card’s marketing page. This means there are really only 2 ways to reliably get this right:
You become a credit card expert yourself because then you’ll know about all the cards, and you’ll know about your personal spending and preferences, and you’ll be able to guide yourself accordingly. There are many excellent resources for this online, from blogs to YouTube channels and everything in between. You might even enjoy it - many of us do - but know that this is now turning away from purely a quick personal finance choice and into a time-sucking hobby.
You let Pointwise do it for you. As a shameless but relevant plug, Pointwise is an app we created specifically to solve this problem. To give people who don’t want to become credit card experts a way to easily know which credit cards to get and when, based on their actual spending and preferences. The concept is simple:
You take a 2 minute onboarding quiz telling us your credit card goals and preferences
You connect your existing credit and debit card accounts so we can analyze your spending patterns
We compare your actual spending patterns and preferences to the different benefits offered from almost every card available, enabling us to tell you which credit cards to get and when to get them. Our algorithm also knows each of the rules that credit card issuers have, like Chase’s famous 5/24 rule, so we take into account each of those as part of our recommendations.
In Conclusion
Choosing the right credit card doesn't have to be a daunting task. By understanding your spending habits, considering essential factors, and utilizing apps like Pointwise, you can easily find the cards that reward you most for spending the way you naturally do.
——
Editors Note: The opinions expressed in this article are solely the author's and do not reflect the views of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved, or endorsed by any of the organizations mentioned.
Choosing the Right Card for Your Spending Habits
Ken Book
Jul 26, 2024
Advertiser Disclosure
Pointwise is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.
Introduction
More than 4,000 credit cards are available in the US, but realistically, you can only get a small fraction of them. Correctly choosing one card over 3,999+ other cards is time consuming, overwhelming, and difficult, if not impossible.
Each card might have a unique welcome offer, different categories that give elevated earning rates, different credits to help offset an annual fee, a different annual fee, and not to mention each credit issuer has their own application rules that can impact the order in which you should apply for cards and whether or not you’re even eligible for them.
Needless to say, it’s not easy.
How People Currently Choose Cards
You’d be surprised to learn how little research goes into such a complicated decision for most people. Most people don’t do very much research when deciding which credit card to get.
The most common answers people give me when I ask them how they chose to get their current credit cards are some variation of the following:
“I fly this airline a lot, so I thought I should get their card to get their miles and status.”
“I asked my friend//relative which credit card I should get, and they’re really into credit cards, so I took their advice.”
“I saw a high welcome offer for this card, so I just got it.”
“I shop at this store a lot, and at checkout they said I’d save 10% if I got this card! Such a good deal, right!?”
“I spend a lot in this category, and this card gives me 3x back in this category, so I got it.”
Let’s take a deeper look at each of those responses:
“I fly this airline a lot, so I thought I should get their card to get their miles and status.”
This answer sometimes makes sense, but most of the time it highlights the lack of knowledge most people have about credit cards. That’s because of two reasons:
Most people who fly an airline a lot still don’t fly that airline enough to get status from their flights alone.
The cheapest way to book most airlines with miles, especially US airlines, is not with that airline’s own miles, but by transferring points from major credit card issuers (Chase/American Express/ Etc.) to one of that airlines’ partners, and by booking it in the partner airline’s points currency.
On occasion, if you’re someone who travels with a big family, and routinely checks many bags, or you’re a consultant who travels the same route weekly for work, then the airline specific cards might make sense as one of your first cards. But for most people, airline specific cards are not worth considering until you’re much further along in your credit card journey.
“I asked my friend//relative which credit card I should get, and they’re really into credit cards, so I took their advice.”
When I hear this answer, I know their head’s in the right place. They know credit cards can be a great source of rewards, and they’ve expressed a desire to earn them, they just also admit they don’t know how to yet. So they do what works in most other areas of life - they ask an expert.
