My Favorite Credit Cards, And A Great Special Offer

Welcome to Saving Money with Andrew!

Credit card rewards are important. Really important. The average American household spends about $73,000 per year. 1% of that is $730 per year. 2% of that is almost $1500. A small percentage of a lot of money can be a lot of money.

And yet, whenever I talk to friend and family about their credit card, they commonly show me a card earning subpar rewards, often worth less than a cent per dollar spent. When faced with this fact, they often reply by citing a recent reward they purchased with the card (a plane ticket, a hotel stay, etc), ignoring that this typically reflects an effective reward rate far below 2% of their purchases, leaving considerable money on the table.

What’s the best way to maximize your credit card rewards, assuming you don’t carry a balance on your card? The answer is simple, and still hasn’t changed much since I first wrote about this in 2019.

Most readers will do best with two credit cards:

1. The Citi Double Cash card for 2% cash back on all purchases.[1] And for the first time in a while, Citi offers a $200 signup bonus if you spend $1500 on the card within six months.

2. If you are a frequent Amazon shopper, the Amazon Prime Rewards Visa card (Amazon Prime members only) for 5% cash back on all Amazon and Whole Foods purchases. Use this for Amazon, Whole Foods, transactions when traveling abroad, and nothing else.[2]

That’s it. This combo earns a blended rewards rate above 2%, far higher than almost any other card out there. And neither has an annual fee.

If you travel frequently using a single airline or hotel chain, it’s possible a travel card could earn you a higher effective rate (if used optimally), taking into account the value of status and other rewards. And there are certain higher-end cards with annual fees that may be worth it if you are a very high spender. But probably not.

Most issuers offering affinity cards (e.g., an airline, hotel, or store-issued card) rely on holders using their cards for general purchases, earning sub-2% rewards, often significantly less, and making lots of $ for the issuer. And cards offering higher rewards for certain categories are counting on you using them for other categories, again earning suboptimal rewards.

I welcome your comments and would love to hear useful counterexamples, but I have found, even after running the numbers on effective reward point values (Investopedia has a somewhat dated but decent set here), that almost no other card yields an average reward rate in excess of these two cards. If you can do meaningfully better than 2% across all your spending, tell me in the comments!

Traditional disclaimers apply—these tips only apply if you never, ever, carry a balance (and make sure to set your card to autopay). And also, this post is not an advertisement! I don’t make money from this newsletter via ads, affiliate links, or anything else, and I am not paid by anyone featured in the newsletter. I also promise never to charge for this newsletter.

And now…Andrew’s pick(s) of the week:

A Psychiatrist Tried to Quit Gambling. Betting Apps Kept Her Hooked is a harrowing tale of the harm sports betting addiction can cause. Americans (legally) bet over $100 billion on sports in 2023 and the industry is growing rapidly.

The Day I Put $50,000 in a Shoe Box and Handed It to a Stranger is another harrowing tale, this time of a financial scam. But is it true? I’m not sure.

Also:

• Are We All Too Cynical for Star Trek? (via Don't Worry About the Vase)

• The Lifespan of Large Appliances Is Shrinking

I hope this has been helpful. If you liked it, please share it on social media! Also, please send me your feedback, requests, and success stories.

[1] The 2% is awarded in two parts: 1% at the time you make a purchase, and another 1% when you pay your balance. Also, technically, cash back is rewarded as “ThankYou Points”, which can be redeemed for a variety of rewards. Your best bet is generally to redeem them for a direct deposit to your bank account.

[2] Unlike the Double Cash, the Prime Visa doesn’t charge foreign transaction fees.