My Four Credit Card Portfolio

I’ll start this with the disclaimer that personal finance is personal. Basically, I’ve found that this combination of credit cards works fantastic for me and my family, but based on how your spending differs from ours, it may work better (or worse) for you.

It seems to be fairly common for people to have one or two credit cards, having their main credit card and a back-up or ‘just-in-case’ credit card. I approach and use my credit cards a little differently, using multiple cards on a regular basis. If it sounds like it’s out of control, it’s actually far from it. I have a system that is optimized to maximize rewards and minimize fees. Through credit card rewards or costs that I haven’t needed to pay, I end up with hundreds of extra dollars every year.

Through rewards or costs that I haven’t needed to pay, I end up with hundreds of extra dollars every year.

I’ve developed this system with the following principles:

  1. Cash is king: I love cash back, it is my preferred rewards type and all my cards are cash back or equivalent.
  2. No annual fees or minimum spending requirements: By avoiding credit cards with annual fees, I give myself the most flexibility (it’s easy to cancel a card or apply for a new one if there’s a new card that offers me more value than a current card), and I completely avoid the thought of “needing” to spend more money to meet a spending requirement.  This is especially important because instead of having a primary credit card that most of my spending goes on, it is divided between multiple cards.
  3. Never carry a balance: This may be my most important rule. It is imperative to pay off every monthly bill in its entirety and on time. Carrying a balance will end up costing you more than the rewards you’re earning.
  4. Spend as little as possible, but use your credit cards as frequently as possible: Never increase your spending just because you have credit card rewards. The extra spending will end up costing you more than any potential reward.  Rather, use your credit cards as often as you can to maximize your rewards (in general, you don’t earn any rewards or save money if you use cash, cheque or debit), but only on your regular spending or on purchases that you need (not want). In short, use credit cards as a transactional tool that can earn you rewards instead of using them as a source of credit.
  5. Use the card that gives you the Most Bang 4 Your Buck: I’ll explain this in more detail later in the post, but all credit cards are not made equal and can be better (or worse) for you depending on the context and situation.
  6. Don’t necessarily take every credit limit increase that is offered (and even request lower credit limits). This one is a bit tricky because it depends on the situation. In general, I will decline offers for increases to my credit limit. In general, the credit limits I have are far more than I use (in part because I’m running 4 cards). I don’t take the higher credit limit because often I don’t need it. Most months, I’ll never exceed 30% of the credit limit. Also, keeping your credit limits low(er) helps you control your debt-service ratio, which can be important if you are going to apply for a mortgage or vehicle financing. However, taking a credit limit increase when it is offered could be advantageous if you’re using a bigger percentage of your credit limit than I am, if you are still able to pay the entire balance every month.  Also, it’s typically easier to take a credit limit increase when it’s offered, than to ask for one.

Capital One MasterCard for Costco Members

I use the Capital One Mastercard exclusively for Costco members to increase my cashback rewards, using it exclusively for gas (2% cashback) and restaurant (3% cashback) purchases. Ironically, I don’t pay for my groceries at Costco with the Capital One Card because I would only get 0.5% cashback (gas gets 2%, restaurants get 3% and everything else all receives a measly 0.5% cashback.

Individual vendors are categorized according to the merchant code assigned by MasterCard, so occasionally I won’t get the cashback rate I’m hoping for. For example, I’ve used the card to pay for gas at a business that was designated as a convenience store instead of a gas station by MasterCard. In general, this happens very infrequently. On the other hand, I’ve also discovered that at least one catering company is classified by MasterCard as part of the “restaurant” category, which gave me a nice boost to my cashback rebates.

I’ve found this card to be quite useful to me. Other than my grocery shopping, gas and restaurant purchases tend to be my next biggest spending categories. Since I do most of my grocery shopping from stores that are classified as “department” stores instead of grocery stores (and I haven’t found a credit card that gives you more than 1% cashback at these stores), it’s hard for me to do better than this card.

Once a year, you are mailed a rebate for all the cashback that you have accumulated. You can then bring that rebate into a Costco store and exchange it for cash or apply it to your grocery bill that trip.

I use the Capital One Mastercard to increase my cashback rewards, using it exclusively for gas (2% cashback) and restaurant (3% cashback) purchases.

The one catch with this card is it is only offered to Costco members.

President’s Choice World Elite MasterCard

The PC WE MasterCard is my primary card. Strictly speaking, it’s a points card, not a cashback card.  Cardholders earn PC Optimum points on their purchases, that can be redeemed in-store (at Superstore or other PC-branded or Loblaws stores) to your grocery bill. In essence, it functions for me as a cashback card with a degree of flexibility not always found with cashback cards. I can apply points towards my grocery purchases when I want to. I like this feature because I can accumulate my points as long as I want, and redeem them when it’s most useful to me. Typically, I’ll use them when expenses are higher (like during the holiday season December and January), or when my income is lower (typically in the summer).

