Overhauling my strategy... again.

[smc733]

Hi all,

So I've decided that my max rewards strategy may not neccesarily be the best thing, because if I have to pay that 22.99% interest one time, any gains are immediately lost.  

I moved my deposits back to BofA after hearing they were not going to charge the fee, as I truly do like banking there with their good CS and ATMs.  Anyway, I decided it is heinous to use cards with poor terms, so I'm chosing two primary cards:

BoA Cash Rewards - $5,000/10.99%

Discover More - $2,500/15.99% (will try to get lowered to 11.99% next month)

The rewards on these are complementary, I'll use Discover for the categories and ShopDiscover, and BoA for everything else.  Both also increase the cash limit with CLIs as a percentage function of the total CL, which while I never use Cash Advances, I don't like how my Citi is $6,000 and the CA is still $400, come on!

I won't be cancelling any cards, but I will be giving them a sockdrawer treatment that does NOT involve once every few month usage, and if they close, they close.

I will use these two cards every month, and set thier statement to cut the same date or close to it, I will not pay early, I will always wait until the statement cuts to pay the cards.  I will pay using BillPay the same day the statement cuts and ideally, PIF as I always do.

Since I will be doing this, I am going to downgrade the Visa Signature card (since I don't use the benefits) to a normal Platinum Plus, so it reports correctly.

All in all, I think this would be my best strategy to move forward with, and develop two (maybe a third I'll keep as a once every three month backup) card strategy to go forward.

Thoughts?

[smc733]

*bump*

[Wolf3]

IMO, Having 2 primary cards and a backup is a good strategy.   I would not recommend less.   What's your backup card?. 

[Guava]

Just out of curiosity, I thought you have a Chase Freedom, why did you pick Discover More over the Freedom?

[haulingthescoreup]

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@smc733 wrote:

Hi all,

So I've decided that my max rewards strategy may not neccesarily be the best thing, because if I have to pay that 22.99% interest one time, any gains are immediately lost...

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This is very true mathematically, but can't the risk be avoided by (1) having $Xxxx in savings to cover a big statement if necessary and (2) not letting a balance get that big in the first place?

That being said, I'm all in favor of simplying. It's fun at first when you finally get attractive to lenders to collect a fistful of cards, all of which do this, that, and the other. But the reality is that unless you are truly a high-flyer, you're just not gonna buy that much stuff, and three or four rewards cards, properly chosen, will cover 99% of your purchases. Juggling all this stuff is fun for a while, but then it becomes a PITA.

And it's fine to wait until your statements drop to pay as long as your sock-drawer cards are still alive (and reporting $0, of course.) If and when the day comes that they are closed for inactivity, and you only have two or three cards, all reporting balances, you might wind up revisiting that. It's pretty perturbing to watch your scores drop (if you're still tracking them) simply because you choose to pay a little later than otherwise. But in the end, each of us has to come up with an approach to credit that makes sense on an individual level, and if you've found your sweet spot, then thumbs up to you.

[smc733]

So my backup will probably be the Amex, just because I don't want to lose their good graces, or Citi...  Haven't fully decided on that yet.

The problem with Chase Freedom is the 22.99% interest rate, even though I've repeatedly told people the Freedom is a better card, Chase REFUSES to budge, and when I graduate and have loans to pay, there may come a time where I will need to have a balance from time to time.

As for money to cover debts, I have around $17k in the bank, and $21k in available credit, and the largest statement I've ever seen was $2,300, which included my on-campus overnight parking permit (in the city of Boston, at $1,350), otherwise, I go between $500-$1,000 a month in balances.

Exactly, for a good portion of my life, I'm not going to have extravigant living, I don't have it now, I won't have it when I graduate, and by the time I get my loans under control, it will be time to start looking at things like starting a family, etc...  And I found that when I juggled cards for "the extra rewards", it led me to overspend, severely.

I feel like with the sock-drawer cards, it may be best to take them out once every 3 months, the same month, for a pack of gum.  One monday, one tuesday, one wednesday.  Rinse and repeat and do the same 3 months later.

I just have trouble with the concept of running all this activity through a card like Chase that will never evolve into realistic terms (Same with Amex Blue, the interest and terms are ridiculous).  Now if I did decide on one card to close, would having 2/4 cards report a monthly balance be a problem?

[Anonymous]

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@smc733 wrote:

So my backup will probably be the Amex, just because I don't want to lose their good graces, or Citi...  Haven't fully decided on that yet.

The problem with Chase Freedom is the 22.99% interest rate, even though I've repeatedly told people the Freedom is a better card, Chase REFUSES to budge, and when I graduate and have loans to pay, there may come a time where I will need to have a balance from time to time.

As for money to cover debts, I have around $17k in the bank, and $21k in available credit, and the largest statement I've ever seen was $2,300, which included my on-campus overnight parking permit (in the city of Boston, at $1,350), otherwise, I go between $500-$1,000 a month in balances.

