Introducing the 1-2-3 Cash Back System to Maximize Your Rewards

ByRob Berger Last Updated:

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Imagine you’re looking for a good cash back credit card. You do what thousands of people do each and every day: You Google “best cash back credit cards.” What do you see?

You get advertorials from the big credit card websites. The content may appear to be objective. The article may even talk about the site’s “methodology” for choosing the “best” credit cards. Some even have sections on why you should “trust” them.

Note: The 1-2-3 Cash Back System is what I use to maximize cash back for Rewards Stacking.

Once you navigate past their methodology and trust, you get cards from their advertisers. Because they all have the same advertisers, you see the same credit cards listed in result after result after result on Google’s first page.

It gets worse. The big sites’ ratings offer no context. Will the card be your one and only rewards card or part of a 3-card strategy you’re using to maximize your rewards? The answer to that question matters a lot. Most of the “best” cards listed on the big sites would not be the best option if you want a one-card strategy.

How Many Credit Cards Will You Carry?

It’s a simple question but one that gets overlooked.

Imagine you find three credit cards online that pay the following rewards:

Credit Card #1

  • 5% on travel
  • 3% cash back on dining
  • 2% cash back on gas
  • 1.5% cash back on everything else

Credit Card #2

  • 2% cash back on everything

Credit Card #3

  • 6% on streaming
  • 5% on groceries
  • 1% on everything else

Which card is “best” for you? It depends.

If you want to use just one credit card, card #2 will likely generate the most cash back rewards. Why? Most people’s spending falls into the “everything else” category. Think about the money you spend on healthcare, utilities, retail stores, warehouse clubs, your pets, car maintenance, home maintenance, home remodeling, and insurance. It’s possible to find cards that pay higher rewards for some of these purchases, particularly store-branded cards, but most mainstream cards pay their base rate on these expenses.

For your first rewards card, it’s the base rate that matters, not the teaser rates on select categories.

Once you decide to get a second rewards card, however, all of this changes. Now cards #1 and #3 come into play. But here’s the thing, I can’t tell you, and the big credit card sites certainly can’t tell you, which one is “best” for you. The best second or third credit card will depend on how much you spend, where you spend it, how many cards you plan to carry, and which cards you qualify for.

We help with the qualifying part by collecting tons of data on the credit scores that were approved or denied for a card. Now with our 1-2-3 Cash Back System (I know, fancy name), we can help you with the other factors. Here’s how it works.

The 1-2-3 Cash Back Credit Card System

We identify the “best” credit cards based on whether you want to carry one, two, or three or more cards. Here’s how it works.

1. Everyday Purchases Card

The first card you get should have a base cash back reward rate of 2% or more. That’s true if you only want to use one card for all your purchases. It’s also true if you plan to use two or more cards. We want the base rate to be as high as possible. Note that the aim should be a base rate of 2% or more.

This is the “1” in our 1-2-3 Cash Back Credit Card System because it’s the first card you should get. Think of it as your solid foundation to maximizing your cash back.

In this category, cards such as the Wells Fargo Active Cash® Card and Citi® Double Cash Card are highly rated because they pay 2% cash back on all purchases. In contrast, the Chase Freedom Unlimited® wouldn’t make the cut. It’s a great cash back card (I carry it), but it’s not the best first cash back card because it pays 1.5% cash back for its base rate.

2. Two-Card Strategy

With the two-card strategy, we pair an everyday card above with a second card that pays elevated rewards in multiple categories. The idea is to get as much bang for our buck with this second card.

As an example, the Capital One SavorOne Cash Rewards for Good Credit pays elevated rewards on several categories:

1% cash back
On all other eligible purchases
Earn 1% cash back on all other purchases
3% cash back
U.S. supermarkets
Earn 3% cash back at grocery stores (excluding superstores like Walmart® and Target®)
3% cash back
Streaming services
Earn unlimited 3% cash back on popular streaming services
3% cash back
Dining
Earn unlimited 3% cash back on dining
3% cash back
Entertainment
Earn unlimited 3% cash back on entertainment
5% cash back
Hotels
Earn 5% Cash Back on hotels and rental cars booked through Capital One Travel (terms apply).
5% cash back
Rental Cars
Earn 5% Cash Back on hotels and rental cars booked through Capital One Travel (terms apply).
8% cash back
Entertainment
Earn 8% Cash Back on Capital One Entertainment purchases.
10% cash back
Select Categories
Earn 10% cash back on purchases made through Uber & Uber Eats, plus complimentary Uber One membership statement credits through 11/14/2024