The problem here is that many of the average person’s friends and relatives who claim to know a lot about credit cards don’t know as much as they think, leading to less than optimal advice. There are more than 4,000 credit cards, hundreds of which are fairly popular, and most people who are self-proclaimed credit card enthusiasts can’t name 30 of them. This means they end up recommending the same small handful of cards, which make sense to them based on their relatively limited knowledge of the options available, but are not nearly as good as an all-knowing expert or advisor.
There are those who do sincerely know a lot about credit cards, and their advice would be much better than average, but they don’t see your spending patterns, so even if they know credit cards perfectly, they only know half of the equation: your spending patterns are equally as important.
There’s also more than one way to skin the credit card cat: there are several different strategies and everyone prioritizes things slightly differently. We’re a very opinionated community, and that credit card expert you know can be prone to projecting their own preferences and opinions on what to focus on onto you - even if that doesn’t make sense for your personal spending patterns and goals.
“I saw a high welcome offer for this card, so I just got it.”
Believe it or not, this is the answer that makes the most sense of those we’ve gone over so far. That’s because welcome offers usually account for so many more points than you’d get from using the card to actually buy things once you’ve qualified for the welcome offer already.
Think of this simple example:
One card has no welcome offer, but gives you 1x back on everything
Another card has a $500 welcome offer, but gives you 0x back on everything
Now assume you spend $2,000/month on the card. After one year, the first card will earn you $240 worth of rewards (1x back on $24,000), while the second card will earn you $500 in rewards after one year. It takes more than 2 years without getting any other cards for the first card to be more valuable than the second card. But if you get more than 1 card every 2 years, if that card has a welcome offer, it will take even longer for the first card to be worth getting.
Now what if I told you that first card is actually close to one of the most popular credit cards out there: the Wells Fargo Bilt Mastercard®.
It earns 1x back on rent, but because it has no welcome offer, it’s not nearly as attractive as people make it out to be. Assuming that $2,000/month is your rent payment, the Bilt card rarely makes sense as your next card if you’re open to opening more than 1 card every 2 years.
This is all to say - getting a card because it has a high welcome offer is one of the smartest reasons to get a card, without having to learn that much about credit cards, but it’s still far from perfect.
“I shop at this store a lot, and at checkout they said I’d save 10% if I got this card! Such a good deal, right!?”
We’re going right from one of the best reasons to open a new card to one of the worst. If welcome offers are such a valuable source of rewards, then what’s the welcome offer on all of these store branded credit cards? In this example, it’s 10% of whatever your purchases is. If you’re spending thousands of dollars in this one purchase than perhaps that’s a great deal, but if you’re spending $1,000 or less on the transaction, you’re essentially getting a welcome offer of less than $100, which is lower than almost every other welcome offer out there.
Not to mention these cards usually aren’t great for spending outside of that specific store, so unless you already have a solid foundation of cards in your wallet for all your other purchases, it rarely makes sense to make the store-branded card your next card.
“I spend a lot in this category, and this card gives me 3x back in this category, so I got it.”
This makes sense if you want a “set it and forget it” strategy. That means if you want to get a small handful of cards and only use those cards, never opening any new ones, then this is the way to go: you figure out how many cards you’re willing to open, you get 1 general card (most likely a 2% back card), and then you take your highest spending categories and the cards that offer 3-5x back on those categories, and keep getting those cards until you’ve hit the amount of cards you’re willing to get in total.
Most people do some version of this unintentionally, and might pick up a restaurant card if they notice they don’t have one yet, for example. The problem with this strategy is twofold:
Beyond food and gas, it’s not obvious which categories you should prioritize. Should you get a card that gives you 5X back on your phone bill that you know you have every month, or 5X back on travel that costs way more than your phone bill, but you only take 1 vacation a year? While this setup is meant to be one-time, simple, and easy, getting it right is not as easy as it looks.
For very little effort, you can usually earn far more points. That’s because, like we’ve discussed, welcome offers are far more valuable than what you’d earn on most standard transactions.
