A few Observations from my experience with using credit cards.
1. All things being equal, for the initial $10k - $12k in spending, the maximum return is to cycle sign up bonuses. For instance, sign up for a 50K ($500) bonus, and spend the $3k. Then, sign up for another similar sign up bonus, and spend another $3K. Rinse and repeat for the entire year, or until all sign up bonuses are exhausted. This will maximize the return on the initial $10K spending—irrespective of whether or no annual fees are waived. Of course, start with the highest sign up bonus for waived annual fees, then progress to the fee ones.
2. When no longer eligible for sign up bonuses, if spending is around $10K - $15K, then go with no annual fee cash rewards cards with rotating and specialized categories. With the level of spending, fees make no sense, and caps aren’t an issue.
3. If spending above $20K, then look for annual free travel rewards cards.
To me, it’s that simple.
CSP, SPG, or a variety of other annual fee cards are a tremendous value if one spends in excess of $15k - $20k, but make little sense for one who spends only $10K. The latter will never recoup the cost of annual fee, let alone reap any benefit from expenditures.
For $10K spending (say, 2% Fidelity no fee Amex), we’re talking about $200 bucks. In my view, doesn’t really matter what rewards you have, the cash back will be approximately $200 bucks give or take.
Makes no sense to pay an annual fee for $200 bucks. So, pretty cut and dry that no fee cash rewards cards are the best option for low levels of spending.
In the end, for $10K spending, we're talking about $200 in rewards. Some people tip more than that in a single dinner. Low spending, forget about rotating categories, or 2% here and 5% there, just rotate sign up bonuses if you can. At least, this way you'll gather a few thousand.
PS - Four $500 sign up bonuses (plenty of them last year) will net $2,000. You'd have to spend $100,000 on the 2% Fidelity Amex to receive $2,000 cash back. Think about that for one second.
