How to assess and build your credit card portfolio
Editor's Note
Whether you have one credit card, a few or a drawer full of them, you may wonder whether you have the right cards in your wallet. You also may wonder how to further build your card portfolio.
These are personal questions, with different answers for each individual. In this guide, I will present various things to consider when evaluating and improving your credit card portfolio.
How do I build my credit card portfolio?
A good place to start is to determine which cards you currently hold and their benefits, earning rates and annual fees. You may also want to check your credit score, which you can do for free.
Once you have a good understanding of your current situation, you can determine whether to add any new cards to your portfolio, as well as whether any cards in your current portfolio are no longer necessary. Let's dive in.
Related: 5 ways to improve your credit score
Top card categories
Since this article is on The Points Guy, naturally, we focus on credit cards that earn rewards for your spending. Rewards cards generally earn one of three types of rewards:
Cash back
Cash-back credit cards generally provide the simplest redemption: cash back in the form of a statement credit, check, gift card or deposit. This is the most straightforward reward card, as most cards earn a flat percentage of cash back on each purchase. However, some require a minimum redemption value or only allow statement credits to offset particular types of purchases.
Related: Cash back vs. travel rewards: How to choose a credit card
Hotel or airline points/miles
Cobranded airline and hotel credit cards earn points or miles associated with a particular hotel brand or airline loyalty program.
These cards can provide a valuable method of earning points or miles for a particular program, but in most cases, you'll be limited to redeeming your points or miles with that one program. (Marriott Bonvoy and Hilton Honors are exceptions, as you can transfer Marriott and Hilton points to various airline partners.)
Related: Are cobranded airline cards worth it anymore?
Transferable currencies
The third type of reward is transferable points or miles.
These points or miles are generally more valuable because they can be transferred to travel partners and used to book award flights or nights through the partner's loyalty program. For example, you can transfer Chase Ultimate Rewards points earned by the Chase Sapphire Reserve® or Chase Sapphire Preferred® Card to 14 airline and hotel transfer partners, including Hyatt, Virgin Atlantic and Singapore Airlines.
You can usually also use these points or miles to book directly through the issuer's travel portal, but you may not get as much value from these redemptions.
Top card benefits
There are several types of credit cards with many types of perks, including:
- Airport lounge access
- Hotel elite status
- Hotel annual free night
- Airline fee credit
- Airline status boost
- Access to hotel programs that provide elitelike benefits, such as American Express's Amex Fine Hotels + Resorts, Capital One's Lifestyle Collection and Premier Collection, Chase's The Edit and Citi's Hotel Collection and Luxury Collection.
- Cellphone protection
- Shopping protections such as price protection, purchase protection, extended warranty protection and return protection
- Travel protections such as trip delay protection, baggage delay protection, trip cancellation/interruption insurance and even emergency medical evacuation insurance
Some of these benefits may provide significant value to particular cardholders but little value to others. Hence, it's important to realistically evaluate how valuable a card's benefits will be for you.
For any cards you currently hold, make sure you understand their benefits and how much value you place on these benefits.
Choosing a card based on your spending
Most rewards cards offer bonus earnings for spending in certain categories. Here are the best cards in popular spending categories:
- Restaurants and dining out
- Groceries
- Airfare purchases
- Booking hotels
- Gas purchases
- Everyday spending
- Entertainment spending
- Sports fans
- Hardware store purchases
- Streaming services
- Commuting
Take a look at your spending and the bonus categories on the current cards you carry. Are there any categories where you spend a significant amount of money but don't earn bonus points? If so, you may want a new card with bonus earnings for that specific category.
Alternatively, are there any categories where you spend significantly and can improve your earnings by moving your spending to a new credit card? If so, adding a new card to your wallet may be worth it.
Related: The best cards for each bonus category
Should I pay any annual fees?
Some people prefer only to utilize cards with no annual fees. However, the benefits, credits, and additional earnings may justify paying an annual fee and, in some situations, offset it, so I'd recommend not immediately excluding cards with an annual fee.
Here are a few articles where we consider whether paying an annual fee is worth it for:
- The Platinum Card® from American Express
- The American Express® Green Card
- Chase Sapphire Preferred
- The Business Platinum Card® from American Express
That said, cards with no annual fee can be excellent additions to your credit card portfolio since they can increase your earnings on particular purchases without costing you anything besides another credit inquiry.