This means if you plan on having a 5 card setup, if you can get 5 welcome offers each worth $500, that’s $2,500 of value. Assuming those cards each earn nothing on other purchases, which will not be the case, and that you can average 3X back by focusing on categories, then you’d need to spend $83,334 on credit cards to earn more with that setup than from the welcome offer path.
Assuming the high welcome offer cards earn you an average of 2X on all eligible purchases - for example, if one of them is the Capital One Venture X Rewards Credit Card - then you’re really only earning an extra 1X back from focusing on categories over welcome offers. That means you’d need to spend more than $250,000 on credit cards to make the category setup more profitable than the welcome offer setup.
But even the welcome offer strategy leaves many questions left unanswered:
Which welcome offers should you prioritize?
How often should you open a new card?
Should I ever get cards that focus on categories?
Which points currencies are most valuable?
Is there a special order that I have to get the cards in?
How do I make sure I only get cards that I’ll naturally hit the welcome offer for, without increasing my spending and getting myself into debt?
This leads us to the next part of our conversation.
How to Choose the Right Card
Once you’ve decided you want to choose the right card, that you know there are thousands of dollars worth of benefits out there each year for most people if they just get these few choices right, then we can talk about how to make sure you get it right.
It’s a hard question because there are so many different cards out there, because only you actually know your spending patterns, and because each credit card issuer has different rules that aren’t obvious when you’re just reading the card’s marketing page. This means there are really only 2 ways to reliably get this right:
You become a credit card expert yourself because then you’ll know about all the cards, and you’ll know about your personal spending and preferences, and you’ll be able to guide yourself accordingly. There are many excellent resources for this online, from blogs to YouTube channels and everything in between. You might even enjoy it - many of us do - but know that this is now turning away from purely a quick personal finance choice and into a time-sucking hobby.
You let Pointwise do it for you. As a shameless but relevant plug, Pointwise is an app we created specifically to solve this problem. To give people who don’t want to become credit card experts a way to easily know which credit cards to get and when, based on their actual spending and preferences. The concept is simple:
You take a 2 minute onboarding quiz telling us your credit card goals and preferences
You connect your existing credit and debit card accounts so we can analyze your spending patterns
We compare your actual spending patterns and preferences to the different benefits offered from almost every card available, enabling us to tell you which credit cards to get and when to get them. Our algorithm also knows each of the rules that credit card issuers have, like Chase’s famous 5/24 rule, so we take into account each of those as part of our recommendations.
In Conclusion
Choosing the right credit card doesn't have to be a daunting task. By understanding your spending habits, considering essential factors, and utilizing apps like Pointwise, you can easily find the cards that reward you most for spending the way you naturally do.
——
Editors Note: The opinions expressed in this article are solely the author's and do not reflect the views of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved, or endorsed by any of the organizations mentioned.
Choosing the Right Card for Your Spending Habits
Ken Book
Jul 26, 2024
Advertiser Disclosure
Pointwise is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.
Introduction
More than 4,000 credit cards are available in the US, but realistically, you can only get a small fraction of them. Correctly choosing one card over 3,999+ other cards is time consuming, overwhelming, and difficult, if not impossible.
Each card might have a unique welcome offer, different categories that give elevated earning rates, different credits to help offset an annual fee, a different annual fee, and not to mention each credit issuer has their own application rules that can impact the order in which you should apply for cards and whether or not you’re even eligible for them.
Needless to say, it’s not easy.
How People Currently Choose Cards
You’d be surprised to learn how little research goes into such a complicated decision for most people. Most people don’t do very much research when deciding which credit card to get.
The most common answers people give me when I ask them how they chose to get their current credit cards are some variation of the following:
“I fly this airline a lot, so I thought I should get their card to get their miles and status.”
“I asked my friend//relative which credit card I should get, and they’re really into credit cards, so I took their advice.”
“I saw a high welcome offer for this card, so I just got it.”
“I shop at this store a lot, and at checkout they said I’d save 10% if I got this card! Such a good deal, right!?”
“I spend a lot in this category, and this card gives me 3x back in this category, so I got it.”
