Which one credit card is best for spend?


Between my wife an I, we currently have about 30 open credit card accounts (not counting authorized user cards, debit cards, prepaid cards, etc.).  Many are cards that we got just for the signup bonuses.  When the annual fees come due we’ll cancel or downgrade most of these.  Many others have no annual fees.  We keep these open to preserve our credit lines, to maintain a long average age of credit, or for each card’s perks or category bonuses.  Several cards do have annual fees, but they pay for themselves through annual bonuses.  For example, between us we have three Club Carlson cards and each one offers 40,000 bonus points each year in exchange for the $75 annual fee ($60 for the business card).

Most of my credit cards stay home in a binder.  The cards that live in my wallet everyday are those that offer the best category bonuses: I use one card for restaurants, another for groceries, another for gas, etc.  And, the particular cards that fulfill those roles change over time.  This quarter, Discover offered 5X at gas stations, so it became my gas station card until the end of the quarter.  Similarly, the Chase Freedom card offered 5X at grocery stores this quarter.  Next quarter (starting April 1), both cards offer 5X at restaurants.  I won’t use those cards at restaurants, though, because my Citi Forward card always offers 5X at restaurants and I’m currently enrolled in a retention offer for that card in which I earn an extra 2X for all spend.  This means that my card earns an amazing 7X at restaurants until the 6 month retention offer expires.  Unfortunately, the Citi Forward card is no longer available to new applicants.

An even better approach to maximizing returns is to sign up for new cards regularly and use them daily to meet the minimum spend requirements.  In this way, you’re likely to average 10 points per dollar or more for all of your spend.  For example, there are a few signup bonuses for 40,000 points after $3K spend.  If the card normally earns 1 point per dollar, then you’ll have 43,000 points once you’ve spent $3,000.  That’s an average of more than 14 points per dollar.

Where am I going with this?  Oh yeah…  While many in this hobby are willing to juggle cards to maximize returns, most real people I talk to are not interested in doing so.  I’m defining “real people” here as pretty much anyone who’s interested in earning points and miles but hasn’t yet made it a near full time hobby.  Real people want to know the one card they should use for everyday spend.

Best of the best

For those not interested in juggling multiple cards for their signup offers and/or category bonuses, here are the best cards to consider:

Discover It Miles (First year: 3% cash back)

Even though this is billed as a miles-earning card, I think of it as a cash back card since miles can be redeemed for cash.  The card has no annual fee, no foreign transaction fees, and offers 1.5% cash back for all purchases.  At the end of your first year with the card, Discover has promised to double all of your earned miles.  This means that the card effectively earns 3% cash back for the first year.  For more, see: Discover introduces a new card and a potentially VERY lucrative 1st year offer. After the first year, the card offers a respectable, but far from best-in-class, 1.5% cash back.  I’d recommend this card only if you’re willing to move on to a different card at the end of the year.

JCB’s Marukai card (3% cash back for many West Coast residents)

If you live in California, Nevada, Oregon, Hawaii or Washington, this card is probably your best bet.  It has a $25 annual fee after the first year ($15 card fee plus $10 membership fee), but offers very compelling rewards:

  • Earn up to 1% Cash Back Points on first $1,000 spent yearly
  • Earn up to 2% Cash Back Points on next $2,000 spent yearly
  • Earn up to 3% Cash Back Points on over $3,000 spent yearly

Plus, earn a $50 bonus when you spend $5,000 or more yearly.  More details about this card can be found here.  My understanding is that this card is not accepted everywhere, so be sure to have a no-fee backup card as well.

BOA Travel Rewards (up to 2.625%)

On the surface, this card appears to be very similar to the Discover It Miles card: No foreign transaction fees, no annual fee; and earn 1.5 miles per dollar for all spend.  Unlike the Discover card, this one does not offer to double rewards  the first year, but (and this is a big BUT), if you have a bunch of money invested in Bank of America or Merrill Lynch, they’ll give you an additional bonus.  The net returns are as follows:

  • 20K to 50K in combined balances (Gold tier): 25% bonus gives you 1.875 points per dollar (1.875%)
  • 50K to 100K in combined balances (Platinum tier): 50% bonus gives you 2.25 points per dollar (2.25%)
  • 100K+ in combined balances (Platinum Honors tier): 75% bonus gives you 2.625 points per dollar (2.625%)

Unlike the Discover It Miles card, BOA Travel Rewards must be redeemed for travel rather than cash.

