I was taking my credit cards under consideration the other day and realized that I’ve been kinda old school with my use of them. Specifically, I have just a few (or so I thought), rarely apply for new credit, and hold on to them for a very long time. I’ve been taught that these are all good credit habits to practice, but wonder if they’ve caused me to leave money (in the form of rewards) on the table.
Ideas preventing me from opening new accounts:
- Fear of damage to my credit score (due to too much available credit, too many accounts, or the application inquiries).
- I placed a freeze on my credit to prevent identity theft, which I would need to lift in order to get a new card.
- Desire to keep my life (financial and otherwise) as simple as possible.
Back in my college days, I was just happy to have a credit card. I racked up a balance as I struggled to survive financially. Many boxes of mac and cheese were consumed in this period of my life. Over the years, I paid off that debt and have seen rewards cards getting more common. My first of these being with Capital One, who offered me 1.5% cash back on all purchases. And for the past 15 years, I mainly use that card, paying the balance each month and periodically cashing in points for Amazon credit. Not too bad of a deal.
Since starting this blog, I discovered websites exalting the opportunities that travel reward cards can open up. This convinced me to unfreeze my credit to apply for the big fish: the Chase Sapphire Preferred! I got a nice bonus for spending a few grand in the first three months (hello, Thailand) and have been wearing out that card ever since.
This month, my credit card corral has increased by one. I heard about the Amazon credit card a while back; 5% cash back on purchases piqued my interest. I didn’t have to look deeply into my past Amazon Prime spending to know that it’s significant enough to warrant the card. It also offers 2% on restaurants, drug stores, and gas stations and 1% on all other purchases. As an extra bonus, I got $70 credit on my Amazon account instantly upon approval.
Now, I get to be all strategic when choosing which card to pull out of my wallet in order to maximize their unique benefits:
- Chase Amazon – Obviously, the huge benefit is for Amazon Prime shopping (5%), but gas and restaurants (2%) are golden, too.
- Chase Sapphire – Any travel-related spending goes here (2%). This is another option for use in restaurants (2%). Rewards get a higher redemption for travel purchased through their website (1.25%), which adds some incentive to use this day to day.
- Capital One – Good old 1.5% on everything. I’m torn between using this or Sapphire for spending that falls outside of the various bonus categories. The allure of travel is strong, but this one technically gets me more money.
- Chase Freedom – The only reason to use this is for the rotating 5% cash back bonuses every quarter. Gas stations are just wrapping up. Grocery stores are next, which I’ll use the shit out of.
The most surprising part of this look into my credit cards is that I have more than I thought (and how much business I’m giving to Chase Bank)! Seven cards seems excessive and I feel compelled to simplify (remember when I wanted to close my oldest card? I guess it’s still a thing). I KNOW! I KNOW! Length of credit is an important factor to my score. To see just how this might affect me, I looked at my last credit report to check the age of my accounts:
- Card #1 – Sept, 1996
- Card #2 – Dec, 1996
- Card #3 – March, 2001
- Card #4 – Jan, 2004
- Card #5 – Feb, 2014
- Card #6 – May, 2016
- Card #7 – March, 2017
With my first two cards from my early college days being only a few months apart, I think I’ll be OK to close one and just get it off my plate (perhaps #2). Neither offers significant rewards and go unused. My credit score is still high and I have no intention of making any big purchases that might be impacted by a score dip (like a refi or car loan). Is it finally time I make that call and nuke one (or more)? I would be interested to hear your thoughts, dear readers.
(Image: Lee Coursey)