I think cash back credit cards are a great way to make money. Back to the purchases I would have made anyway. I use my credit card for as many expenses as possible and pay the full amount to avoid interest. In 2022, my total compensation was $1,701 ($1,606 after the $95 annual fee I paid for one of these cards). This translates to an average return of 2.1% for every dollar I spend (1.9% after deducting the annual fee from the reward value).

I only use two credit cards these days. At one point the maximum was 6. The American Express Blue Cash Preferred® card is my favorite. Because my girlfriend's family of four spends a lot of money on groceries. This card offers 6% cash back at US supermarkets (up to $6,000 on annual purchases, then 1% cash back thereafter). It also offers 6% cash back on select streaming services, 3% cash back on US gas station purchases and public transit purchases, and 1% cash back on everything else. The card's average return per dollar was 2.2% in 2022 (1.9% after deducting the $95 annual fee from rewards).

I also like another card, the Chase Freedom Flex℠. Its biggest selling point is a series of rotating 5% cash back categories. Please note that activation is required and a 5% rate applies to qualifying purchases up to $1,500 each quarter. After that it drops to 1%. This year was my favorite set of 5% categories. I used up 3 of my 4 quarters (mainly grocery, live entertainment, and PayPal purchases) and almost completed the remaining quarters featuring Amazon.com.

Freedom Flex cardholders receive 5% cash back on travel booked through the Chase Ultimate Rewards portal, 3% cash back on dining and drugstore purchases, and 1% cash back on everything else. Earn an average of 2% cash back for every dollar spent with the Freedom Flex card in 2022.

My strategy Biggest hole

An obvious way you can increase your overall cash back return is by adding cards with better rewards for “everything else” spending. That's a good amount. The Wells Fargo Active Cash® Card is a good candidate as it offers unlimited 2% cash rewards on purchases. Another great card is the Citi® Double Cash Card. You get 1% cash back on purchases and another 1% cash back when you pay off. That means you're effectively getting 2% cash back on every purchase. Neither card has an annual fee.

Interestingly, my current two card strategy nets out just under 2% overall. Some purchases earn more, others less. That's why there are many people who unexpectedly like the flat-rate 2% cashback card. Those who want to keep their card strategy very simple but still get solid returns can use this as their only card. If you want to pursue even higher rebates, you can use the 2% card as a foundation and supplement it with other cards that offer better rewards in key categories.

If I continued to use the higher Blue Cash Preferred and if I replaced my 1% earnings with a 2% payout, excluding the Freedom Flex category, I would have made an additional $667 a year, more than the personal average The return will be 2.7 percent. Honestly, I probably should. The math certainly adds up. You should be able to do better in the first year thanks to the signup bonus.

Why didn't I? A few years ago, I canceled the card after feeling that expanding to six was too much. Some benefits overlapped. I was paying 3 annual fees and my wife in particular was having a hard time figuring out when to use each card for maximum benefit.

2 The simplicity of the card strategy in and the two cards I use have many more advantages. As I've gotten older, I've come to appreciate these invisible things.

About cards Other things I like

Good customer service makes a big difference to me and no one does it better than American Express. In J.D. Power's U.S. Credit Card Satisfaction List, in 16 years he was top for 12 years, and for the remaining four years he was second.

Chase said that in 2022 he will be fourth, but personally I found his customer service to be very good as well. Freedom Flex comes with strong travel insurance, which helped him recover over $1,000 from canceled hotel stays last year.

I also like that both cards offer generous purchase protection and extended warranty benefits. A few years ago, Chase sued my wife for $299 in damages for her Apple Watch.

Credit to 2023 How to optimize your card reward strategy

Of course, what works best for me may not be the best for you. Choosing the best credit card is a highly subjective and personal decision.

The first big question to consider is whether you have a balance. 1, 2, or 5% cash back or airline miles, especially when credit card interest rates are at record highs (the current national average is 19.6%). If you have credit card debt, prioritize interest. Perhaps use a 0% balance transfer card.

The reward is free money as long as you can avoid interest and pay the full amount. Credit cards offer far greater rewards programs and buyer protection than debit cards, cash, or other payment methods. Consider how you spend your money (because different cards highlight different reward categories) and how much effort you're willing to spend.

Also think about how you will use these rewards. While cashback generally offers a simpler, more universal appeal, travel rewards can be more lucrative (especially after spending a few hoops to find the best deals and travel on the best dates). if you intend to jump over it).

Some people are happy to use 30 different credit cards, while others stick with just one or he two. It should be pointed out that if you plan to collect many different cards, it is best to do it gradually. Applying for many cards in a short period of time can lower your credit score.

Conclusion

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