Sunday, February 17, 2008

Credit card limits and strategy

So I've got 10 credit cards with a total limit of $186,700. Here is a breakdown of all the cards from high to low:

$55,000 American Express Blue Cash
$27,000 Charles Schwab Visa
$26,300 Merrill Lynch Merrill+ Visa
$19,500 Chase Freedom Visa
$10,000 American Express Blue
$10,000 American Express Blue Sky
$10,000 Chase Amazon.com Visa
$10,000 Navy Federal nRewards Visa
$10,000 Shell Mastercard by Citi
$8,900 Citi Diamond Preferred Rewards American Express

Having 10 cards is probably more than most people need, but I actively use 8 of the cards. I'm not sure what to do with the other 2 cards but will keep them open for other reasons. I'll will break down I how use each account.

American Express Blue Cash: This is my primary card. For the first $6500 per year, I earn 0.5% cash back. For anything after $6500, I earn 1.5% cash back. After the $6500 tier has been met, I would use the card for gas (other than Shell), groceries, drug stores, and USPS, in which I would get 5% cash back.

Chase Freedom Visa: This is my second primary card. If I have not met the $6500 tier for the Blue Cash card, I would use this card for gas (other than Shell) and groceries to get 3% cash back. In addition, I use this card for fast food and quick service restaurants and telecommunications such as AT&T Wireless and Vonage. I would get 3% cash back for those categories. As an extra bonus, if you wait until you have $200 in cash back, you get a $50 bonus for a total of $250, or an effective 3.75% cash back.

Shell Mastercard: I use this card exclusively for gas purchases at Shell. I receive 5% credit towards next month's Shell purchases.

Chase Amazon.com Visa: I use this card exclusively for Amazon.com purchases. I receive a 3% credit towards an Amazon.com gift certificate.

American Express Blue Sky: I use this card for for travel purchases such as airline, train, car, cruises, or hotel if I have not passed the $6500 tier for Blue Cash. I get points for future credit towards travel purchases at a rate of 1.33%.

Merrill+ Visa: I use this for all other purchases that does not accept American Express and do not fall into the categories above. I also use the BillPay feature to pay merchants that do not accept credit cards. I earn points at a rate of 1%.

Charles Schwab Visa: Like the Merrill+ Visa, I use the BillPay feature to pay merchants that do not accept credit cards. I earn points at a rate of 1%.

American Express Blue: I do not use this card, but I have authorized users that do use the card. They make a purchase, and they pay me back cash. If I ever wanted to make a long term purchase that I had to carry a balance, this would be my choice of card because the rate is fixed at 7.99%. I earn points at a rate of 1%.

Navy Federal nRewards Visa: I don't really use this card, but I keep it around because I've had this card since 1999, the card with the longest history. I earn points at a rate of 0.5%.

Citi Diamond Preferred Rewards American Express: I don't have a use for this card either. I signed up for it because I took advantage of a 0% APR offer for 12 months, in addition to 10,000 Thank You Points on signup, which I used for a $100 gift certificate at Macys. I earn points at a rate of 1%.

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