The best way to diversify your credit cards
Diversify rewards by signing up for these types of cards
The average American has three credit cards. Three is a good number to start, but you can also diversify your credit cards – and therefore rewards – with more than three cards.
In reality, the best credit cards to have comes down to the type of credit card you have, not necessarily the card issuer. By having a diverse set of credit cards in your wallet, you can reap great rewards and have more financial freedom.
Easy-to-earn cashback cards
Cashback cards are one of the best credit cards to have because they make earning rewards simple. Most card issuers will offer 1% to 3% cashback on every single purchase you make. If you use your cashback card often enough, this could amount to a few hundred dollars in cashback every year.
If you’re looking for more than 3% cashback, you can also sign up for a specialty cashback credit card. These kinds of credit cards will allow you to earn 5% or more on specific rotating spending categories like groceries, restaurants, or entertainment.
For the savvy spender, rotating cashback credit cards can give you a good boost in diversified rewards. You’ll want to stay on top of these reward categories, though. If you don’t you may lose out on cashback opportunities each quarter.
Lifestyle rewards and specialty cards
Once you’ve got a solid cashback card in your wallet, you can move on to specialized credit cards. Depending on your lifestyle, you may find one credit card more beneficial than the other. Specialized rewards cards can provide more bang for your buck, especially if you frequently shop with the card issuer.
For travel lovers, a travel rewards credit card or a card through an airline is one of the best credit cards to have. You can earn miles through purchases you can later use on hotel accommodations, flights, and more. If you’re a regular shopper at certain retail outlets, consider signing up for their cards, too. You will likely earn rewards with the card you wouldn’t be offered as a regular shopper.
Depending on your lifestyle, you may find one credit card more beneficial than the other. Specialized rewards cards can provide more bang for your buck, especially if you frequently shop with the card issuer.
Finally, you may want to seek a basic credit card for regular purchases like gas or auto maintenance. While these cards have fewer rewards than cashback or specialty cards, they do have their perks. Signing up for a basic auto credit card will boost your overall credit allowance.
What’s more, you can put auto purchases on this card that won’t affect your overall balance on another card. If you use an auto or gas card like a debit card, your credit will improve in terms of your total credit allowance, types of credit you have, and your overall credit age.
While it is important to diversify rewards with credit cards, don’t go applying for too many. When you apply for a credit card, a hard inquiry will usually appear on your credit report. These inquiries lower your score and take 2 to 3 years to disappear from your credit report.
Instead, start slow and diversify rewards with a new credit card every few years with these tips in mind.
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