The Frugalwoods Guide to a Simple, Yet Rewarding, Credit Card Experience

Kidwoods in the snow

My credit card strategy has been, heretofore, unoptimized. Woefully unoptimized. It’s been less of a “strategy” and more of a “doing what we’ve always done because it’s easy.” Mr. Frugalwoods and I decided to (finally) do some research and–wonder of all wonders–sign-up for the credit cards that make the most sense for us. We landed on:

  1. The Fidelity Rewards Visa Signature Card (more here)
  2. The Amazon Prime Rewards Visa Signature Card (more here)
  3. The Marriott Bonvoy American Express Card

Wondering what on earth a “credit card strategy” is? Wondering what “rewards card” even means? Well, my friend, you’ve come to the right place. I’m doing a deep dive into the world of credit cards today, which I promise won’t be horrible, boring, or complicated.

While I’m all for judicious and mindful spending, I’m also all for leveraging that spending when it makes sense. Using credit cards isn’t a license to overspend, but rather, a clever way to benefit from the purchases you were going to make anyway.

Disclaimers I want to share:  

  1. I am not a trained financial professional and I encourage people not to make serious financial decisions based solely on what one person on the internet advises. I encourage everyone to do their own research to determine the best course of action for their finances. I am just a person who writes about money. You, presumably, are a person who likes to read stuff about money. Or you’re here for how hilarious and good-looking I am. Either is fine with me.
  2. This post contains affiliate links for the credit cards that I use. I don’t promote stuff that I don’t personally use, which is why it took me so long to write this post (I mean, I’ve only been writing Frugalwoods for FIVE years, so, not that long… ). Before writing about these cards, I had to first get these cards and use them for myself. I’m not going to write “affiliate link” after every affiliate link because that’s annoying to read. When in doubt, assume it’s an affiliate link.

The Three Levels of Credit Card Usage

Gardening the hard way: with a toddler wielding a sledgehammer. Because why not?!

As with most things in my life, I’ve decided to keep my credit card strategy simple and straightforward. There are many ways to leverage credit card points, but I do not–at this stage in my harried existence–have the time, energy, or spreadsheets to chase complex credit card bonuses, advantageous though they may be.

There are (in my opinion) three levels of sophistication/complication for credit card usage:

  1. Easy: Have one credit card that offers a flat cash back bonus on any and all purchases (the Fidelity Rewards Visa is a good card for this approach as is the Chase Freedom Unlimited).
  2. Medium: Have several credit cards that earn different types of rewards on different types of purchases (this is what I do and I go into detail below about my approach).
  3. Hard: Set up a credit card portfolio to manage multiple accounts that generate different rewards at different times for different things.

If you’re interested in embarking on the third, and most sophisticated, tier of credit card-ing, you’ll need to conduct your own research to determine the stable of cards that’ll make the most sense. CardRatings.com is a site that’s really helpful in determining which cards offer what bonuses and I’d start my research there.

If you want to manage multiple cards with different requirements and restrictions, more power to you! What I will caution, however, is that if you do so, you need to be extremely organized and careful about how you utilize your cards and manage your spending.

Credit Card Rewards: Getting Something For Nothing!

Earning cash back is better than earning kale back. I speak from experience.

Let’s get right into the fabulous world of credit card rewards. Mr. FW and I buy everything we possibly can with credit cards in order to earn rewards, which are sometimes referred to as “points.” However, credit cards and their rewards are not all created equal.

There are two basic categories of credit card rewards:

  1. Cash back rewards (cold hard cash back on your purchases)
  2. Travel rewards (typically airline miles and/or hotel points)

Mr. FW and I have credit cards that fall into both of these categories: 

  1. The Fidelity Rewards Visa Signature Card provides 2% cash back on all purchases
  2. The Amazon Prime Rewards Visa Signature Card provides 5% cash back on all Amazon purchases
  3. The Marriott Bonvoy American Express Card provides travel rewards (specifically hotel points)

1) The Fidelity Rewards Visa (the simplest, easiest credit card rewards to get)

The Fidelity Rewards Visa is a cash back credit card. This means it gives you a percentage back on all of your purchases. Cash back cards are pretty straightforward in that sense, but not all cash back cards are easy to use. Some require certain amounts of money to be spent at certain types of retailers within certain windows of time in order to qualify for cash back.

That is way too complicated for moi because I’d be in the grocery store going, “HALP! It’s March and I’m buying bananas! Which card am I supposed to use????!” I can barely remember that I’m supposed to be buying bananas in the first place, let alone which card I should pay for them with. Given my memory-related limitations (I blame my two children 100%), I decided to get the simplest, most straightforward cash back card that I could find: the Fidelity Rewards Visa. Even the name is simple, which I appreciate.

I can’t imagine why I have trouble staying organized in the grocery store…

The Fidelity Visa gives me 2% cash back on ALL of my purchases. It doesn’t matter what I buy, when I buy it, how much I buy, or where I buy it. Every single purchase made with this cards yields 2% cash back. That, to me, is the definition of a simple credit card strategy. How many times can I say simple? A lot, apparently.

Q:     What exactly does 2% cash back mean?

A:     It means that I receive 2% back on all purchases I make with this credit card. For example, if I were to spend $1,000 with this card, I’d receive $20 (because 2% of 1,000 = 20). For free. For buying stuff I was going to buy anyway! This is the beauty of credit card rewards. They’re literally something for nothing.

Other stuff I like about the Fidelity Rewards Visa:

  • No annual fee. Some credit cards charge a flat annual rate just for the privilege of having them in your wallet. Without an annual fee, it’s an easy decision to have this card and keep it open (and paid off) for years, which is beneficial to your credit score.
  • No minimum spending requirement. Some cards require a set amount of spending over a set amount of time in order to earn your rewards. This card does not.
  • No categories for spending. As I mentioned, some cards specify different types of expenditures that qualify for rewards at different times (for example: all restaurant purchases qualify for rewards in the month of March, but not in the month of April). This card has no such parameters.
  • You can earn a $100 bonus if you spend $1,000 within the first 90 days of having this card (note: this is not an invitation to overspend, but rather, a nice bonus if you just so happen to spend this amount).
  • Cash back is automatically deposited. Since we bank with Fidelity, they automatically deposit our cash back rewards into our checking account. So, so, so simple.

If you have zero desire to own more than one credit card and are looking for a simple way to earn credit card rewards, I think the Fidelity Visa fits that bill quite nicely. If you’d like to learn more about this card, you can do so here.

One note is that you need to have a Fidelity account in order to have the Fidelity Visa. I bank with Fidelity, am happy with the accounts they offer, and so this wasn’t an issue for me. But, if you don’t have a Fidelity account and don’t want to open a one, there are two other cards with similar benefits that might work better for you:

More on each of these cards below.

A Card That I Don’t Have, But That Might Work Better For You: Chase Freedom Unlimited

Choosing the best credit card has a lot to do with how and where you spend your money. And we all spend money differently and in different places. Given that, it’s totally possible that a different card is going to make more sense for you, which is why I’ll devote some time to two cash back cards that I don’t have, but that might be better for you.

The Chase Freedom Unlimited Visa is very similar to the Fidelity Visa. It offers:

  • 3% cash back on all purchases in your first year, up to $20,000 spent. After that, earn unlimited 1.5% cash back on all purchases. As with the Fidelity Visa, there are no spending categories to manage and no limits to contend with. It’s a simple, straightforward 1.5% cash back.
  • There’s no minimum spending required in order to to redeem your cash back
  • Cash Back rewards do not expire as long as your account is open
  • Being a cardholder provides you with a free credit score
  • There’s no annual fee 

The real difference is that, after the first year, it offers 1.5% cash back as opposed to Fidelity’s 2% cash back, but again, if you’d rather not open a Fidelity account, then I think the Chase Freedom Unlimited is a good cash back option with very similar benefits. If you’d like to read more about this card, you can do so here.

Another Card That I Don’t Have, But That Might Work For You: Chase Freedom Visa

If you’re up for a bit more cash back challenge–which comes with more rewards–then you might consider getting the Chase Freedom Visa card.