See also: Up to 2.625% back for timeshares, fortune tellers, and more.

Citi Double Cash MasterCard or Fidelity Investment Rewards Amex (2%, no fee)

Both of these cards have no annual fee.  Both earn 2% cash back rewards.  Citi has the edge since MasterCard is accepted in more locations.  Fidelity has an edge since points can also be redeemed for flights at better than 1 cent per point value under certain circumstances (details here).  Also, the Fidelity Amex is one of the few cards that still earns decent rewards when reloading Serve cards online (see Amex Serve Credit Card Loads to End in April).  Both cards are great options for most people, but both charge foreign transaction fees so they’re not ideal for everyone.

UpdateThe Barclaycard Arrival Plus offer reference below as since changed. See our Best Offers page for the current best offer.

BarclayCard Arrival Plus (2.2%)

If you want a card that retains its value past the first year (unlike the Discover It Miles card), you travel internationally, you do not have a ton of money invested in Bank of America or Merrill Lynch, and you want to earn rewards that can be used for any travel purposes, then this is your card.  It earns 2 points per dollar for all purchases; points can be redeemed for any travel purchases; you get a 10% rebate on all points redeemed for travel (making this effectively a 2.2% rebate card); and it has no foreign transaction fee.  Pretty much the only downside is the $89 annual fee.  See also: The Arrival Plus: More than just a new name.

Amex EveryDay Preferred (2.33 points per dollar)

If you like the idea of cash back, don’t even think about this card.  If you like the idea of racking up airline miles so that you can fly around the world in business or first class, then this may be your best bet.  First the negatives: foreign transaction fees, $95 annual fee, and to maximize rewards you need to make sure to use the card 30 times each billing cycle.  On the plus side, the card offers decent category bonuses (3X grocery, up to $6K per year; and 2X gas) plus it offers a 50% bonus in every billing cycle in which you make 30 or more purchases.  This means that the card’s maximum points per dollar earnings are: 4.5X grocery, 3X gas, and 1.5X everywhere else.  When I estimated (in this spreadsheet) how a regular person might use their card, I calculated an average earning rate of 2.33 points per dollar.  For a card that offers a large selection of airline transfer partners, 2.33 points per dollar is ridiculously good.  I recommend making a copy of this spreadsheet and entering your own assumptions about how much you spend overall and in each category to see how many points per dollar you’ll likely earn.  See also: Amex’s powerful new EveryDay cards.

Chase Freedom paired with Sapphire Preferred or Ink Plus (up to 1.78 points per dollar)

Alright, in this case I’m recommending two cards instead of one, but they work well together.  Both earn Chase Ultimate Rewards points.  The no-fee Freedom card earns 5 points per dollar in rotating quarterly categories (up to $1500 spend per quarter).  That’s pretty good, but if you have only the Freedom card, points are worth only 1 cent each.  However, if you also have a premium card, such as the Sapphire Preferred or Ink Plus (both $95 per year), you can move your points to the premium card and then transfer points to airlines, hotels, and Amtrak.  In some cases, via these transfers, you can get far greater than 1 cent per point value.  The decision of which premium card to get depends on a few factors: first, the Ink Plus is a business card, so if you do not have a business of any kind you should go for the Sapphire Preferred.  The other consideration has to do with each card’s bonus categories.  The Sapphire Preferred offers 2 points per dollar for dining and travel.  The Ink Plus offers 5 points per dollar for office supplies, phone, and internet; and 2 points per dollar for gas and hotels.  Most people would probably do better with the Ink Plus, but if you eat out often and/or spend a lot on travel, the Sapphire Preferred is the better bet.  When I estimated how a regular person might use these combinations of cards (in this spreadsheet), I calculated an average earning rate of 1.76 points per dollar for the Freedom + Sapphire Preferred combination, and 1.78 points per dollar for the Freedom + Ink Plus combination.  Get this combination of cards if you’re likely to take advantage of transfer partners not supported by Amex Membership Rewards.  These include high value partners such as: United, Southwest, Korean Air, Hyatt, and Amtrak.

See also:


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