Published: April 28, 2014

*This content is not provided by Citi, Chase, or Discover. Any opinions, analyses, reviews or recommendations expressed here are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by Citi, Chase, or Discover.



If you love getting extra something for things you must do anyway--namely cashback for shopping--then you know from our previous posts here and here that there are three staples of cashback credit cards you must consider for your portfolio: Chase Freedom, Citibank Dividend, and Discover It. Each of these cards is different, but there is something that makes all of them worth having: rotating 5% bonus cashback categories.

Why is it so great? Because a regular cashback card only gives you 1% off your purchase. It is better than nothing, but it is still nothing to write home about. Five percent cashback, on the other hand, is really huge! And most importantly, if you want to use coupons, codes, or any other discounts, you are free to do so because using coupons does not disqualify you from receiving your 5% cashback, no matter what.

My friends and relatives nicknamed me a "card guy", so I always get this question: "Which credit card should I use"? Yet, I never really get this question (pun intended). There is no such thing as a perfect credit card for everything. The obvious answer is, if you want to profit from credit cards, use the ones that gives you maximum returns. That means you have to use different cards at different time for different types of purchases.

Going to a restaurant? Use Chase Freedom. Shopping at Home Depot? Use Citi Dividend. Buying stuff at Bed Bath and Beyond? Whip out Discover It. These are just some examples of maximizing your credit card returns in the second quarter of 2014. The third quarter will have different 5% categories, so the smart consumer you are, you will have to switch allegiances as you go along.

You have to understand that this is not how a credit card company hopes you will behave, but this is how you should behave for your own good. They actually lose money giving you 5% cashback on these particular transactions, as their straight interchange commission is much smaller than that (they share a small 1.5%-3.5% interchange fee with the Visa/MasterCard networks).

The reason they give you this huge cashback in the first place is that they want to train you to use their credit card at all times. And when you do carry a balance from month to month, this is where the banks make some really serious money!

I realize that most folks are reluctant to have several credit cards. They think it's too complicated and they are scared that something bad might happen to them, like identity theft. But the truth is, it doesn't have to be complicated, and identity theft can happen even if you have only one credit card. The number of credit cards you carry does not necessarily correlate to the heightened security risks. I am not saying you should not be vigilant, but if you treat credit cards simply as plastic money, you are missing out.

Let's recap. You can profit from credit cards, but you shouldn't use the same card for all your purchases. If you are afraid you won't be able to remember which card to use, do what I do. Put this information in your phone. I have an app called Quick Notes, but you can use a dozen of different apps for the same purpose. It took me all but one minute to spell out the 5% bonus categories for the rolling quarter on my phone, and I almost never leave home without it! I couldn't forget which card to use even if I wanted to.

This is a post by Andy Shuman, a credit and travel expert who blogs at www.Lazytravelers.net. He writes and blogs during and between trips that he enjoys free of charge mostly due to creative use of credit card offers. He believes that credit cards are much more than just a convenient way to pay for a purchase, and that the benefits of responsible credit habits can go far beyond getting the best rates for loans and mortgages.

Andy is the author of bestselling books from Lazy Traveler Handbook Series available on Amazon. When he's not traveling, he lives with his beautiful wife and daughter in Brooklyn, NY.

Questions? Suggestions? Keep them coming!