Reasons #1 and #2 why I can’t manage complex credit card requirements

It entails a slightly more complicated scheme for earning points, but it does offer a whopping 5% cash back in certain categories of spending at certain times.

As we’ve established, I can barely manage myself these days–let alone spending categories–but if you’re slightly more organized than me (wouldn’t take much, people), then the Chase Freedom might be your ticket to a pretty significant amount of cash back.

I did some math for you: if you spent $1,000 on the Chase Freedom (in the correct categories and at the correct times), you’d get $50 in cash back (5% of 1,000 = 50), which is a hefty chuck of free money!

Additional pros of the Chase Freedom Visa:

  • No annual fee
  • You can earn a $150 bonus if you spend $500 on purchases in your first 3 months of owning the card (note: this is not an invitation to overspend, but rather, a nice bonus if you just so happen to spend this amount)
  • Automatic 1% cash back on all purchases

If that appeals to you and your spending patterns, you can learn more about the Chase Freedom Visa here.

Ok back to the cards that I have. Next up is….

2) The Amazon Prime Rewards Visa

Yep, we have a second cash back Visa card. Why? Because the Amazon Prime Visa yields 5% cash back on all Amazon purchases. Since we live in the middle of nowhere (and hate to shop), we buy a fair number of things from Amazon. We have this credit card linked to our Amazon account, so it’s automatically the card we use for Amazon purchases.

This ukulele and slide were both purchased on Amazon

This makes for an easy way to manage our spending to leverage maximum rewards. If you’d like to apply for this card, you can do so here.

Important Note: the 5% cash back card is only available if you have Amazon Prime, which we do. If you don’t have a Prime membership, Amazon offers a different card, the Amazon Rewards Visa Signature Card.

However, I would select the Fidelity Rewards Visa over the non-Prime Amazon card because if you’re not a Prime member, the benefits aren’t as good: 3% cash back on Amazon; 2% cash back at restaurants, gas stations, and drugstores; and 1% cash back everywhere else. If you use Amazon enough to warrant an Amazon cash back card, it would probably make sense to also be an Amazon Prime member and thus have the Amazon Prime Rewards card.

To redeem Amazon points, we go into the credit card interface (which is hosted by Chase) and choose to redeem our points as a “statement credit,” which puts that money towards our monthly credit card bill. The reason being: if you redeem your points for merchandise on Amazon (which is another option with this card), you lose out on the 5% discount you’d be getting if you instead purchased the items with your Amazon Prime Visa.

3) The Marriott Bonvoy American Express Card

Kidwoods in a hotel! Less fun than it sounds.

Formerly known as the Starwood Preferred Guest Starpoints card, this is the third and final credit card we have. The reason we have this card is that: 1) we’ve had it for over a decade; 2) we both used to travel a lot for work and we racked up tons of points; 3) we used to travel internationally at least once a year (this was, obviously, pre-kids… ).

Marriott Bonvoy is a merger of several hotel loyalty programs including Marriott Rewards, Ritz-Carlton Rewards, and Starwood Preferred Guest. It now covers a bunch of different hotel properties (including Sheraton, Westin, Courtyard, and Marriott), which is convenient.

This card only makes sense if your travel lines up with these properties and if you will redeem travel rewards points. This card does have an annual fee, which means you need to be pretty careful about deducing whether or not it’ll be worth it to you. Back when we traveled regularly (aka before we had two kids), this card made a ton of sense for us and our points enabled us to stay in gorgeous hotels all around the world. These points are not currency dependent and they don’t fluctuate with exchange rates, which worked in our favor when, for example, the Euro was strong against the dollar.

At one time, we were traveling so frequently that we had platinum status, which earned us hotel room upgrades and–something that goes down in Frugalwoods family lore–a free, high-end, daily breakfast buffet overlooking a canal at our hotel in Amsterdam. We started every morning with smoked salmon, capers, custom espresso drinks, champagne, homemade pastries, omelettes-made-to-order, bacon, champagne, smoked salmon, espresso, champagne, and uh… we got our points worth on that one.

Travel Rewards Cards Generally

Me on our trip to Zagreb, Croatia back in the olden days

It’s entirely possible that the Bonvoy won’t make sense for you because travel cards are all about how and where you regularly travel. The reason we got the Bonvoy, lo those ten years ago, is that our business travel patterns synced with the properties rewarded by the Bonvoy. If you travel a lot, and are organized enough to manage different travel cards, then it’s probably a good idea to sniff out a travel rewards card that–crucially–matches your travel patterns.

My friends who are into travel rewards told me that these three cards offer excellent rewards and are also ideal for accruing points that transfer to lots of different airlines and hotels:

If you want to analyze and compare travel cards, take a look at this list and figure out which one matches your travel patterns. This is a higher level of credit card sophistication, but if you travel a lot, this can be an excellent way to earn rewards and free travel!

When We Use Which Card

Glorious view of the Eiffel Tower from a trip Mr. FW and I took to Paris a few years ago. Like more than a few years ago…

There’s a modicum of organization required with owning three different cards; namely, remembering which card to use for which purchases. Fortunately, this is a simple calculation for us:

  • When booking a Marriott-affiliated hotel, we use the Marriott Bonvoy American Express
  • When buying on Amazon, we use the Amazon Prime Rewards Visa
  • For everything else, we use my favorite, the Fidelity Rewards Visa

Even I can keep this straight!

How Did We Find These Credit Cards?

I’m so glad you asked. You won’t be surprised to hear that the credit card applications flooding your mailbox are usually not for great cards. The best way to find cards that’ll work for you is to search for them yourself. Fortunately, there’s a website, CardRatings.com, with a search function for this purpose that nicely aggregates information about tons of different credit cards.

Me strolling around Portland, Maine on a rare child-free trip

This is where we learned about the Fidelity Rewards Visa. And again, if you want a simple, no fee, cash back card, then from my research, I think the Fidelity Rewards Visa is a good card as is the Chase Freedom Unlimited.

But if you want to optimize your card strategy a bit more, check out CardRatings and do your own research into which cards will offer the best rewards for your circumstances and spending patterns.

When researching cards, keep in mind:

  1. Whether or not the card has an annual fee.
  2. If there are restrictions on the types of purchases–or the timeframe of those purchases–that’ll impact receiving rewards.
  3. If you’ll actually use the rewards the card offers:
    • This is probably the most important factor because there’s no point in earning rewards that you’re never going to use.
    • This is another reason why I love cash back cards so much–I’m definitely going to use cash.
    • Airline miles, hotel points, toaster ovens–these are all lovely, but they’re not as easy to use as cash. I speak from experience as someone who has approximately one billion unused hotel points (which I will use someday, I swear!!!!).
    • Airline and hotel points can sometimes be converted to cash, but the exchange rate is typically abysmal. I wouldn’t recommend pursuing airline or hotel (or other specific) points unless you’re going to use them for their intended purpose.

Responsible Credit Card Usage

Now that we’ve established how awesome credit cards can be, I want to talk about how to use credit cards properly (don’t skip this section, people!!). I’m an advocate for responsible credit card usage, which entails the following:

1) Only Buy What You Can Afford

You cannot run away from a credit card bill. You must, my friends, PAY IT

A credit card is not a license to buy stuff you can’t afford. A credit card is a way to purchase things you were going to buy anyway and that you can 100% afford.

Don’t go around saying, “Mrs. FW told me to put a ton of stuff I can’t afford on a credit card!!” I SO DID NOT, you guys! Pretend that your credit card is a debit card. In order to use your credit card, you must have actual money in an actual bank to actually pay for whatever you’re actually buying. Actual truth.

2) Pay Off Your Card(s) In Full Every Month

Responsible credit card usage means you pay off your credit card(s) IN FULL every single month. No exceptions. No nuance. No grey area whatsoever. If you cannot pay off your cards in full every single month? Then you are buying more than you can afford.

If you’re concerned about how much you’re spending and want to save more every month, you might consider taking my free Uber Frugal Month Challenge (which you can sign-up for at any time).