At minimum, I earn the equivalent with 1% cashback in PC Optimum points on all my purchases. With the number of accelerators available with this card, I’m frequently earning more than the 1% minimum. For example, I earn the equivalent of 3% back from all my purchases at Loblaws stores. This comes in handy because we do a significant portion of our grocery shopping at Superstore. You can also earn additional PC Optimum points on grocery purchases that qualify for the weekly bonus offers through the PC Optimum program.  The PC Optimum bonuses are delivered via email or through the PC Optimum app and offer you an extra 20% back in PC Optimum points.  For example, you could get 1,000 points (which are worth $1) on every $5 spent on Joe Fresh apparel.  You also get double the points on gas purchases at Superstore gas bars (depending on what the prices are at the pump, 99.9% of our gas fill ups are at Superstore Gas Bars with the PC WE MasterCard or at Costco with the Capital One Mastercard). Whenever I’m booking any flights, I’ll typically check the PC Travel website (which is exclusive to PC MasterCard holders), to see if there are any special offers. I’ve received 5% cashback in PC Optimum points on trips who’s pricing was competitive with all other booking options.  On a $500 dollar trip, that’s an extra $25 in points!  Stay tuned for another post, where I review the PC Optimum in more detail.

I earn the equivalent with 1% cashback in PC Optimum points on all my purchases. With the number of accelerators available with this card, I’m frequently earning more than the 1% minimum.

You need a minimum $80,000 personal income or $150,000 household income to be approved for the President’s Choice World Elite MasterCard.  However, you don’t necessarily need those income levels to get this credit card.  You could, as I did, work your way up through the family of President’s Choice Mastercards.  I started with the basic PC Mastercard.  Based off of my spending, I was offered an upgrade to the PC World Mastercard.  At some point after being upgraded to the World Mastercard, I noticed that the World and World Elite Mastercard have minimum spending levels in addition to minimum income levels.  After a year in which I had accumulated the requisite $25,000 in annual spending, I phoned customer service and asked if I could be upgraded to the World Elite Mastercard and voila!  A week or so later, my WE Mastercard arrived in the mail.  In this case, I didn’t necessarily have the minimum personal or household income levels to get the WE Mastercard.  However, I was able to get the perks and benefits of the WE card based off of my annual spending and the fact that I always paid off my balance in full.

The PC WE Mastercard has worked for us for three main reasons: 1) It’s minimum 1% cashback equivalent is quite competitive with the other no annual fee credit cards out there; 2) the 3% cashback equivalent you receive at President’s Choice branded retailers has a lot of value to us because we do so much of our grocery shopping at Superstore; and 3) I can redeem my points for groceries when I want to.  The convenience of having the PC WE Mastercard double as your PC Optimum points card is the cherry on top!

The PC WE Mastercard earns between 1% and 3% cashback and let’s you redeem your rewards at your own discretion.

Home Trust Preferred VISA

I have the Home Trust (HT) Preferred VISA more so to reduce fees than accumulate rewards. HT VISA includes roadside assistance for cardholders, though I hope to never have to use it. Having this as an included feature on a no annual fee credit card saves me over $100 a year.  As an Alberta driver, I would be paying for an AMA membership if I didn’t have this card to have the roadside assistance. The HT Visa gets me this coverage for free!

I have the Home Trust Preferred Visa more so to reduce fees than accumulate rewards.  I get roadside assistance coverage for free with this card.

The other cost that I avoid by using the HT VISA is foreign currency conversion fees. On almost all other credit cards, you end up paying an extra 2.5% premium on top of the current exchange rate on any transaction not processed in Canadian dollars.  Whether it’s online shopping in USD or paying for anything while traveling outside the country, that 2.5% can add up quite quickly. I use the HT VISA because it is one of the few credit cards that doesn’t charge the 2.5%.  It usually costs somewhere close to $1,000 for each week you travel abroad (roughly $150 per day in accommodation, meals, excursions and shopping x 7 days).  Some trips will be more expensive and others less but $1,000 gives us a rough ballpark.  Each week you travel, you’ll save roughly $25 by using the HT VISA instead of a card with a foreign currency fee.  The fact that I get 1% cashback rewards on all transactions is an extra bonus.

The other cost that I avoid by using the HT VISA is foreign currency conversion fees.

Because the 1% cashback rewards on the HT Visa is either the same or lower rate than my other cards, I only use this card if I’m spending on foreign currencies or if a vendor or business accepts Visa but not MasterCard. There are frequent months where I don’t spend a single cent on the HT Visa (this means there’s one less bill to pay and makes it easier to stay organized) but I keep it for the free foreign currency conversion and roadside assistance.

West Jet World Elite Mastercard

The RBC WJ WE MasterCard is another credit card I use to avoid fees and lower costs, rather than for the rewards that it offers on your spending.  It does come with an annual fee of $119, but you’re able to cover that cost and save some money if you travel once or twice a year.  The card covers the $30 fee on the first checked bag for the primary cardholder and up to eight guests traveling on the same itinerary (Unfortunately for consumers, Air Canada & Westjet recently increased their checked baggage fees)

The card covers the $30 fee on the first checked bag for the primary cardholder and up to eight guests traveling on the same itinerary

Further, the companion fare voucher offers great opportunity for savings.  Once a year, you can use a $99 companion fare voucher for a companion travelling on the same itinerary.  The companion fare voucher covers the roundtrip cost of airfare anywhere in Canada or the continental US (for trips to Hawaii, Mexico or Central America, the fare voucher costs $299 and for trips to and from Europe it is $399), so whoever you’re traveling with will only have to pay taxes and fees.  The companion voucher offers the greatest value if you’re flying to or from a smaller regional airport.  If your itinerary has a connecting flight (for example Prince George, BC to Vancouver and then Vancouver to Toronto), the companion voucher will cover the airfare on both legs.

