This holiday shopping season, you may find yourself reaching for your favorite rewards credit card, or even for an application for a new one.
According to an Experian survey conducted in the second quarter of 2019, 1 in 4 consumers plans on opening a new credit card during the holidays, with 35% of respondents saying they wanted to use their new card to maximize their rewards earnings.
That’s a fine idea — after all, there’s no rule against rewarding yourself as you shop for others. But before you apply for a new card, think about how it might best complement the cards that are already in your wallet. With a little strategy, a multicard system can be a gift that keeps on giving.
1 card for gas and groceries, 1 for everything else
If your household is like many others, food and fuel make up a sizable chunk of your budget. The Bureau of Labor Statistics estimates that the average U.S. household spent $4,464 on food at home and about $2,109 on gas in 2018.
There’s no shortage of credit cards that earn, say, 3% back at grocery stores or gas stations. But those cards also typically yield a mediocre 1% back on all other spending, including holiday shopping at places like big-box retailers, home improvement stores or online merchants.
For those purchases, you might be in the market for a card that earns a flat 1.5% back or better on all spending. Use it on everyday expenses that may not be major line items in your monthly budget and reserve your groceries-and-gas card for when you’re at the supermarket or pump.
Add a rotating bonus category card
A 2019 holiday shopping survey by the National Retail Federation found that shoppers plan to spend a total of $1,048 on average for items such as decorations, candy and gifts, as well as other purchases for themselves and their families.
That kind of shopping could fit well with a credit card that offers 5% bonus categories that change every quarter. Historically, these categories have included warehouse clubs, big-box retailers, drugstores, Amazon.com and more — all holiday-friendly shopping areas.
In this scenario, perhaps you’d use your 5% card on decorations and gifts at a qualifying store, but switch to your flat 1.5% card to fill up your tank on the way home.
Yes, you’ll have to keep track of those bonus categories and “activate” them every three months, and the 5% rate is typically capped at $1,500 in spending per quarter. But if you max that out in one year, it’s $300 back in your pocket, on top of what your flat-rate card — with no spending cap — is earning on everything else.
Consider a new card with the same issuer
Owning multiple cards from one issuer can be beneficial in several ways.
For starters, it keeps all of your statements “under one roof,” and you’ll have to keep track of only one set of terms and conditions. Those can get complicated in a hurry and pose all kinds of hurdles, such as reward expiration dates, minimum redemption requirements and more. You may have neither the time nor the inclination to learn the rules of multiple programs.
Another benefit of sticking with one issuer: Some allow you to combine your rewards across several cards and redeem them at a higher rate for things like travel. The “Chase Trifecta” is a popular example of this, but other issuers also offer versions of it.
In some cases, an issuer may even allow you to pool points among households or family members who have the same cards you do, meaning you could add a Player Two in your rewards-earning system and attack holiday spending together.