3) Ignore the “Minimum Due” Amount on your Credit Card Statement

You will feel victorious, like this sunrise, every time you pay your credit card bill.

You need to pay the full “balance” on your credit card statement, not just the “minimum due.” Paying only the “minimum due” amount means you’re keeping a balance on your card, which will start accruing interest, which means you’ll owe more money. Paying a card off in full every month means paying the entire balance every month.

4) Keeping a Balance on a Credit Card Is Bad. Full Stop.

It’s a dirty, dirty myth that carrying a balance on your credit card helps your credit score. IT DOES NOT. Paying your cards off IN FULL every month and keeping them open for many years, however, does help your credit score. Do not keep a balance on a credit card (in other words, do not owe money to your credit card company. Ever).

Have I repeated myself enough? All together now:

  • Only use credit cards to buy things you can afford (and were going to buy anyway)
  • Pay off all of your credit cards in full every single month
  • Do not EVER carry a balance on a credit card

Making Payments On Time, Every Time: Set Up Automatic Payments!

I’m smiling because my credit cards are on auto pay!

Due to the extreme importance of never missing a payment, we have automatic payment set up to pay the entire balance on all three of our credit cards every month. Given my aforementioned memory-related limitations (CHILDREN) I wouldn’t dream of trying to remember to pay these each month. Back in the halcyon days of my twenties, I manually paid my credit card bill (IN FULL) every month because I had a lot less going on in my life.

There’s nothing wrong with manually paying credit card bills, as long as you are 100% certain you won’t forget to do so. Hence, the easiest thing to do is set up auto-pay (through your checking account) and never worry about missing a payment. Whether I’m having a baby, publishing a book, harvesting my garden, traveling to an exotic locale/let’s be honest: doing the laundry; thanks to auto-pay, I never have to worry about missing a credit card payment (flashes smile).

Mr. FW and I still comb through our credit card statements every month to ensure there aren’t any fraudulent charges, but to ensure on-time payments every month, auto-pay is your best friend.

Should I Get A Credit Card?

Well geez, Mrs. FW, you’re probably thinking, now that you’ve terrified/browbeaten us about paying off cards, why should we use them at all? They seem like a snake pit of danger!!!! Well, yes and no. Credit cards have the ability to handily destroy your finances if you don’t use them responsibly. But as we just learned, it’s actually quite easy to use them responsibly. It’s no more complicated than paying off your balance every month and choosing a card that’s right for you. That being said, I’m not a universal credit card advocate. Some people should not use credit cards and those people usually know who they are and need to be honest (with themselves) about this.

I am a person who cannot keep bags of chips or boxes of cookies in my house. Why? Because I will devour every last crumb in an unrepentant fit of consumption. I cannot use junk food responsibly and so I do not use junk food at all. Similarly, if you are a person who cannot pay off credit cards in full every month, then you shouldn’t use credit cards.

Homemade cookies! I cannot be trusted with these things…

I sometimes recommend that people stop using credit cards. The following Reader Case Studies contain just such advice from me:

If you see yourself reflected in some element of these Case Studies, then it may be that credit cards aren’t for you. And that is perfectly fine!! There’s no “being an adult” mandate that says you must have a credit card. There are other ways for you to build credit and other ways for you to purchase your stuffs.

A debit card (which is a card that directly debits from your checking account) is a great option if you’re not a credit card candidate. I like debit cards for this purpose because:

  • They’re just as convenient to use as a credit card.
  • You can use them for online purchases.
  • You can’t overspend because they pull money directly out of your checking account (hence the name “debit” versus the name “credit”). Most checking accounts come with a debit card linked to them.

The Advantages of Using Credit Cards

If you’re confident in your ability to pay off your credit cards in full every month, then I heartily encourage credit card usage for the following reasons:

The 10 little pumpkins we grew two years ago. I think they’re technically supposed to grow to the same size, but hey, diversity is so much better!

1) Credit card usage makes it super simple (my theme, apparently) to track your spending. While I use (and recommend) the free expense tracker from Personal Capital to consolidate my monthly spending, purchasing with credit cards makes that consolidation easier.

2) Credit card usage makes it easy to spot fraud. Since I comb through my monthly credit card statements, it’s easy for me to spot fraudulent activity and I have the protections offered by my credit card companies. I’ve had a few fraudulent charges over the years and I’ve always been reimbursed by my credit card company.

3) Credit card usage builds your credit. Since Mr. FW and I don’t carry any debt other than our mortgages, having several credit cards open for many years (which are fully paid off every month) has greatly helped our credit scores.

4) Credit card usage can equal REWARDS!! Woot. This is perhaps the most significant reason to use credit cards since all of the above can be accomplished through other means. But credit card rewards only come from credit card usage.

In Conclusion (finally, I know, right?!?)

See? That wasn’t too horrible or too complicated or too boring (right????!!!!)…

October barn view! Not remotely related to credit cards; I just like this picture.

Learn from my lazy/negligent credit card strategy and find a credit card that’ll pay you money for buying what you were going to buy anyway. Mr. FW wanted me to see how much cash back we DIDN’T earn by not having the Fidelity Rewards Visa until now, but I refused to perform this calculation. I am not a rear-window regrets-laden regretter (more accurately, I didn’t want to bother doing the math… ).

The point is, we left a lot of free cash on the table by not utilizing a card with a good cash back offering.

The reason it took Mr. FW and me so long to find a new credit card is partially because there are so many credit cards out there and partially because I was intimidated by the serious credit card maneuvering that so many people manage with aplomb. Turns out, once we actually looked around and spent, oh, five minutes researching, we realized there are great credit card options that we’d be foolish not to take advantage of.

For us, at this moment in our lives, maximizing travel rewards isn’t our priority. There may come a time when that is our priority again and when/if that happens, I’ll let you know which cards we choose. For the moment, the simplest, most straightforward thing for us to do is go with a cash back card.

In sum? I’ve decided to simple it out. If you too want to simple it out, then I think the Fidelity Rewards Card is a great choice, as is the Chase Freedom Unlimited, for people who are not into managing complicated credit card schemes, but who want to earn some cash back. The end.

Do you use credit cards? Which rewards/cards have you found most effective?

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84 Responses

  1. You’ve got some really good suggestions here. I especially like that your cash back card automatically deposits your cash back into your checking account. We use the Barclay Arrival Plus, and it gives us 2.5% (or maybe 2.05%? not sure?) on every purchase, but we have to use it to pay ourselves back for travel. Which is no problem because Mr. ThreeYear travels for work. Like you, I have trouble keeping up with different cards, so we just use it for everything. But I should check out the Amazon card, because we buy a lot at Amazon and 5% cash back sounds nice. I saw a great strategy: someone labeled their cards with a label maker, and indicated what they should buy with each one and what percentage back they got. I thought that was a great strategy if you tended to forget which card to use in which circumstances, like me!

    • Mrs. Frugalwoods says:

      Oh I like the label maker idea! That would totally work!

    • Lindsey says:

      We found it more financially advantageous to Safeway gift cards for Amazon and earn gas points. You can now take up to $2 worth off every gallon of gas using the points. I still order what I want from Amazon, but I keep a gift card balance and pay off that instead of any kind of credit card. I do the same for Home Depot remodeling purchases—estimate the cost and buy enough gift cards to cover it, thus earning gas points. If it is something I can order from Home Depot on line and pick it up at our local store, I do the same thing, paying with gift cards. I do the home depot ordering through My Points (like Swagbucks) and get My Points that I later redeem for other gift cards. It is not a lot of trouble and makes my money work harder for me by getting me cheaper gas and My Points gift cards. Periodically I make sure this technique is still giving me maximum returns and for now it is.

      • Lindsey says:

        P.S. we also buy the gift cards at Safeway with a credit card that gives us cash back.

        • Amy P. says:

          I’m curious if you can still get the Amazon gift cards at Safeway. Our Giant Eagle had a sign up that said they would not be carrying Amazon gift cards after mid-march. We have run into numerous problems with Home Depot gift cards and whether they can be used in store or online and it is never the place we want to use them.

