In a different post, I argued that it’s a good idea not to carry balances on credit cards, and to get cash back rewards instead. But which card is the best? Online services such as CreditCards.com, Mint.com and BillShrink claim to show you the best available credit cards. However, there is one important thing they fail to tell you:
Dirtly little secret: No single credit card is best for you
These services get a referral fee from the card issuing bank, and would get a much lower or no commission if they told you that you are much better off by combining different cards. Each bank wants you to use their card exclusively. They may give you 1 or 2% cash back in selected categories, but hope to make money from you whenever you use the card to make purchases in a different category (or don’t pay your balance in full).
To avoid the “credit card tax” as much as possible, you should turn their business model on its head, and use the card that gives you the best rewards for each purchase. In fact, you can get nearly all the benefits with just 2 of the best cards.
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