How Far is Too Far in Chasing Credit Card Rewards?

If some lenders had their way, you'd do all your shopping on a credit card Why? Because it makes them money

Lots of it And to try and entice you into keep spending, they offer rewards Some really, really nice rewards But are those rewards really worth it? Who's being rewarded? You? Or your bank? If you're careful, airline, hotel, and credit card points can get you far And some people spend a tremendous amount of time seeing exactly how far that is

This is Brad And he's a bit of a Let's call him a credit card connoisseur

I decided to head down to Murray Hill to check out his massive card collection This is a lot of credit cards Walk me through How many are here? I think there is about 70, or 80 here How many of these are open? I think there is about 20 to 25 that are open right now

How did you get into it? How did that process begin? I got a letter in the mail, saying you can get I think it was 50,000 Delta points for spending $3,000 in three months Okay

There was no fee in the first year Yeah, I've gotten those I always toss those Yeah, well you should read them 'cause sometimes you can see that if there is no fee, and you're gonna spend that $3,000 in three months- Yeah If you're doing that anyway, it's free points

Do you know how many points you've accumulated over the last five years? Yeah What is it? It's probably between seven and ten million points Are you joking? No How much time do you spend on this? On just this, it's probably a couple hours a week I have a spreadsheet that I maintain

And there is websites that will keep track of your loyalty accounts But also there is kind of research that I'm doing The best general card anyone can get is just 2% cash back, no annual fee Okay At the end of the year, you get a check in the mail

It's just free money It's what you can get, and you don't have to think about it at all It seems like kind of exhausting To someone else, it would seem like homework But I kind of enjoy it

If someone wants to get into it, what would you tell them? What's the way to start up? The very first thing I would tell them, is just make sure your finances are in order Don't carry a balance Don't pay unnecessary interest Don't ever carry a balance? No 'Cause that's

You're paying interest on any balance that you're carrying Right That's money you're giving away

Treat it like a debit card Okay It's money that you're spending each month, and you pay it off immediately Okay Managing 25 open cards can be exhausting

Done right, like Brad, you could get a lot of free stuff But it's also full of traps that could expose you to expensive fees Remember banks are in the business of making money, and credit cards are one of their most profitable activities Here to tell us more about how banks usually win is Bloomberg reporter Jenny Surane Credit card companies, their ideal goal is that you'll spend each month, and then you'll pay off your bill

Or ideally actually you'll carry a balance, and they can charge you that interest When you're thinking about getting a credit card, and using a credit card, interest is one of the most important things to be paying attention to For instance, let's say you buy a TV for $1,000 Even if you pay off $999 of that bill, you could still be charged interest on the whole thing, even if you've only left a dollar on your balance And credit cards sometimes come with the highest form of interest

If you're thinking about going and chasing after crazy credit card rewards, you have to be really responsible, and stay on top of your payments If you're very responsible, and meticulously organized like Brad, then you're probably set If it's something where you're gonna be carrying a balance, you probably should walk away Yeah, chasing points requires a lot of time and care Just look at Brad

As the old saying goes, "Make sure the juice is worth the squeeze"