  2. Ken says:

    You don’t mention cards that offer other benefits, such as the following (Note that I live in Canada; maybe these are not common in the US): double the warranty on purchased goods, travel insurance (cancellation, medical), etc.

    • Leslie reed says:

      Agree Ken. I once got a Costco Citi card because I was buying my college-age son a new laptop. Instead of Costco’s already good 2 year warranty, I got a 4 year warranty!
      Within 90 days, he left it in his car and it was stolen. I happened to call the card, and because it was within 90 days, they reimbursed me the entire 750 bucks! That really made my day. Forever grateful.

    • Mrs. Frugalwoods says:

      That’s a great point, Ken. Thank you for bringing it up! I think that the American Express Platinum is perhaps the best card in the US in terms of benefits. For anyone interested in a card with these types of benefits, I’d recommend using the CardRatings interface to see what would most nearly fit your needs.

  3. Pam Wickman says:

    I’m actually going to have my high school students read your article.

    • Csndace says:

      I love that! I sure wish I had gotten a financial education in my youth. It would have saved me years of grief.

  4. Carla says:

    I wonder what you think of the Fidelity card online interface. I have the same card and I HATED how clunky the online system was so much that i switched to a different card with 1.5%cashback through my bank. Not as great of a reward (and it doesn’t go directly to my Fidelity investments) but I like that I can see the info for both my debit and credit cards through one banking app. Also I didn’t like that the Fidelity autopay doesn’t really pay in full. Maybe this is normal for a credit card but it pays 1 month in arrears as of the statement date. So I started using Debitize because I don’t want to have those unpleasant surprises where I need to pull from savings, but I also want my cash flow process to be pretty hands off. Thanks for such a detailed post as always!

  5. Liana says:

    Thanks for this post! I have been considering getting a new card or 2 that more closely match with the rewards I want, but I’ve been hesitant because of the conflicting information out there about 1) how many cards is an ok number to have and 2) whether to keep the old cards with no balance or cancel them. Any thoughts there? Thanks so much!

    • Rebecca says:

      Keeping your accounts open helps lengthen your credit history, improving your credit, so that could be a reason to keep them open! I love the podcast ChooseFI and they always talk about their intense conversations travel hacking credit card rewards system, and those guys open cards ALL the time to get the travel bonuses. Opening a new card will only bump your credit down a few points, which can be built right back up with responsible useage. But, keeping an account open that has a good strong history can help keep your credit strong despite the little fluctuation. So there’s a thought!

  6. Rebecca says:

    We love using our credit cards! I’d say that we are in the medium credit card useage category. We have two cards and each one serves a purpose. We use the Citi Double Cash card which we really like, for our every day purchases. We get 2% cashback across the board with it and have really benefited from the extra cash! We also have the Discover It card, which my fiancé has had since he started college, and has added me on to since. We figured it was a good so we decided to keep it! We get 1% cash back on all categories, but there are rotating categories throughout the year that gives us 5%, on stuff like gas and groceries. We then usually use Ebates or Ibotta to earn ADDITIONAL cash back.

    We use our credit cards to purchase EVERYTHING and love it. Like you said, we get free money from stuff we were going to buy anyway! We used NerdWallet to pick our cards and thought it was really helpful! Also, we chose to go with the cash back option vs. travel rewards because I work as a nurse and I just don’t get that much free time to travel! The cash back option is definitely better for us.

    It is an incredibly satisfying feeling paying off your credit card every month. I’m currently working to pay off my student loans, and the feeling I get from paying off my credit card every month gives me the same positive, financial confidence building rush that I get from paying a loan balance off. It’s an incredible feeling that more people than you think will never experience. Paying off your credit card every month isn’t the norm, but it’s a great situation to be a weirdo in 🙂

    Great post to enjoy my coffee with this morning!

  7. Ruth H says:

    I have the Fidelity rewards card too, and my favorite part is that it can also deposit directly into a Fidelity IRA! It’s an easy way to automatically boost up retirement savings for people who aren’t already maxing out both a 401k and IRA. That 2% cash back now will keep on earning!

  8. MJ says:

    I’m not a big credit card user, but I do have the amazon card. Mostly because I don’t drive/have a car, so I do get a lot of things delivered. But, also because in my city, one of the Prime benefits is being able to have Whole Foods deliver groceries in a 2 hour window. So not only do I get my 5% on my amazon purchases, I get it on my food purchases. (And before anyone says “Whole Paycheck”… I’ve found the buying groceries online to be about ~$40 a week for one person, all of my meals, and I don’t buy any impulse things because I would have to look for them in the app).

    • Mrs. Frugalwoods says:

      Sounds like you have a great system in place there! I’m all for figuring out what works best for your individual circumstance and it sounds like you’ve got it dialed in. Plus, you’re saving MAJOR $$$ by not owning a car!!!

    • Jen says:

      Me too! I just put up a comment saying nearly the same thing. We sold our only car and rely on either walking to Whole Foods down the street or getting it delivered via prime. I totally agree about the lack of impulse shopping when you order online. It’s been raining here a lot lately so we’ve been doing the delivery more often, and I think we’re going to keep doing it. I just add things to my Prime cart throughout the week and then click buy at the end of the week. Super easy and no extra items sneak in. We also spend reasonably, I think, anywhere between $50 to $80 per week for 2 adults and 2 spoiled dogs who get fresh baked chicken everyday, lol. Since we don’t have a car, I just count the tip amount for the driver against our transportation budget, and always use the 2 hour window so there is no delivery fee. 🙂

  9. Loveym says:

    What if your credit sucks at the moment & your trying to build your credit back up & you you should pay your credit card balance in full? The banker says no becuz they want to make sure your making payments on time ?I m so confused about credit stuff ! How it works in general! Applying for credit to brings your score down? Applied for a few in a month brought my score done significantly ☹️ I’m soooo confused ! Another system I’m set up to fail at !! Shhesh

    • Mrs. Frugalwoods says:

      You’ve brought up some good questions here and there’s no short or easy answer. And so, what I’ll plan to do is write another post about credit in general and credit scores and rebuilding credit. Let me mull this over and put something together.

      • SurfingtoFI says:

        Refer to Radical Personal Finance’s Credit Card course. He explains in depth about increasing your credit score even if it’s super low. I have helped two family members and two friends climb backup the ladder quickly applying his strategies. And it’s easy…just takes a bit of time.

    • Jackie says:

      Not to steal Mrs. Frugalwoods’s thunder but here’s a quick recap of credit. There’s a lot that goes into a credit score. Just a few tips: you DON’T need to pay interest to improve your score. Use less than 30% of the card’s available balance and pay in full every month. That will show a good utilization rate (“they” like to see 30% or less) and a good payment history. Banks running your credit does impact your score, so hold off on new applications for a while. It will take some time to establish 1. good payment history and 2. length of accounts. This might help you https://www.myfico.com/credit-education/credit-scores/credit-scores-and-credit-reports

  10. Rhonda says:

    I have the Amazon card and a LL Bean card that earns cheap and free clothing. We just built a house so I got a lot of points. But I think for monthly living I spend less using the cash envelope system.

  11. Michael Outa says:

    Great post! Credit cards can definitely be a useful tool if used properly. Cash-back bonuses are awesome and pair this with a cash-back app like Ebates or Dosh and you can some more cash-back! Thanks for sharing! 🙂

  12. SurfingtoFI says:

    I am using several 0% credit cards to pay down debt faster. I have saved thousands the past year I have done this thanks to the “Credit Card Exploitation Course” by Radical Personal Finance.(It’s a great podcast too in general by the way!)

    If you have good credit and are in a rush to pay down your debts, car, house, college tuition and you have good organization with card tracking it’s a great tool. You can do 0% cash advance or do something called surfing, moving the balance from one card to the next as it nears the end of it’s promotion period. Balance transfers fee can be 2%, 3% or 0% depending on the card and your score. Check out Nerd Wallet for comparisons.

    While acquiring debt is considered a no no, if you already have the debt or life happens this is a great tool when used responsibly. google the course I talked about above if you need more info and confidence in giving it a whirl.