Exactly, for a good portion of my life, I'm not going to have extravigant living, I don't have it now, I won't have it when I graduate, and by the time I get my loans under control, it will be time to start looking at things like starting a family, etc...  And I found that when I juggled cards for "the extra rewards", it led me to overspend, severely.

I feel like with the sock-drawer cards, it may be best to take them out once every 3 months, the same month, for a pack of gum.  One monday, one tuesday, one wednesday.  Rinse and repeat and do the same 3 months later.

I just have trouble with the concept of running all this activity through a card like Chase that will never evolve into realistic terms (Same with Amex Blue, the interest and terms are ridiculous).  Now if I did decide on one card to close, would having 2/4 cards report a monthly balance be a problem?

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If you close on card and you are letting balances report on two other  cards, you could negatively affect your UTILIZATION, and you could hurt your score. I think you are better off just putting the cards in your sock drawer rather than close them.

If you are going to carry a balance, I agree that you would want to use the cards with the lowest interest rates.

I just did some re-vamping myself. I have business cards (INK and Gold). But for solely personal use, I have cut my cards down to 3. I have not closed anything. I am just not using them.

Freedom for rotating catagories, Sapphire for dining, and Discover Escape for everything else since it has a 2% reward on all purchases. The Escape is my catch-all card.

[smc733]

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@Anonymous wrote:

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@smc733 wrote:

So my backup will probably be the Amex, just because I don't want to lose their good graces, or Citi...  Haven't fully decided on that yet.

The problem with Chase Freedom is the 22.99% interest rate, even though I've repeatedly told people the Freedom is a better card, Chase REFUSES to budge, and when I graduate and have loans to pay, there may come a time where I will need to have a balance from time to time.

As for money to cover debts, I have around $17k in the bank, and $21k in available credit, and the largest statement I've ever seen was $2,300, which included my on-campus overnight parking permit (in the city of Boston, at $1,350), otherwise, I go between $500-$1,000 a month in balances.

Exactly, for a good portion of my life, I'm not going to have extravigant living, I don't have it now, I won't have it when I graduate, and by the time I get my loans under control, it will be time to start looking at things like starting a family, etc...  And I found that when I juggled cards for "the extra rewards", it led me to overspend, severely.

I feel like with the sock-drawer cards, it may be best to take them out once every 3 months, the same month, for a pack of gum.  One monday, one tuesday, one wednesday.  Rinse and repeat and do the same 3 months later.

I just have trouble with the concept of running all this activity through a card like Chase that will never evolve into realistic terms (Same with Amex Blue, the interest and terms are ridiculous).  Now if I did decide on one card to close, would having 2/4 cards report a monthly balance be a problem?

---

If you close on card and you are letting balances report on two other  cards, you could negatively affect your UTILIZATION, and you could hurt your score. I think you are better off just putting the cards in your sock drawer rather than close them.

If you are going to carry a balance, I agree that you would want to use the cards with the lowest interest rates.

I just did some re-vamping myself. I have business cards (INK and Gold). But for solely personal use, I have cut my cards down to 3. I have not closed anything. I am just not using them.

Freedom for rotating catagories, Sapphire for dining, and Discover Escape for everything else since it has a 2% reward on all purchases. The Escape is my catch-all card.

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Makes sense, while I won't actively use all the cards, I also won't close any, I'll just let them sit reporting a 0 balance.

To me it just makes sense to only groom and use the cards that are willing to give me decent terms, sometimes I may have to unexpectedly carry a balance, and if that happens, I'd hate it to have to happen at 22.99%.

I feel like with these two cards, my spending could be controlled as well, with the Chase card I had a habit of telling myself "its ok, I'll get the rewards", this way, I still get rewards, but for some reason I feel like I'm less compelled to overspend.

[RockinRay]

I hear you on the Chase card - same high interest rate for me. It, along with Discover and store cards sit in the sock drawer.

I use:

1. PenFed Visa - gas and "some" purchase (I like the statement credit).

2. USAA MC - some purchases but not many. I have a 7.75% rate with them.

3. Target Visa - 5% at the register and we shop there all the time.

4. Amex BCE - for whatever I feel like.

I have quite a few cards, and like stated in the thread, it becomes a royal PAIN to manage all of them if you try and use them all of the time.

You are for sure on the right track to simplify things!

Ray.

[aamex]

Very good strategy but does it match your spending habits... You don't seem to be the type to carry a balance so I wouldn't consider interest rates as something youd really care about. But i don't know that as a fact. Also, good choice with keeping boa and your other cards open.. I didn't think the one card only thing was a good idea. But I can't believe you sockdrawered Amex because you worked so hard to get your foot in the door. Either way I think this strategy is effective if you carry a balance that actually collects interest.