5% solution

  

While it takes a lot of work, you can earn 4-5% or more on all your credit card spending.

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Step 1: Use cards with high bonus category reward rates

The easier part of the strategy is simply to take advantage of cards that have high reward rates for various bonus categories. Your choices depend on how highly you value Ultimate Reward points, other transferable reward points, or straight cash back; and whether you are willing and able to take advantage of business cards.

For the "standard approach", we value Ultimate Reward points at 1.7 cents each; and Membership Reward and ThankYou points at 1 cent each. For the "miles" approach, we try to maximize the number of transferable points we earn, with a slight preference for Membership Reward points. For the "cash" approach, we only consider options where get actual cash back, or can use your points to make or offset travel purchases. In that case, we value Ultimate Reward points at 1.5 cents each.

Category	Standard	Miles	Cash
Dining	5.1% w/Chase Sapphire Reserve ($150)	5x w/Citi Prestige ($245) or 4x w/Amex Gold ($140 US Only)	4% w/Uber ($0), 5% w/Citi Prestige ($245), 4.5% w/Chase Sapphire Reserve ($150), 4.5% Wells Fargo Propel ($0)
Airfare	5.1% w/Chase Sapphire Reserve	5x w/Citi Prestige or 5x w/Amex Platinum Card ($350)	4.5% w/US Bank Altitude Reserve ($75), 4.5% w/Wells Fargo Propel ($0), 4.5% w/Chase Sapphire Reserve
Other Travel	5.1% w/Chase Sapphire Reserve	3x w/Chase Sapphire Reserve, 3x w/Citi Premier ($95), 3x w/Citi Prestige (Hotels and cruises only)	4.5% w/Chase Sapphire Reserve, US Bank Altitude Reserve, or Wells Fargo Propel, 3% w/Uber
Groceries	6% w/Amex Blue Cash Preferred ($95)	4.5x w/Amex Everyday Preferred ($95), 4x w/Amex Gold ($250)	6% w/Amex Blue Cash Preferred ($95)
Gas	5% w/Ducks Unlimited ($0)
Amazon Purchases	5% w/ Amex (Biz) or Chase (personal) Amazon Prime card ($0)
Target Purchases	5% with Target Debit Card ($0)
Office Supplies and Telecom Services	8.5% w/Ink Cash (Biz, $0)	5x w/Ink Cash	7.5% w/Ink Cash, 5% w/Amex SimplyCash Business (Biz, $0)
Sporting Goods	5% w/Ducks Unlimited ($0)

Step 2: Add additional categories with "Pick Your Own" category cards

Several credit cards let you choose from a set of bonus categories. By getting multiple of these cards, you can add additional categories above and beyond the "normal" categories listed above.

The U.S. Bank Cash+ Card earns 5% on two categories of your choice, with a $2,000 cap on bonus category spending per quarter. The VantageWest Connect Credit Card earns 5% in a single category of your choice, with a $1,500 cap on bonus category spending per quarter. You can change your bonus category for these cards every quarter.

If you can move $100,000 in retirement or investment assets to Merrill Lynch, you'll qualify for Bank of America's Platinum Honors status and will receive a 75% bonus on credit card rewards. This turns the BOA Cash Rewards Card into a card that earns 5.25% on a category of your choice, that you can change monthly. You are capped at $2,500 in bonus category spending each quarter.

Examples of extra categories include:

• online shopping
• home improvements and furnishings
• home utilities
• department stores
• gym/fitness centers
• select clothing stores
• charitable organizations
• drugstores

You can also try to leverage "rotating category" cards. Like pick your own category cards, these cards sometimes cover more unusual categories and there is a quarterly bonus rewards spending cap. But instead of getting to choose your own bonus categories, the credit card company decides the bonus categories for each quarter. Earn 5-10% in Rewards with Rotating Category Cards.

Step 3: Use the Altitude Reserve when it make sense

• The Altitude Reserve earns 4.5% on any digital wallet purchase. Apple Pay, Google Pay, etc. can be used in many physical stores, apps, and websites.
• If you have the right Samsung device, you can use Samsung pay at any credit card terminal that accepts swipes, allowing you to earn 4.5% at many physical locations.
• You can use the Altitude Reserve, whenever you can use a digital wallet and you aren't already earning more valuable rewards with another card. That is assuming you can get approved (try to apply before you receive too many other new cards). For example, you can always do better than the Altitude Reserve at gas stations with the right gas reward card. And if you value Ultimate Reward points, you can always do better at restaurants with the Sapphire Reserve card. But, if you want to restrict yourself to cash back cards, the Altitude Reserve is the best option for restaurants where you can use your digital wallet. And the Altitude Reserve is your only good option for many retail locations that don't fit into other categories.

Step 4: Leverage merchant gift cards

• Many different merchants and services sell gift cards at supermarkets, office supply stores, gas stations, drugstores, and Amazon.com.
• Whenever you make a purchase with one of these merchants, and you don't have a credit card that earns good bonus rewards, you can use a gift card instead. By buying these gift cards at stores where you can earn good bonus rewards, you will effectively earn high reward rates on an increased range of purchases.

For example, if you purchase a BestBuy gift card at the grocery store, with a card that earns 6% at supermarkets, and then use the gift card, instead of your credit card, at Best Buy, you're effectively earning 6% on your BestBuy purchase.

• If you are lucky, you may be able to buy merchant gift cards when they are on sale, saving you more money on your purchases. In these cases, you may choose to make a purchase at a store where you aren't already earning a super-high reward rate, such as at Costco.
• The most lucrative option is to use the Ink Cash Card to purchase merchant gift cards at Office Supply stores. You'll earn 5x Ultimate Reward points, value at 8.5 cents per dollar. But, it is a business credit card. If you are blocked out of this card by the Chase 5/24 card, there are a number of other small business cards that earn around 5% rewards at Office Supply stores.
• There are several good options to use at supermarkets, which usually have a wider range of gift cards available. You may even want to get the Amex Gold Card just to earn 4x Membership Reward points (on your first $25,000 of grocery store spending). It should enable you to purchase all the gift cards that you are likely to need without hitting the spending limits of the somewhat more lucrative Everyday Preferred Card (or Blue Cash Preferred Card. With all of these cards, you can subtract about 1% from the reward rate to cover the extra annual fees for increased supermarket spending.

Both the personal and business versions of the Amazon Prime card can be great options. The earn 5% at Amazon.com and at Whole Foods, and they don't have a spending cap or an annual fee.

• With some gas credit cards, you can purchase gift cards at gas stations that sell them. Do a quick search online, as we haven't tested most of the combinations. Drugstores are another option, but the only way to get a great reward rate is with promotional offers or by "using up" one of the categories from a pick your own category card, so you are usually better using an office supply, grocery, or gas card.

Step 5: Use Visa / MasterCard gift cards everywhere else

• Rather than buying merchant gift cards, you can also buy Visa and Mastercard gift cards, and then use them anywhere you could have used a credit card. Since these are actually debit cards, you can even use them in some places that only accept debit cards (or in some cases pay lower transaction fees). By buying these flexible gift cards at stores where you earn good bonus rewards, you can effectively extended your high bonus reward rates to all of your remaining credit card purchases.

The only issue is cost. Unlike merchant specific gift cards.

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