  13. Julie says:

    I love the Chase Freedom card. The quarterly 5% categories don’t bother me since one of them is usually something that I use. For example, this quarter has gas stations and drug stores. Next quarter will have grocery stores. I’ll see warehouse clubs and Amazon at some point throughout the year too. And everything else is 1% back.

    We did some points hacking last year when my husband took out a Chase sapphire and another Chase preferred card. The points paid for premium economy seats to Korea for the both of us!

    I’m considering getting an Amazon card. I shop at Whole Foods on occasion, too (their weekly sales include a great price on sustainable fish!). We pay off our cards in full every single month.

  14. JM says:

    Interesting post. I see why it was so long, since in the same breath you are advertising credit cards and also warn about being frugal,which don’t go well together for MANY people. I myself utilize credit cards and rewards,I have for years. I’m also quite frugal. I’m REALLY glad you mentioned not carrying a balance,it’s probably the most important thing most people overlook. And also, the Marriott Bonvoy is so much less profitable for hotel stays than other hotel branded cards now, when the merger happened the card lost much of its previous value. The points charts changed (for the worse) and it’s hard for an average traveler to get much out of it reward-wise anymore. (as they intended) Far better to pick up a Hyatt or Hilton or IHG brand which costs less and provides more reward options. (IMHO) I enjoy reading your blog posts anyway.

  15. Trish says:

    As an FYI, Amazon’s store card (not Visa) also offers 5% cash back if you’re a Prime member. I already have the Fidelity Visa card, which I love dearly, as well as the LL Bean Visa. LL Bean used to be Mastercard but switched to Visa last year.

  16. Nancy S says:

    We’ve had the Starwood Preferred Guest (now Bonvoy) American Express Card since 2000, and it has been a great card. However, since August 2018 when the Starwood Preferred Guest Program officially merged with Marriott – the credit card has been devalued on non-Marriott spending, and we now use it only for Marriott hotel stays. We are keeping it because we’ve had it so long, and because the annual free night certificate more than pays for the annual fee. However, it’s a moot point for your readers, as the card is no longer available to new cardholders.
    (See The Points Guy’s blog post here: https://thepointsguy.com/guide/starwood-amex-card-review/)

  17. Jackie says:

    I’ve had the Fidelity Visa for years and I wondered why you guys never mentioned it (I opened my IRAs with Fidelity based on your posts!) It really is super easy, and it gives us a bit extra to put in the Roth or the kids’ 529s!
    I am also on Team No Junk Food in the house! 🙂

  18. Erin says:

    I LOVE my Capital One World Aspire MasterCard. I’m Canadian and though this card has a fairly high annual fee ($130), it’s always made financial sense to keep it: great travel and flight insurance (including baggage loss and flight delay and cancellation), great rental car insurance, and consumer protection. I’ve had to use the travel medical and the company was prompt and reasonable in reimbursing me. The rewards are terrific too: right now I’m building up the points to use for travel next year but in the past have mainly used them for cash back or gift cards (for myself or others). And, finally (to close this love letter to my MasterCard), the online interface is very easy to understand and I can generate reports for my different spending categories.
    I have a no fee RBC visa that I use only for my transit pass so that I qualify for free VIP banking. Because I use it so rarely I don’t think I’ll see any rewards for about a decade, but that’s ok.

    • Laurie says:

      I feel the same way about the Aspire card. Though I don’t think it’s offered any longer. Seems it was ‘too good’ 🙂

  19. Abby says:

    Costco Citi Rewards Visa has these cash back rewards: 4% on gas, 3% on Travel & Restaurant, 2% at Costco, 1% everywhere else, no annual fee, no foreign transaction fees, 2yr extended manufacturers warranty, 60day price rewind, etc…

    • Dicey says:

      I was going to say this, but I see it’s been done for me. Thanks, Abby.
      Timely Pro Tip: CASH that check at Costco, but don’t use it when you shop there. If you do, you’ll be losing out on the rebate for that purchase. Every warehouse will gladly give you cash, either at the checks and or at Member Service. I cashed two last work for over $240.00. Woo-hoo!

  20. KN says:

    Great post! I also land somewhere around where you do on the easy-medium-hard spectrum (maybe a smidge closer to hard). What we do:

    –Chase Sapphire Preferred, for 2% dining and travel. We use the points, though, for travel and not cash back. This ties in with our:
    –Chase Freedom, for the 5% categories. We do try to max those out every quarter because the Ultimate Rewards points are valuable to us and can be transferred to the Chase Sapphire Preferred. This quarter was tough because we simply don’t spend that much at gas stations/tolls or drugstores, and while I know I can use the Freedom at a drug store to buy a gift card for something I was going to use anyways, there just wasn’t much in the way of gift cards that I knew I could use at the drug stores. My strategy for wrapping up Q1 with the Freedom is to buy some Shell gas gift cards and to preload some extra funds on our toll account, since our state lets us do that. Q2 should be a slam dunk for us with grocery stores.
    –Chase Freedom Unlimited, 1.5% on everything else. Again, these points can be transferred to the Chase Sapphire Preferred.

    We also utilize the 5% Amazon card that the Frugalwoods use, but will probably cancel Prime after this year and the card, since we don’t use it much. And for us, we could go to a drug or grocery store, buy Amazon giftcards with the Chase Freedom for 5% back, since the Ultimate Rewards points with Chase are more valuable.

    Finally, I have a Discover card that I got eons ago that I still sometimes use if the 5% categories are good, but it’s my lowest priority card at this point. Some quarters it’s in circulation, others it isn’t.

    I realize I could do more to chase bonuses and such, but right now that’s not a priority.

  21. Anastasia says:

    I really like this strategy, thank you! Any thoughts on what to do with the old credit cards? I have several store cards which I never use because I am off shopping for new clothes (yay me!). But I haven’t closed them because worried it will hurt my credit score. I have no other debt, so credit cards are really the only thing my credit score is based on. Thoughts?

  22. Molly says:

    We’re about to do a kitchen reno. I’m interested in putting the costs on a card (that I’ll immediately pay off) that will give us the best rewards for spending a lot of money. Any suggestions?

  23. Suzanne says:

    I need to add the Southwest Airlines Priority Card to the discussion. We are retired and our family (daughter, son, mother, sister nieces, etc) is distributed all over the US. No one lives in the same town as anyone else, including us and everyone lives near an airport with SWA access. My husband and I each have separate SWA accounts, he always has enough points/miles to get a free companion pass and together we have enough points to always “buy” a free ticket. So we fly “free”. Always. Last year we made 14 trips back and forth across the US, gave my sister a round trip ticket from Denver to Tampa and our son (and his family) round trip tickets from Manchester to Tampa for Christmas. And we have just booked additional tickets for our 4 trips in the next 3 months. (Easter visit to Oregon, Mother’s Day in Austin, ballet recital in Maine and back to Oregon to celebrate a big birthday in June. I think a good life is all about supporting your values and our SWA card helps us “stay connected” even though we are so spread out.

  24. Tara says:

    I think cards are different for everyone depending on your needs. I am really not a fan of Amazon so having their card isn’t useful to me (I also dont’ have Prime). Instead, I use an Ally Card, the Costco Citi Card, and then misc. airline cards.

    I have Ally savings accounts, so signing up for Ally’s free credit card and using that for groceries makes sense as the cash back I earn on groceries (2%) gets increased 10% when I deposit in an Ally savings account, so I earn a bit that route. And the card has no annual fee so it’s no big deal to buy. Also, you can tell which stores are what type in your transactions, so I have learned that if it’s a super walmart, it’s considered a grocery store, for instance, but then my produce delivery service (hungry harvest) is unfortunately not grocery even though that’s all they sell.

    But the card that really works for us is the Costco Citi card. You get 4% cash back on eating out, and I mystery shop at restaurants, plus when we eat out with our large family, we pay the bill and get paid cash, so that gets us a lot of cash back. Then we get 3% cash back on gas and any travel related charges. Then it’s 2% at Costco an 1% everywhere else. We got $400 cash back last year (we did book a 4-day anniversary cruise on the card and bought a laptop for my brother and he reimbursed so that helped a lot too) so getting that chunk of change in Cash at my local Costco in February was amazing. I actually think that even if you don’t shop at Costco, if you use a decent amount of gas, travel a lot, and/or eat out a lot, this card pays for itself easily. The only downside is you do have to go to Costco to redeem your issued-once-yearly cash back. But for another $400, I’d do that!

