How the Maximizer Works
Used responsibly, credit cards can be an amazing way to earn rewards from your everyday spend. However, picking the credit cards that maximize your rewards has never been harder. There are thousands of credit cards issued by hundreds of banks and credit unions. Many credit card reward programs often have their own “currency.” Beyond the standard rewards on everyday purchases, many credit cards provide bonus rewards on special categories, like grocery shopping or travel. To complicate things further, bonus category rewards are sometimes capped and some cards even change their bonus categories throughout the year. Looking at just the rewards aren’t enough: the best reward credit cards also typically have the highest annual fees.
Credit card rewards are money on the table. When you aren’t using the right cards, you’re losing money. We build the Credit Card Maximizer to make picking the right credit cards as easy as possible, and this is how we did it.
A Common Currency
There are dozens of leading credit card reward programs, and we estimated the average dollar value of one unit of the program’s currency. Of course, these values can change over time, so we continuously monitor any changes that may impact the valuation of a credit card reward program currency.
Credit Card Program Reward Currency Valuations
|Credit Card Currency||Value in Dollars|
We capture all reward and fee details of a credit card in a proprietary database. Factors we consider in calculating the net rewards from a credit card include:
- Everyday purchase reward rate
- Bonus category reward rates and caps
- Sign-up bonus and requirements to receive sign-up bonus
- Annual fees and any first-year fee waivers
We calculate the rewards for each credit card based on your spending by category. Then, we see if you could do any better by having another card. Our proprietary algorithm identifies the best way to spend across cards to maximize your rewards. We continue adding cards until the incremental value becomes negative. In each step, we reevaluate the way you should spend across cards, ensuring your final recommendation provides not only the cards you should get, but also the way you should spend across those cards.
Acting On the Results
You should sign-up for your first credit card recommendation today. If you multiple credit card recommendations, then you should wait to sign-up for these cards. The reason is that we want to make sure you get your sign-up bonuses, which often have a spend requirement, and you don’t make a credit card issuer think your identity was stolen because you’re applying to 4 credit cards in the same day! Sign-up with Facebook or your email address, and we’ll remind you when it’s time to sign-up for the next card.
I already have credit cards. What do I do with them?
If you don’t see your credit card in the Credit Card Maximizer output, then your credit card is probably not giving you the greatest rewards. In general, if your existing credit card doesn’t have an annual fee, you should keep it (even if you don’t plan on using it). If your existing credit card does have an annual fee, it’s probably best to cancel it. It is important to note that if you had your existing credit card for a long time, cancelling that card may temporarily and marginally lower your credit score. Learn more about how cancelling credit cards impacts your credit score.
How long should I keep these credit cards?
You should keep these credit cards until your spending pattern materially changes. For example, instead of eating out, you eat in more often and therefore spend less on the Dining category and more in the Grocery category. Come back to reuse the Credit Card Maximizer another day!
How does this impact my credit score?
Using this tool does not impact your credit score. Learn more about how opening new credit cards impacts your credit score.