Of the Big 4 spending categories (groceries, gas, dining and travel), it gives 3 to 5% cash back on all but gas. For hotels and car rentals, you do have to book through Capital One to get the 5% cash back (airfare is not included in the 5% rewards). Add in 3% on entertainment and streaming, and it’s a perfect example of a second card in a two-card strategy.

As another example, the Redstone Visa Signature Credit Card is an excellent second card in a 2-card setup. It pays 5% cash back on dining and gas, and 3% cash back on groceries, discount stores, wholesale clubs, utilities, phone, and streaming services. Wow. It covers a lot of spending categories with elevated payouts. You do have to jump through some hoops to become a member of Redstone, but it may well be worth the effort.

NOTE: You won’t find this card on most of the big website’s “best” cash back credit card pages. It also isn’t part of an affiliate program, so websites don’t make money from this card. Does that explain why it’s absent from the big sights? IDK.

In contrast, the Citi Custom Cash® Card wouldn’t be ideal in a 2-card setup most of the time. It’s an excellent card that pays 5% cash back on up to $500 in spending in one of several categories. But after that, all purchases earn just 1%. This card is better suited for those who want to use 3 or more cards.

Speaking of which . . .

3. Three-Card Strategy

The final category is for cards we can add to get elevated rewards on a specific category. Here, we are looking for an absolute minimum of 3% cash back, but in reality, we want 4, 5 or even 6% cash back.

I mentioned the Redstone card above, which pays 5% cash back on dining and gas. The other two categories that make up the Big 4 are supermarkets and travel. For all of these individual categories, the Citi Custom Cash card is a great option. You can get 5% cash back on up to $500 in spending in any one of select categories, which includes all of our Big 4. It also has no annual fee. But it will only cover one of the Big 4 categories.

Note: You can get more than one Citi Custom Cash® Card. For couples, both can get their own card. You can also get a different Citi card and request a change to the Citi Custom Cash card. Some have used this strategy to get three cards.

Here are some other offers for each of the Big 4 categories.

Groceries

  • The Blue Cash Preferred® Card from American Express is best known for its 6% cash back on up to $6,000 in annual spending at U.S. supermarkets, then 1%. It does have an annual fee, however. The cash back is received in the form of Reward Dollars that can be redeemed as a statement credit or on Amazon.com at checkout.
  • The Prime Visa pays 5% cash back at Whole Foods.
  • The American Express® Gold Card pays 4x at U.S. supermarkets on up to $25,000 in purchases each year. The cash value of Amex Reward Points is just 0.6 cents, so this is only a reasonable option if you plan to use the points for travel.
  • Store brand cards such as Kroger Rewards World Elite Mastercard® or Harris Teeter pay 5% up to cash back on purchases at their respective stores.
  • The Verizon Visa® Card pays 4% on groceries and gas, 3% on dining, and 2% on Verizon purchases. You must be a Verizon Wireless customer, and you earn Verizon Dollars that can be used on Verizon purchases, to pay your Verizon bill, or to book travel, among other things.

Gas

Dining

Travel

These are just a few of the options, but give you a good idea of what’s out there. Of course, there are other spending categories to consider, such as streaming, entertainment, and utilities.

Conclusion

The big takeaway is that there is no one “best” cash back card. To find what works for you, you have to pick cards based on the strategy you plan to use. Once you know how many cards you want to carry, finding the best options is the easy part.

We are working to have listings by major spending categories. These listings will order the cards from highest cash value to lowest, so you can quickly find what’s best for you. Stay tuned.

Rob Berger is the founder of allCards.com. He's written about personal finance and investing since 2007 and is the author of the highly acclaimed book, Retire Before Mom and Dad. He is a former litigation attorney in the securities field and the Founding Editor of Forbes Advisor.