This is particularly true for the Chase Freedom Flex®, Chase Freedom Unlimited® and Citi Double Cash® Card (see rates and fees) since the rewards earned by these cards become more valuable if you have an eligible premium card in the Chase Ultimate Rewards and Citi ThankYou Rewards families, respectively.
The information for the Amex Green Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Related: Why a $500+ per year credit card isn't crazy at all
What if a card is no longer useful?
So far, we've mainly considered adding new credit cards to your portfolio.
But what if you've identified a credit card that is no longer useful to your earning and redeeming strategy? In this case, if the card has no annual fee, there's no harm in keeping the card. Just be sure to spend a small amount occasionally to keep your account active.
This is especially important if this card is one of your oldest cards, as closing it would decrease your average account age (which would affect your credit score).
If a card has an annual fee and you don't find the benefits and earning rates justify the annual fee, then you'll want to take action. You may want to call the number on the back of the card when your annual fee comes due and explain why you can't justify paying the annual fee. The agent might provide you with a credit card retention offer, or you can inquire whether there's an option to downgrade your card to a no-annual-fee version.
Otherwise, you may want to close your account to avoid the annual fee. Just do these things first if you do choose to close your card.
Related: Should I cancel my credit cards if I don't use them anymore?
Selecting the perfect card mix
The perfect card mix is different for each person. You'll want to consider the following questions:
- What type of rewards do you want to earn, e.g., cash back, transferable points or airline/hotel points and miles?
- How many cards do you want to carry?
- Do you want some cards primarily for the benefits they offer, such as elite status or lounge access?
Suppose you want to focus your earnings on American Express Membership Rewards or Chase Ultimate Rewards points. In that case, you may want to consider one of the following collections of cards and use them as recommended:
- Amex Trifecta: The Amex Platinum (flights booked directly with airlines and flights and prepaid hotels booked with American Express Travel), American Express® Gold Card (restaurants and U.S. supermarkets) and The Blue Business® Plus Credit Card from American Express (non-bonus spending)
- Chase Trifecta: Chase Sapphire Reserve (travel and dining), Ink Business Preferred® Credit Card (shipping purchases, Internet, cable and phone services, advertising purchases with social media sites and search engines) and Chase Freedom Unlimited (non-bonus spending)
- Chase Quartet: Chase Sapphire Reserve or Chase Sapphire Preferred Card (travel and dining), Ink Business Cash® Credit Card (telecom and office supplies), Chase Freedom Unlimited (non-bonus spending) and Chase Freedom Flex (rotating bonus categories)
If you want to earn a more diverse set of rewards, you may prefer a mixed strategy that earns a range of transferable points and cash back on most purchases while also providing useful benefits. You may prefer to create a mixture of the following types of cards that best fit your needs:
- Luxury travel rewards card: Chase Sapphire Reserve and/or The Amex Platinum for premium travel benefits and protections
- Cobranded airline credit card: Cards associated with airlines such as Delta, United, American and Southwest for benefits when traveling with the specific airline
- Cobranded hotel credit card: Cards associated with hotels such as Marriott, Hilton, Hyatt and IHG for anniversary free nights and other benefits when staying with the specific hotel brand
- Cash-back credit card: Citi Double Cash Card for flat-rate cash back, Capital One Savor Cash Rewards Credit Card for dining and entertainment, Blue Cash Preferred® Card from American Express for gas purchases at U.S. gas stations and for U.S. supermarkets (cash back is received in the form of Rewards Dollars that can be redeemed as a statement credit or at Amazon.com checkout), and/or Chase Freedom Unlimited for pairing with an Ultimate Rewards earning card
- Rewards credit card: Capital One Venture Rewards Credit Card for redeeming at a fixed rate or transferring to partners
- Business credit card: Amex Blue Business Plus, Capital One Spark Miles for Business or other small-business cards for bonus earnings on business expenses
Related: The ultimate guide to the best credit card pairings
Bottom Line
The credit cards in your wallet depend totally on your needs and spending patterns. Regardless of your cards, be sure to check them regularly for new offers and utilize all the benefits and credits associated with each one.
Choosing which rewards currency you earn with your credit cards is essential to determining what cards best fit your wallet. When adding a new credit card, examine the annual fee, benefits, earnings and welcome offer and see if it nets you any value.