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A smart card strategy for your spending style

On average, Americans have 3.4 credit cards, most of them offering a variety of perks. To really maximize those benefits, take a minute to compare your cards to how you spend. Then use this guide to know which card to reach for in almost any scenario.

Making a large purchase? Use a low-interest-rate card

Maybe you want to buy something big, such as an appliance or big-screen TV. If you plan to use a credit card, a good bet could be one with a low interest rate. The goal here is more of your monthly payment goes to paying down your balance. The average credit card charges an annual percentage rate (APR) of 16 percent, while the average low-rate card is 13 percent, according to That difference could save you thousands of dollars over time. Some cards offer even lower introductory rates when you apply for them, and you might use one of these to pay for your purchase. Just make sure you have a plan to pay off your balance before the rate rises.

Put everything on your card? Choose one with cash back rewards

Do you buy every lunch, coffee and pack of gum with your credit card and then pay your balance in full each month? Consider one that offers maximum cash back rewards for your purchases. (Just make sure you don’t overspend to earn them.) Added bonus: Your statement becomes a handy record of where you shopped and how much you spent. You might even add the card to your smartphone’s digital wallet to speed up your transactions.

Have a goal in mind? Look for bonus points

If you want to redeem your credit card rewards for a specific item—like a new home theater system— look for ways to maximize your points. Some cards offer extra points for certain types of purchases or at defined times of the year. For example, you may be able to earn triple points on grocery purchases for six months. If you’re applying for a new card, factor in any welcome points and annual points bonuses, which could help you get to your goal faster. Just confirm that the value of these benefits exceeds any fees or interest charges. Also, you may need to select your reward from a catalog or a specific vendor.

Travel a lot? Get a travel rewards card

Do you travel for your job, for family visits or just for fun? Some cards offer traveler-friendly benefits for trips you pay for with that card. These might include flight or hotel room upgrades, roadside assistance and protections if you lose your luggage, face travel delays or have a medical emergency on the road. You may also want to use this card for non-travel purchases if you earn miles or points for each dollar you spend. A general travel rewards card might give you more ways to redeem your points compared to an airline-specific credit card. But if you do intend to redeem them for a plane ticket, it takes 30,000 points on average to equal a round-trip airfare. If you spend $10,000 on purchases annually on one card that lets you earn 1.5 miles for each dollar spent, you could earn a round-trip airfare every other year.

Love a specific retailer? Consider a store card

If your entire wardrobe or decor comes from one store or website, look into getting that retailer’s credit card, if it offers one. Some store cards give a regular discount, like 5 percent off everything you spend, or special perks such as free shipping or a credit on your birthday. Just be sure to review all the costs, terms and conditions, since store cards often have much higher interest rates than typical credit cards. So if you’re not going to be able to pay off that $500 shopping spree right away, consider using a low-interest-rate card instead.

Keep in mind: The optimal card for any given purchase could change over time, based on card benefits and your own financial situation. Most important, always try to pay your balances in full. Paying interest on purchases can quickly erode the value of your points and other rewards.

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The material provided on this website is for informational use only and is not intended for financial, tax or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional and tax advisor when making decisions regarding your financial situation.

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