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And over the course of the year, you put down $4,800. And you got $48 at the end of the year for spending like you normally would.

Exactly right. Or more, if you pay it off more regularly. And once you establish yourself with lenders as a less risky customer, you unlock a lot better products for yourself. I have credit cards I use specifically for groceries, cards I use for any travel-related expenses, and then credit cards I use for overall expenses, and then one I use just for restaurants — because I get the highest return in specific rewards that those credit cards offer. Usually, it’s percentages or travel points or what have you. But if I spend $200 to $300 on a restaurant per month, and get $80 to $100 back a year, why not? But I have good credit. “ “Get your one percent, pay the And I have all my monthly expenses mapped out. So card off… Do I know where I’m spending my it again money and I know the credit cards that will give me the next month.” the greatest return on those expenses.

So, assuming you have good credit, what kind of products should people get?

Depends on the person. That’s why when friends ask me, “Which credit card should I get?” I say it depends on how they spend their money right now. That’s the first step: what are you spending money on all the time? What aligns with your personal monthly expenses?

Is it safe to say that some of the bigger rewards cards also have a hefty interest rate?

Yeah, that’s a concern. Your goal is to pay them off every month, so that doesn’t come into play. But a lot of the top-tier rewards cards also come with an annual fee. So that’s where a little bit of math comes in. So, to give you a scenario, I had a friend who wanted a card just for restaurants and entertaining. He goes out to eat a lot. He has excellent credit. So Capital One has two cards — the Savor Card and Savor One. Savor One is no annual fee and you get three percent back at restaurants. The Savor card has a $95 annual fee and you get four percent back. So, if you’re going to spend more than $9,500 a year at restaurants, the Savor card is worth it. Because you’ll get more than one percent back in rewards.

That means spending $800 a month at restaurants alone.

Well, the Savor card also has rewards for concert and theater tickets — they’re geared toward people who spend a lot of time going out and doing fun things. Probably people that don’t have kids. [Laughs] I do. So I spend a lot on groceries. And American Express, for example, has a “cash back” family of cards. So, with the Preferred Cash card, you get six percent on groceries — and that’s the best across any card. And that comes with a $95-a-year fee. And they have the American Express Cash, which is three percent. So then you ask: “Is that $95 going to be made up by getting three percent more back over the course of a year, or not?” “Is three percent on gas going to be better than two percent?” So you really have to know your own budget. You have to know your fixed expenses, and you have to know your variable expenses. And then you have to dedicate those cards to those expenses. Otherwise it doesn’t work.

So you’ve got a “training wheels card” — that’s the Discover. You’ve got a couple of options for people with good credit and enjoy dining out — the Savor cards — and options for a more domestic lifestyle — American Express. What about travel?

American Express and Chase have a lot of products that are geared toward people who travel. And some are affiliate cards — American Express has a relationship with Delta, Chase is United, and American Airlines is Citi. Norfolk flies a lot of Delta, too, so people here may think of that product, too. And a lot of the more lucrative rewards cards have sign-up bonuses attached to them, which is something else to consider.

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