Let’s take a deeper look at each of those responses:
“I fly this airline a lot, so I thought I should get their card to get their miles and status.”
This answer sometimes makes sense, but most of the time it highlights the lack of knowledge most people have about credit cards. That’s because of two reasons:
Most people who fly an airline a lot still don’t fly that airline enough to get status from their flights alone.
The cheapest way to book most airlines with miles, especially US airlines, is not with that airline’s own miles, but by transferring points from major credit card issuers (Chase/American Express/ Etc.) to one of that airlines’ partners, and by booking it in the partner airline’s points currency.
On occasion, if you’re someone who travels with a big family, and routinely checks many bags, or you’re a consultant who travels the same route weekly for work, then the airline specific cards might make sense as one of your first cards. But for most people, airline specific cards are not worth considering until you’re much further along in your credit card journey.
“I asked my friend//relative which credit card I should get, and they’re really into credit cards, so I took their advice.”
When I hear this answer, I know their head’s in the right place. They know credit cards can be a great source of rewards, and they’ve expressed a desire to earn them, they just also admit they don’t know how to yet. So they do what works in most other areas of life - they ask an expert.
The problem here is that many of the average person’s friends and relatives who claim to know a lot about credit cards don’t know as much as they think, leading to less than optimal advice. There are more than 4,000 credit cards, hundreds of which are fairly popular, and most people who are self-proclaimed credit card enthusiasts can’t name 30 of them. This means they end up recommending the same small handful of cards, which make sense to them based on their relatively limited knowledge of the options available, but are not nearly as good as an all-knowing expert or advisor.
There are those who do sincerely know a lot about credit cards, and their advice would be much better than average, but they don’t see your spending patterns, so even if they know credit cards perfectly, they only know half of the equation: your spending patterns are equally as important.
There’s also more than one way to skin the credit card cat: there are several different strategies and everyone prioritizes things slightly differently. We’re a very opinionated community, and that credit card expert you know can be prone to projecting their own preferences and opinions on what to focus on onto you - even if that doesn’t make sense for your personal spending patterns and goals.
“I saw a high welcome offer for this card, so I just got it.”
Believe it or not, this is the answer that makes the most sense of those we’ve gone over so far. That’s because welcome offers usually account for so many more points than you’d get from using the card to actually buy things once you’ve qualified for the welcome offer already.
Think of this simple example:
One card has no welcome offer, but gives you 1x back on everything
Another card has a $500 welcome offer, but gives you 0x back on everything
Now assume you spend $2,000/month on the card. After one year, the first card will earn you $240 worth of rewards (1x back on $24,000), while the second card will earn you $500 in rewards after one year. It takes more than 2 years without getting any other cards for the first card to be more valuable than the second card. But if you get more than 1 card every 2 years, if that card has a welcome offer, it will take even longer for the first card to be worth getting.
Now what if I told you that first card is actually close to one of the most popular credit cards out there: the Wells Fargo Bilt Mastercard®.
It earns 1x back on rent, but because it has no welcome offer, it’s not nearly as attractive as people make it out to be. Assuming that $2,000/month is your rent payment, the Bilt card rarely makes sense as your next card if you’re open to opening more than 1 card every 2 years.
This is all to say - getting a card because it has a high welcome offer is one of the smartest reasons to get a card, without having to learn that much about credit cards, but it’s still far from perfect.
“I shop at this store a lot, and at checkout they said I’d save 10% if I got this card! Such a good deal, right!?”
We’re going right from one of the best reasons to open a new card to one of the worst. If welcome offers are such a valuable source of rewards, then what’s the welcome offer on all of these store branded credit cards? In this example, it’s 10% of whatever your purchases is. If you’re spending thousands of dollars in this one purchase than perhaps that’s a great deal, but if you’re spending $1,000 or less on the transaction, you’re essentially getting a welcome offer of less than $100, which is lower than almost every other welcome offer out there.
