It has been more than six months since I last updated my credit card portfolio. Much has changed:
- I replaced my WestJet RBC World Elite MasterCard with an American Express Cobalt
- I added a Brim MasterCard for free Boingo internet access
- I am beginning the process to cancel my MBNA Smart Cash MasterCard—I am accruing more points to meet the minimum threshold in order to redeem my outstanding balance
Rationale for a portfolio of credit cards
Most credit cards offer a baseline of cash and points (“rewards”) and additional rewards for special expense categories. Common special expense categories for additional rewards include gas and groceries.
You can maximize rewards by assembling a portfolio of credit cards to cover a broader range of special expense categories. For example, if the market offers a baseline of 1% cash back for all expense categories, but Card A offers 2% return on gas and Card B offers 2% return on groceries, you can obtain both cards to maximize your rewards.
While one credit card could be relatively more competitive within a set of options, only a portfolio of credit cards can maximize rewards and non-monetary benefits (e.g. insurance coverage) by covering a broader scope of expense categories. A less competitive card can still be considered to assemble an optimized portfolio.
A portfolio of credit cards is therefore (almost always) better than one credit card.
Rationale for cash-related rewards
Credit cards offer rewards in the form of either cash or points.
I prefer cash for transparency—I can ascertain that I would earn A dollars if I spend B dollars in C expense category.
Points can be redeemed for products, services, gift cards, or, sometimes, cashback. I prefer to redeem points for cashback because the redeemable products and services are often overvalued. Cashback allows you to ascertain the value of the points.
Rationale for one for-fee credit card in every portfolio
No-fee credit cards do not offer adequate insurance coverage. If you frequently travel or rent cars, you should consider insurance for:
- Emergency medical insurance (out of province and country)
- Car rental theft and damage
- Lost or stolen baggage
- Flight delay
- Trip interruption
- Hotel burglary
- Travel accident insurance
I would not be hesitant to carry a high-fee credit card. The American Express Cobalt costs $120 per year and is one of the more expensive credit cards in the market. However, I prefer the assurance of market-leading insurance coverage.
You should carefully review the insurance terms, such as scope and monetary limits, before selection.
I use the American Express Cobalt to pay for food (e.g. restaurants and groceries), and travel and transit expenses (e.g. Uber). If a restaurant does not accept American Express (one in ten occasions), I use the Rogers World Elite MasterCard.
The card offers 500 points for food, 200 points for travel and transit, and 100 points for all other categories.
100 points equate to one dollar if you redeem points for travel expenses (e.g. flights and accommodations). The points have a lower monetary value if you redeem points for other expense categories. You need to accrue a minimum of 1,000 points before redemption.
In my opinion, the card offers the most competitive insurance coverage.
A $10 fee is charged on a monthly basis; the annual fee is thus $120.
Tangerine Money-Back MasterCard for recurring expenses
I use the Tangerine MasterCard to pay for recurring expenses (e.g. mobile phone, home internet and charitable donations).
The card allows you to select 3 of 10 special expense categories for 2% cashback. Although the available categories include restaurants, gas and transportation, these categories are covered by the American Express Cobalt in my portfolio.
The cashback system is highly transparent—earned cashback is communicated in Canadian dollars and is automatically applied within the immediate billing period.
No annual fees apply.
Rogers World Elite MasterCard for foreign transactions and all other expenses
I use the Rogers World Elite MasterCard for expenses in foreign currencies and all other expenses.
The card charges a foreign transaction fee of 2.5% but offers a 4% cashback for foreign expenses—a net return of 1.5%. Most credit cards charge a foreign transaction fee in addition to the currency bid-ask spread. MasterCard offers competitive currency bid-ask spreads.
1.75% cashback is earned for all other expenses.
No annual fees apply.
Brim MasterCard for free Boingo internet access
I applied for the card for the sole purpose of gaining free Boingo internet access—I do not intend to use the card. I often encounter Boingo in American and European airports and planes; I have not yet encountered Boingo in Canada.
No or low utilization of a credit card can improve your credit score—that is an ancillary benefit of having the Brim MasterCard.
No annual fees apply.
2018 in retrospect