In yesterday's post on bargains and baselines, I talked about some of the reason we got an Amazon rewards card, even though we had another one.
This prompted a great question from The Wallet Doctor:
I like your strategy on the Amazon card versus your usually 1% cash back card. I’ve thought about going for deals like that, but I’m always a little nervous about having too many cards. Where do you think you need to draw the line on that sort of specialized strategy?
He's right about not applying for credit cards indiscriminately. Applying for a bunch of credit cards usually isn't the best for your credit score. The average age of your accounts goes down, and the amount of credit you have available (potentially to abuse) goes up.
There have been a number of rewards credit cards available to us that we've passed on applying for. But after thinking about it, and considering the pros/cons, we decided to apply for the Amazon rewards card. These were the main deciding factors for us:
- We shop Amazon regularly. The best rewards come from Amazon purchases — naturally! — so that should be a given.
- With as many things as Amazon sells, we weren't really locking ourselves into a company (even though we were). Sure, the 3% rewards are paid out in Amazon gift codes — “Amazon gift certificates”, basically — but gosh, that still let us purchase just about anything we could want. Not like an airline miles card. It's practically like cash back.
- The 3% reward wasn't a flash in the pan. The 3% is a long-term reward, not just for the first three months. Other cards we've seen offered a nice rebate — 6% or so — but that was only for the first three months, and then the rebate dropped to about 1%. Like I mentioned, I can get 1% now.
- The rebate was easy to use. It shows up right in our Amazon account. Nice!
- The $50 credit sign-up bonus didn't hurt. But notice that I listed this one last. It was just that: a bonus. It wasn't the main reason for signing up.
Hopefully that shows where we drew our line!