Not to mention these cards usually aren’t great for spending outside of that specific store, so unless you already have a solid foundation of cards in your wallet for all your other purchases, it rarely makes sense to make the store-branded card your next card.
“I spend a lot in this category, and this card gives me 3x back in this category, so I got it.”
This makes sense if you want a “set it and forget it” strategy. That means if you want to get a small handful of cards and only use those cards, never opening any new ones, then this is the way to go: you figure out how many cards you’re willing to open, you get 1 general card (most likely a 2% back card), and then you take your highest spending categories and the cards that offer 3-5x back on those categories, and keep getting those cards until you’ve hit the amount of cards you’re willing to get in total.
Most people do some version of this unintentionally, and might pick up a restaurant card if they notice they don’t have one yet, for example. The problem with this strategy is twofold:
Beyond food and gas, it’s not obvious which categories you should prioritize. Should you get a card that gives you 5X back on your phone bill that you know you have every month, or 5X back on travel that costs way more than your phone bill, but you only take 1 vacation a year? While this setup is meant to be one-time, simple, and easy, getting it right is not as easy as it looks.
For very little effort, you can usually earn far more points. That’s because, like we’ve discussed, welcome offers are far more valuable than what you’d earn on most standard transactions.
This means if you plan on having a 5 card setup, if you can get 5 welcome offers each worth $500, that’s $2,500 of value. Assuming those cards each earn nothing on other purchases, which will not be the case, and that you can average 3X back by focusing on categories, then you’d need to spend $83,334 on credit cards to earn more with that setup than from the welcome offer path.
Assuming the high welcome offer cards earn you an average of 2X on all eligible purchases - for example, if one of them is the Capital One Venture X Rewards Credit Card - then you’re really only earning an extra 1X back from focusing on categories over welcome offers. That means you’d need to spend more than $250,000 on credit cards to make the category setup more profitable than the welcome offer setup.
But even the welcome offer strategy leaves many questions left unanswered:
Which welcome offers should you prioritize?
How often should you open a new card?
Should I ever get cards that focus on categories?
Which points currencies are most valuable?
Is there a special order that I have to get the cards in?
How do I make sure I only get cards that I’ll naturally hit the welcome offer for, without increasing my spending and getting myself into debt?
This leads us to the next part of our conversation.
How to Choose the Right Card
Once you’ve decided you want to choose the right card, that you know there are thousands of dollars worth of benefits out there each year for most people if they just get these few choices right, then we can talk about how to make sure you get it right.
It’s a hard question because there are so many different cards out there, because only you actually know your spending patterns, and because each credit card issuer has different rules that aren’t obvious when you’re just reading the card’s marketing page. This means there are really only 2 ways to reliably get this right:
You become a credit card expert yourself because then you’ll know about all the cards, and you’ll know about your personal spending and preferences, and you’ll be able to guide yourself accordingly. There are many excellent resources for this online, from blogs to YouTube channels and everything in between. You might even enjoy it - many of us do - but know that this is now turning away from purely a quick personal finance choice and into a time-sucking hobby.
You let Pointwise do it for you. As a shameless but relevant plug, Pointwise is an app we created specifically to solve this problem. To give people who don’t want to become credit card experts a way to easily know which credit cards to get and when, based on their actual spending and preferences. The concept is simple:
You take a 2 minute onboarding quiz telling us your credit card goals and preferences
You connect your existing credit and debit card accounts so we can analyze your spending patterns
We compare your actual spending patterns and preferences to the different benefits offered from almost every card available, enabling us to tell you which credit cards to get and when to get them. Our algorithm also knows each of the rules that credit card issuers have, like Chase’s famous 5/24 rule, so we take into account each of those as part of our recommendations.
In Conclusion
Choosing the right credit card doesn't have to be a daunting task. By understanding your spending habits, considering essential factors, and utilizing apps like Pointwise, you can easily find the cards that reward you most for spending the way you naturally do.
——
Editors Note: The opinions expressed in this article are solely the author's and do not reflect the views of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved, or endorsed by any of the organizations mentioned.