I typically steer clear of credit cards with an annual fee, but I make an exception with the WJ WE MasterCard with its annual fee of $119. I’m happy to pay the annual fee though, because of the value that it provides. With a child under a year old, traveling long distances by car is not as practical as it was before being a parent. The WJ WE card provides our family with surplus value if we take two trips a year. With our extended family being in different provinces, this is all but a given. In the past ten years, Canadian airlines have begun charging baggage fees. Without a child, it was feasible to travel without a checked bag.  Now that we need a checked bag, the free checked bag pays for the annual fee itself. With it costing $30 on the departing flight, another $30 on the return flight, we save at least $60 in baggage fees each trip. When taking at least two trips a year, we’re saving a minimum $120 a year in baggage fees. On top of that, the companion fare voucher allows a 2nd traveler to book the same itinerary (within North America) for $99. Not only does this save us significant dollars on our airfare, it saves us having to drive three hours to a major airport to avoid the high cost of the connecting flight.

That being said, the WJ WE Mastercard provides us with extra value because of the regularity of our travels, because flying with just a carry-on is not feasible with a young family, and because any trip we take has at least one connection because live in a city with a smaller regional airport.  If you don’t travel regularly, typically fly with only a carry-on, or live in a city with an international airport, you may not recoup the cost of the annual fee.

Bottom line:

My annual savings on the PC MasterCard when combined with the PC Optimum program are well over $600 in free groceries (stay tuned for a post on how I generate value with the PC Optimum Rewards Program). My annual rebate cheque on the Capital One Mastercard is typically between $100-$200, depending on how much we drive and how frequently we eat out. The HT Visa saves me a minimum of $100 a year before considering any savings on foreign currency fees.  Obviously, in years that I travel abroad, the HT Visa saves me much more than in years I don’t. And lastly, the WJ WE card saves me between $100-200 a year as well.

All told, since I always pay my entire balance every month, my four credit card system saves me more than $900 a year and that is after accounting for the annual fee on the RBC WJ WE Mastercard.  That is roughly $900 that I’m able to keep in my bank account every year.  I’m able to save it, invest or spend it in whatever way I like!

Substitute cards

Let’s say, for whatever reason, the exact cards that I’m using don’t fit your spending patterns very well.  Perhaps it is inconvenient to shop at a Superstore or your live in a metropolitan city and don’t drive a car.  What alternatives can I suggest?

Let’s say that you’re not a Costco member and that the membership fee outweighs the benefits of the Capital One Card.  Or, you don’t own a car so the 2% cashback on gas is a wasted benefit. The Tangerine No-fee MasterCard is a good alternative. Like the Capital One Card, there is no annual fee and it does not require any membership. If I were to give up my Costco membership (and along with it the Capital One Card), I would likely switch to the Tangerine card.  The advantage of the Tangerine Mastercard is that you get to pick two or three 2% cashback categories, with the remainder of your purchases earning you 0.5%.  You could pick from grocery, home improvement, entertainment, hotel-motel, recurring bill payments and others (just be aware that buying groceries from Costco or Walmart won’t necessarily get you 2% back in a grocery category).  In some ways, depending on your spending patterns, the Tangerine card could generate more value than the Capital One Card. If you don’t eat out frequently enough, or don’t drive at all often enough, the ability to choose from the available categories would be an advantage.  Selecting recurring bill payments as one of your categories and getting 2% cashback on your cell phone, home internet, utility, Netflix, insurance, gym membership, and/or any subscriptions you may have, could easily be worth over $100 a year alone!

If you don’t drive, the free Roadside Assistance that is included with the HT VISA has limited to you.  However, one of the Rogers Bank Mastercards may provide More Bang 4 Your Buck.  Depending on which card you use, you get 3 or 4% cashback on purchases in foreign currencies.  After the 2.5% foreign currency conversion fee, you end up with 0.5 or 1.5% cashback on foreign currency purchases.  You also get back 2% on any Fido or Rogers services charged to the card and 1.25% or 1.75% cashback on everything else.  Cardholders can use their cashback rewards to pay for Rogers or Fido services at any point during the year using the app.  If you aren’t a Rogers or Fido customer, you can get your rewards by requesting a statement credit once per year in December.  With the relatively high cashback rates, the Rogers Bank Mastercards (specifically the World Elite) would provide tremendous value to cardholders who tend to have expenses in foreign currencies and are looking for a primary card.

I use four credit cards to maximize my rewards and reducing fees, by getting the best of four worlds.  Do you optimize your credit card use differently? Please comment below with your credit card perspectives, tips, tricks and experiences.