What’s In My Wallet? And What Should Be In Yours?

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After seeing yet another of those ubiquitous CapitalOne “What’s in your wallet?” ads, I decided to write about the one credit card that’s in my wallet (now that I’ve learned some hard lessons about the dangers of them). I route almost every minor purchase I make through a Chase amazon.com credit card for which I pay the whole balance each billing period. The card offers a points program, 1 point for every dollar spent. Every 2,500 points, they turn into a $25 gift certificate at amazon.com. Alone, that’s not particularly great, but here’s the kicker: for every $1 you spend at amazon.com, you get 3 points instead. That makes the card have a 3% return at amazon.com. For me personally, it nets about a 2% return in what amounts to cash, because I am a heavy user of amazon.com for all sorts of purchases. We use it almost exclusively for gift-giving purposes, for buying diapers in bulk (it is far easier and cheaper to have a deliveryman dump a monster box of diapers on the front step than having us do it), and for buying lots of bulk groceries and personal hygiene products through Amazon grocery. I would esitmate that roughly 60% of our “household spending” each month goes through amazon. Since “household spending” is by far the largest portion of our use of the card, we easily turn out a 2% return (approaching 3% near Christmastime). Of course, one of the big reasons for this is baby supplies; when our baby gets older, this may be re-evaluated. How do I select a bonus program that’s right for me? The first thing to do is evaluate your credit card spending over the past few months and see where you use them and what you use them for. I made a list of spending ordered by what I buy and where I buy it. The next step is to visit the websites of the top places that you use for purchases and see if they have good offers. Many of them are comparable to amazon’s offer. For a long time, my wife used a Target credit card because she lived very close to a Super Target and did virtually all of her shopping there, easily netting her a 2-3% return. While you’re comparing these, you should also look at the offers from the major credit card companies to see if any offers match your spending profile. Good places to start include Chase, Bank of America, CitiBank, and CapitalOne. Whenever you find one that’s interesting, make sure to evaluate it carefully before signing up. If you’re not earning back at least 1.5%, there is probably an offer out there better for you. For example, My Money Blog recommends a Fidelity Investment Rewards card that generates 1.5% cash back into a Fidelity account (of course, you need a Fidelity investing account first…). The key thing is to do some research and see whether or not your everyday card is really as much of a benefit as it can be. For me, switching to the Chase amazon.com card has netted a lot of “free” diapers.