    The everyday spending outside of gas/travel/restaurants/groceries goes on one of two airline cards. I know it’s silly to have two fee cards, but both are airlines that fly from our home to my dad’s house in Dallas so we’re racking up miles to see family for low costs. I had the SW card longer, but I got the AA card for work travel, so I keep both because SW is Chase and I really like their fraud protection (my old Sapphire was duplicated by staff at a restaurant and went on a $1,000 shopping spree) and it’s my last Chase card. But with the frequent work flights, I should have the AA card when booking work travel to get the free miles. If I ever leave the job, we’d end the AA card.

    Also for people worried about losing credit history with a fee card if you close it–unfortunately, yes, you do lose that history, but your smartest thing to do now is open up a free credit card, put something small on it monthly (like Netflix or similar), and pay it off each month. Eventually, it will become your longest open credit card and keep that good history! For me, I’ve had an Amex since 2007 that is free and I keep my recurring cat litter purchase on that card so it stays active enough and isn’t closed on me.

  25. Brandy says:

    I was excited to see your post today! We’ve been credit card “hacking” since 2012… it all started with wanting to take the kids to Disney, and not having the money/ not wanting to spend the money to do so. 😉 I consider my credit card adventures to be a major part of my frugal journey. Our vacation budget is nearly zero… I haven’t paid for a hotel or flight since 2012, other than sometimes having to pay a random small charge for airline or hotel taxes. This combined with being frugal has allowed me to pay off all of our non-mortgage debt, and helped to max out our 401k’s every year.

    Also have earned an obscene amount of money in cashback, that I redeemed to my Schwab account through American Express and invested into my IRA… ultimate frugal weirdo here! That was an epic year of strategically maximizing cash back from sign up bonuses. Also paid off a significant car loan that year with the cash signup bonuses.

    Just to give you an idea of what can be accomplished – all of the following trips were basically done for free, minus some small random taxes/fees…Disney, Niagara Falls, all-inclusive resort in the Bahamas, Washington DC, several trips to Gatlinburg, New Orleans, Charleston, SC, Upper Peninsula in Michigan, Chicago, Indianapolis, most of a Carribbean cruise for 2, and numerous other random small weekend trips. Our kids are in travel soccer, and we have never paid for their out of town hotels, always use hotel points. And our family is all out of town – we normally stay in hotels when we visit them, also using points.

    I just wanted to share all this, in case others are interested in this “hobby”. You must be extremely organized if you do it at the level I have, but the cost savings and cashback earnings have been well worth my time. At one time I had over 1 million Hilton points, just to give you an idea.

    I have zero debt other than a mortgage for my house, and recently took out a mortgage for a rental property. We had zero issues with getting the rental property loan or a recent refinance on our primary home, but the mortgage guy laughed when he said we each had a credit report that was 35 pages long.

    I mostly follow Doctor of Credit now to find new credit cards, there is a wealth of information on his site.

    I’ll never forget the feeling I had when I first earned enough to get free round trip airline tickets to Orlando for a family of 4…this was before I started on our frugal adventure, and we would have otherwise never been able to afford that trip. You can use cashback or the Chase Disney card to buy the Disney tickets, if you were wondering how that worked out.

    In all seriousness though, you do NOT have to do this at the level I have. Start small and see if you like doing this at all. Pay everything on time, and NEVER pay interest! …One late payment can be catastrophic!

    There is nothing wrong with having just one or 2 rewards cards, just enjoy the free nights and cashback – never get more cards than you can comfortably manage with the amount of time you want to spend on it all.

  26. Norm says:

    After going hard on the “Hard” method for years, the rewards are starting to dry up. We’ve earned over 5 million miles and points since 2011 by churning like mofos, but it just gets harder and harder to get approved. American Express will only give you the bonus on a card once in your lifetime, Chase won’t approve you for anything if you’ve been approved for five cards in the last two years. Even a American Airlines business card I signed up for wanted some proof that I have a business, like articles of incorporation! (The JetBlue card didn’t ask any questions!) We did get that Marriott card recently with a 100,000 bonus points so there are still good deals out there. Since “churning” is all about the sign-on bonuses, I never use certain cards to pay for certain expenses. It’s purely about hitting the minimum spending requirement for the card, then moving on.

    So while we used to start a new credit card almost every month, I kind of look forward to simplifying and only getting a few bonuses a year. But since we’ve traveled around the world (Asia 3 times, Peru once, Europe a few times, etc.) using about half of our 5 million points, getting 2% cash back is hard to get excited about.

    • KN says:

      For some folks, like myself, coming up with a schedule of what card to open when given the AMEX and Chase 5/24 rule, is just too much at this point in our lives. And I have nothing I do that remotely resembles a business for getting business cards at this point, though that may change in the near future. So it’s easier to just figure out what cards work best using what I have right now. That may change in the future though.

  27. Amanda says:

    This is a timely post. I’ve been considering ending my credit card use after next quarter. I have never carried a balance on my 7 years of using my discover card (5% on certain categories quarterly). Currently the 5% back is on grocery stores, next month gas stations. I think I beat the system sometimes (by purchsing gift cards from said store, or other ways that I wont mention) however I also think I tend to spend more than if I didn’t have a card at all. I don’t feel safe carrying cash around, but am seriously considering going back to my bank card so I immediately see that declining balance like when I was in college. Maybe I’ll test it out for a bit first. *note I don’t have kids, and probably have less overall purchases than parents do*

  28. Laura says:

    Thanks for a(nother) interesting FI/life post! I always enjoy Frugalwoods. This one’s especially interesting to me because I’m coming from someone who (was) abused (by) credit cards for most of my life but is turning it around.

    Like most Americans, I was raised to think of credit cards as “free money” so you could have it all this month, and that carrying a balance and having a monthly credit card payment was normal. Not surprisingly, I spent my 20’s – and my 30’s and 40’s – struggling with debt. Debt truly is slavery. I think it was Jerrold Mundis’ book on getting out of debt that made me realize that credit cards are not free money but a method of purchasing like cash or checks and should be treated as such. Ding, light bulb goes on. I paid off and closed accounts since then, sadly with one exception that I’m only now beginning to seriously chip away at.

    Meanwhile, in addition to said Chip card (which at least has a relatively low interest rate, 10.99%, thanks credit union), I slowly picked up three others: Bank of America rewards, BoA travel, and a non-rewards card through my local bank. Backstory/why: I picked up the BoA rewards card after reading multiple FI blogs that extolled the virtues of rewards cards. I was terrified because I knew if I ever let a balance accrue, not only would it wipe out any advantage of having rewards, I’d never get out of debt – the interest rate is 19.24%. That has been an amazingly strong impetus to always pay the balance in full each month, something I have managed to do since getting the card. The rewards vary but mine is currently 3% for online shopping (but not paying bills online, sadly), 2% for grocery stores/wholesale clubs and 1% for everything else.

    I added the travel card when Hubby and I planned a trip to Europe (1st time out of the States) and it made sense – no international transaction fees, and there was an introductory bonus which I think was spend $2000, get a $200 bonus, and since we were traveling anyway… The bonus paid for a chunk of the trip. We rarely travel but I’ve kept this card anyway. I got the regional bank card in the one month where I was unable to pay the BoA bill and I used a 0% introductory offer to pay off the BoA and have the balance on this card at 0% – managed to pay it off before the offer ended.

