Does the thought of owning multiple credit cards intrigue you?


If you are anything like me, you want the best value you can get out of using credit cards. If you’re going to use them, you might as well cash in on the benefits. I like to use what I call ‘credit card optimization’, where I use multiple credit cards to full advantage.

I used to have only one credit card, which I used to pay for everything so I could earn some cash back at the end of the year. After a few years of doing this, it dawned on me – I was letting a lot of my purchase power go to waste. I was only redeeming in cash back what my single credit card was giving me, at all locations I shopped at. Now I have a few cards for different purposes, and I am earning and redeeming rewards much more efficiently.

My realization came to me when I saw an advertisement for a credit card at my gas station that included a sign-up bonus. I have my favorite gas station, the one I use all the time if I know there is one close by. If I was always at this gas station, why didn’t I use their credit card? Often location-specific credit cards have a better redemption rate than simple cash-back cards, that only give you a percentage of what you earn. Businesses do this to reward loyal customers and keep them coming back, so I might as well take advantage of it.

Here is a simple example:

A regular cash-back credit card will often give you a percentage of your total purchases back at the end of the year; a good average is 1%. A gas station credit card will give you points, say at 1 point per dollar spent, but will reward you with 2 points if you spend money at their pump. In this case, you would get 2% worth of rewards for using their credit card at the same place you always get your gas.

Imagine if you did this at the 2 or 3 most frequent places you shop. If you thought about it, I have a feeling you could name your favorite gas station, grocery store, and perhaps clothing store, restaurant or pharmacy. If these places had cards that rewarded you for being a customer, and you were diligent about using their cards whenever you shopped at their business, this could add up to a few hundred extra dollars in your pocket at the end of the year. Which may make owning multiple credit cards the right thing for you.

Here is a breakdown, money-wise:

As a family of four, let’s say your average grocery bill every month is $600, you spend $200 on gas, and you treat yourself to some clothes for $100 a month. This is a total of $900 spent, which equals $9 in cash back at the end of the year.

Now, let’s pretend you have a gas credit card that gives you 2 points for every dollar you spend at their station. That’s 400 points a month, which is equivalent to 2% back in cash or reward value. You also use your grocery store credit card, and earn 1200 points with the same system, and maybe even got an additional bonus for putting a certain amount on your card. At the clothing store, you would get 200 points, and sometimes they have sales in which you can double your points even further if you use their card.

Even at the bare minimum, you have earned 1800 points, or potentially $18 in rewards, twice as much as the cash-back credit card. Over a 12 month period, with the additional $9 you would earn per month, that’s $108 more than with just cash back. Imagine if your family spent more than that!

This is a simple example presented to show you that there is value in using store- or location-specific credit cards. Not all cards will give you the same terms presented here, but it is a good average. There are a few things to watch out for though, if you’re thinking of trying this route. One, make sure the credit card is going to give you more points for shopping at their chain. No benefit comes in having an additional gas card if it only gives you the same return as your regular card. Two, check the rewards they offer to make sure they are agreeable to you. There is no point in earning extra rewards if you cannot redeem them. Look for cards that offer you money off of your bill at the end of the year, or rewards programs that are easily redeemable, for things you are interested in. Sometimes you can get gift certificates for the store you shop in most! Three, take advantage of special offers to get more points if you use the store credit card. This is just extra money in your pocket if you can meet the requirements of the offer. And last, make sure that you are loyal to that business before signing up, and that you are dedicated to using it once you receive the card. If you shop at many different places, you won’t be getting the same benefits.

Sign up bonuses offered are just that, bonuses. But be careful of getting yourself into too many credit cards, just because the bonuses seem worth it. If you are not using them effectively, or even forget about paying a card once, having too many cards can negatively affect your credit score and get you into trouble. My favorite number of cards to have is 3 right now, since I currently have a gas card, grocery store, and a general cash-back card for all other purchases – ones that I won’t get additional discounts for. It is an easy enough number to handle, while still reaping the extra rewards offered by places I am shopping at already.