    The different cards help keep spending straight for me thus: the Chip card is for expenses where I simply don’t have enough in savings to cover and something needs to be covered when I know I can’t pay the balance in full (rare); BoA rewards is for my charges; BoA travel is for Hubby’s charges; and the regional bank is for Son’s charges. Hubby doesn’t have any credit cards because he’s been paying back old credit card debt through a counseling service; for the few times he can’t use his debit card and has got to have a credit card, he uses this one and pays me back. Basically I pay it in full and he gives me money back here and there, sometimes over months, because he struggles with the notion that interest is charged on cards. Son uses a card while he’s in college across the country; this means I don’t have to mail him money and he’s learning how to use a card. We have a Google docs spreadsheet set up where he enters his expenses and watches his monthly allowance drop as he buys stuff. I give him credit (pun intended) – he is managing to stay within a tight budget without living exclusively off Ramen noodles, and even managed one month to only spend 60% of his allotment (because he was planning to blow a chunk of it on his girlfriend visiting, something I’d already said I wasn’t going to pay for and shut down). This is teaching him budgeting and he’s getting creative about it, focusing on spending money on what he really has to have or what’s a priority like food and books and not on meaningless stuff.

    That’s how we use credit cards. I could probably get fancier about maximizing rewards etc., but this is what works for me. Frankly, I hate credit cards. If I got paid monthly, they’d be an excellent tool for managing expenses, but I get paid weekly and have to be careful to save up paychecks to cover big ticket items like the mortgage. I don’t want to put everything on credit cards and then spend my paycheck on nothing but credit card debt – that might generate rewards but it makes me feel like a slave to BoA and similar corporations. I pay cash when I can, it feels better/more real to me.

  29. BB says:

    We finally minimized our cards down to two – a Visa from our credit union that we’ve had for years to assuage the long-term owning/usage part of the credit world, and for ‘this round’ of the Costco credit card, the Citi Visa they switched us to a couple years ago. We have LOVED the Costco Citi Visa, as it has been the easiest credit card company to deal with EVER. We travel twice a year, to the same general area (central FL – one of the ‘fraud capitals’), and our old credit union MasterCard that hubby had kept getting turned down on for purchases just BECAUSE we were in a ‘fraud capital’ EVEN THOUGH we had forewarned the credit union that we would be traveling there. Even after calling and thinking we’d gotten it resolved, the next purchase attempt got another refusal to allow the card to be uses. After that happened on the one trip, hubby went to our credit union when we got home and had them close that MasterCard acct. Before the next trip, we ended up with the Costco Citi Visa, and thought ‘well, let’s see how THIS goes on the next trip’. Gosh, it was NO PROBLEM at all. We got a text on one purchase, asking if it was us (not a refusal for purchase like we got with MasterCard), and once they knew it was us, we’ve been good for trips ever since without even having to notify them. I’m sure if we went off ‘our pattern’ of time of year or place, or made some very large purchase, we’d get a text again, but how easy peasy it has been has been phenomenal. AND no bogus charges on this account at all, either! (I keep a side-bar accounting in each month’s excel budget spreadsheet for our credit card so it is very easy to reconcile – just like a bank statement.) Now that this Costco Citi card is due to expire the end of this year (2019) I am already starting to wonder what credit card is going to be next, as we have loved this Citi one SO much! Our long-term-owned credit union Visa has been allocated to replenishing our local toll road windshield ‘pass’, as we don’t trust it for our twice-yearly trips since the MasterCard issue from the same source. The Amazon credit card cash back for Prime Members might be a good deal for us, as we do order from them quite a lot, and getting that extra kind of bonus would be nice – but there is no explanation as to how this actually works with Amazon which would be nice to know beforehand from those who have this card.
    I am quite enjoying all the articles/posts from the FW Family and appreciate this effort to educate us all on a variety of topics, thank you!

    • Mrs. Frugalwoods says:

      To your question on how to redeem the Amazon points, here’s what we do: To redeem Amazon points, we go into the credit card interface (which is hosted by Chase) and choose to redeem our points as a “statement credit,” which puts that money towards our monthly credit card bill. The reason being: if you redeem your points for merchandise on Amazon (which is another option with this card), you lose out on the 5% discount you’d be getting if you instead purchased the items with your Amazon Prime Visa.

  30. Mel says:

    Could you Please make your articles Printable ? That way it would be easier to have them to read or use for reference Without printing the pictures.
    I bet others would like this idea also.
    Thank you very mcuh.

  31. Jen says:

    Thanks for the reminder! We get most things delivered by Amazon and only shop at Whole Foods. I might have missed it, but I don’t think you mentioned in your review that this card also gives you 5% back on Whole Foods purchases too. So your post reminded me to finally sign up, yay! Thank you!

  32. M says:

    We got a whopping $800 back from Costco last year, but now that we live an hour from Costco we should probably switch to the Amazon card…..
    I like Costco more, they treat their employees really well, so we got cash back and did a little positive social reinforcement at the same time…but it’s hard to resist Amazon.

  33. Kris says:

    Really like your credit card strategy. All of my credit cards are cash back and almost have the same strategy as you do, using them efficiently. I have a Costco Visa Cash Back and make all of my Costco purchases including their gas station through this card where I get the most cash back. My other purchases I go through my AMEX cash back where I get more cash back than if I used the Costco Card. So I would say I’m in the easy-medium range for CC usage where I have a simple approach but use a couple of credit cards for my purchases.
    I’ll look into the Fidelity Rewards Visa Signature Card since it’s a 2% cash back for everything and I have purchases that only get 1% for my AMEX. Thanks for the recommendation Mrs. Frugalwoods.

  34. Jen says:

    You’re post is so timely as I just joined a travel FB group that focuses on getting the bonuses to be able to travel for free or very low costs using these types of cards. I’m considering getting into that a little, though I don’t think I have the energy or time to do the serious churning, plus I do want to be careful about my credit score as I’ve worked very hard to get it from a crappy place to being above 800 and I did see a drop due to a recent CC I opened because it dropped my average age significantly.
    In any event, I’ve had an AA card for years, but am considering dropping it because of the annual fee and switching to something where you aren’t wedded to a particular airline or hotel. Most of my spending recently is with my Amazon card, and I recently added the Discover card that has 5% back on certain categories each quarter. They had a sign up offer where they double that to 10% up to a certain amount. Couldn’t pass up 10% back!!

    By the way, I don’t think I saw you mention this – for anyone considering one, the cash back that you earn with the Amazon cards does not need to be spent at Amazon. I was under the impression early on that it did, but you can transfer it to your bank account. In the past I used it for things I felt were a little indulgent like a new e-reader or tablet, but now I typically just transfer it over and use it for travel.

  35. Torrie says:

    Super informative! The only credit card I use on a regular basis is my Old Navy card, which is basically how I pay for any and all of our clothes (the ones we don’t get secondhand, at any rate). Spending money on clothes used to be a huge temptation of mine (and I often spent too much on it), so once I said that I basically only will spend the rewards money on clothes, it has definitely helped me rein in my spending, for sure. I don’t have a particular system for what I put on my credit card, other than that I tend to put really big expenses on there just because the points add up quick and since they’re often not “normal” expenses, it’s easier for me to stay within my own bounds and not overspend. I’ve had a credit card for about 14 years and have only carried a balance once (for one month) because we literally had no money to pay the rest of it off that month. So for us, credit cards have been a great tool to use to spend on a category we need to spend at least a *little* bit of money on most years anyway! (I also have a Kohl’s card, and their program can be AWESOME for giving you rewards to use at their store, but it can also be pretty easy to start spending a ton there as a result! I have to be a little more careful to not go overboard on that one, ha ha.)

  36. Mims says:

    I like supporting our local credit union over big Wall Street banks. No fees Visa CC with 1% cash back plus all the benefits you outline for just using credit in general: fraud detection, building credit history.
    I have an alaska airline visa as we live in a hub city for them and even though it costs $75 in annual fee you get a $125 companion flight anywhere they or their partners fly each year. We have flown to Hawaii 3x, Mexico twice and Alaska….That alone pays for the card several times over…as typically these flights are $600-800.

    • Krysten says:

      We have the Alaska Airlines Card too. It’s great for traveling with a family. Free companion fare annually, free checked bags and good flight coverage. We cover our annual fee easily with the companion fare alone.

  37. Karen says:

    I am also a fan of Fidelity Visa rewards card, the reward $ goes straight into my Roth for the year. The web site is not user friendly, but since the reward automatically goes into my investment account, I basically ignore it. Their fraud alerts and phone help line is very professional. We also have the Citi-double rewards card 2% on everything but am really more interested in the investment benefits of the Fidelity card at the present time. In the future, when I’m retired, I assume I will want a travel rewards card like the Capital One venture card (no annual fee) but as others have mentioned, the rewards are diminishing and the hoops you jump through are growing more onerous on the travel reward cards so who knows if that will even be a good choice in the future .
    I agree 7000% that you only use a credit card to purchase what you can pay off in full.

  38. Jacinta says:

    It really hurts me to see people promoting credit cards. You say you get rewards but so does flybuys. Why chain yourself to the bank promising great rewards as long as you don’t go over or we will hit you will masses of $$ in interest and be at the mercy of ‘what they can offer you, for now’ . No thanks. Save up and use a debit card.

    • Tara R says:

      I certainly do see your point, and everyone must do what works best for their values and lifestyle. There was a period where I had a savings goal, and using a debit card only for 5 months helped meet that goal. I have also used the cash in envelopes system, and that was an eye-opener. Using an airline credit card now allows me to gain miles for items I would otherwise purchase anyway. The rewards, miles, and cashback benefits are excellent for those that are self-disciplined and diligent in avoiding debt.

  39. Maeve says:

    One thing not mentioned was transaction security. I’ve had my card number stolen several times and used for nefarious purchases. Since the transactions were done with a credit card, it was easy to get the full amount back. This is not true for debit card purchases. So I use my credit card for almost everything and check my statements regularly.

  40. LongTime Frugal says:

    Autopay is the way to go. Last time I switched credit cards was back in the early 90s. The issuing bank sold their credit card portfolio. The “buying” bank would do autopay but only for the minimum monthly payment! Didn’t take me long to switch.
    But you can count me out on any type of rewards credit card.

    And you may have heard it first on Frugalwoods but be prepared for rewards to start changing. Issuer may stop OR issuer may start charging an annual fee. Always read the disclosures that come with any bill. And be prepared to take your business elsewhere if need be.

  41. Barb Barry says:

    One more reason to always use credit cards…fraudulent use of your debit card can drain both your checking and overdraft lines in seconds, leaving you in critical territory financially for weeks until completely fixed. Why risk it? I use travel credit cards a lot and Travel A lot!

  42. Mrs H says:

    I’m a Norwegian who is soon relocating to the United States with my American husband. We have a property there. Witch steps do I have to take to be eligible for a credit card in the US? I have excellent credit scores in my own country, and use an airline creditcard for most of my purchases and work flights. I am not likely to find a job quickly, as we are moving to a rural area. I do however have a savings account of 200000 $. Hope somebody can give me some guidence.

    • Laurie says:

      I’m no expert, but I would suggest calling a reputable credit card company directly to inquire into their policies. That would likely be a good place to start.
      Many banks offer their own cards as well, and if you know where you’ll be banking, they’d probably be a good source of information.

  43. Liz C says:

    If you don’t otherwise bank with Fidelity or have investments through them can you still
    get the 2% cash back with the Fidelity card? It sounds great but I’m not sure I want to open more bank accounts.

  44. Mel says:

    Could you please make you articles printable? That way we would not have to print the pictures.
    I think that a lot of people would appreciate this. They would easier to read and to save for reference.

    Thank you very much.

  45. Michel S. says:

    Thanks for this succint guide! We’re doing something similar (but pairing Chase Freedom Unlimited with Chase Sapphire Reserve, and transferring the reward points to the latter since when using it for travel we get a 1.5x multiplier so in effect we’re getting 2.25%

    Thanks for the tip on redeeming Amazon Prime Rewards points as statement credit! We’ve been foregoing the 5% when redeeming on Amazon without even thinking about it.

    Also note that the Amazon card also gives a 2% cash back on restaurants and pharmacies, but if your main card is already giving 2% then it’s moot.

  46. Mrs. Gardener says:

    I use a 2% cash back card (not Fidelity) for large purchases and it is fuss-free and worthwhile. The local Fidelity office was unhelpful and offhand when I ran into a complicated problem settling a relative’s estate; I wouldn’t use them. Prior to that experience, I had a positive view of Fidelity based on reading Peter Lynch’s books.

    I disagree with the “something for nothing” view of rewards. You are putting your buying history and habits out there. You’re giving the credit card companies reams of data about you. There are too many data breaches and even without them, there doesn’t need to be a log of every financial transaction you make.

    Paying cash also makes it more real; I feel it as the money leaves the wallet.

  47. I combine Chase Freedom and Discover it cash back cards. So I’m getting 5% back for two categories per month. You have to keep track of the reward categories but in my opinion, it’s worth it.

  48. Katherine says:

    I pay everything on credit cards. $200 cash can last me six months. I just reworked my automatic payments so that all home fixed expenses go one card and variable expenses (groceries, meals out, purchases, etc) go on another card. In addition to using Personal Capital, I can easily see how my much my spend is fluctuating.

    I recommend reviewing your auto payments once in a while. I just discovered that my insurance company now allows payment via credit card versus previously only accepting electronic check.

  49. Chris says:

    I’ve been churning credit cards for several years. My husband and I each have gotten the airlines ones, where you have the bonus period and earn enough for two free tickets. The first time this was about $632. That was a few years ago. We recently got another one and have approximately the same amount waiting for us to “purchase” the tickets. I figure we have probably earned about $4500 in the last few years. We live in one of the lowest income states and are low income people compared to many, so to be able to go on free or cheaper vacations is a great blessing to us. We are debt free including our house. We pay off our credit cards every month and have probably only paid about $20 in interest in 30 years – because I forgot to mail a bill or something. Most times when they charge us, I will call and they cancel the fee. Some of these do have annual fees but they have been worth it for us.

  50. Tripplefiguy says:

    I agree that credit cards can bring real value to the table. On the contrary, I would also say that they there is a couple of important points not mentioned in the article.

    Credit cards delay the pain of paying and we psychologically cannot process as well the loss when we spend money when it’s put on the card versus physically pulling out cash and seeing it leave our possession. That triggers pain and therefore less spending.

    Also, sometimes people put auto payments of things they don’t really need monthly subscriptions for and keep getting ripped off every month but it gets lumped into all others purchases on the card so they just pay the bill at the end of the month. I’ve seen this happen more with senior citizens.

    If they didn’t have a credit card then they wouldn’t be getting taken to the cleaners for that $100 a month “watch of the month club” membership.

    • Mrs. Frugalwoods says:

      That’s a really good point about monthly subscriptions! It’s very true that putting things on autopay shouldn’t be a license to forget about them.

  51. Paula says:

    We have credit cards for dealing with merchants who won’t accept a check, or online ordering from merchants who don’t accept PayPal. (I much prefer to pay from the checking account via PayPal, over and done.) I pay in full as soon as any credit card bill comes. It wouldn’t be worth it to me to do a bunch of unnecessary charging and bill paying to get rewards. My favorite reward is not owing any money and not getting bills in the mail.

  52. Luisa says:

    If you don’t use amazon prime card, the additional benefit of the regular amazon card (3/2/1 %s) is that there is no foreign exchange fee. We use this card for international travel or purchases to avoid the normal 3% exchange fee. Even if you don’t have an amazon prime or other amazon credit card, if you are a prime member and shop at Whole Foods and have downloaded the prime app to your phone (i.e. you do need to be a prime member) and you don’t need to carry an amazon card to get that 3% back. So this quarter, my Chase card gives 5% back (instead of 1%) for grocery shopping and so I use my prime app and get 8% back! (3% prime, 5% chase)- best of both worlds. Most of the time we use our Citi double cash card (2%) principally because we don’t have to think about what to use when AND more importantly Citi offers virtual credit card #s which are a fraud prevention (each unique VN can only be used with one seller, so it someone gets that # they can’t use it anywhere else!). The only problem is when you sign up for travel insurance at the same point as paying for your airline ticket, the travel insurance will not go through because it is a different company. However you can always buy it separately which then you get to see terms and chose among policies which makes better sense.

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