Rewards Stacking: How to Build Wealth From Credit Card Rewards

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Several years ago, I stumbled upon a quote from Dave Ramsey about credit card rewards. I’ll never forget those 11 words. :

“No one ever says they got rich off of credit card points.” (Source).

Now, I have a confession to make. Dave Ramsey annoys me. I agree with much of what he says about finances, but his attitude that he’s always right grates on my nerves like nails on a chalkboard. He also labels anyone who can add 2 + 2 a “math nerd,” reminding me of a middle school bully I knew.

As I read his words, I knew immediately that he was wrong. One could build wealth through credit card rewards. In this sense, credit card rewards aren’t special. Saving and investing small amounts of money from any source over a long time will turn into piles of cash. We just need to allow compounding to work its magic.

It was then that the idea of Rewards Stacking was born. Over the past four years, we’ve saved and invested all our credit card rewards. Our balance now stands at $37,834.55.

While that doesn’t make us rich (yet), it’s an impressive sum, particularly when you consider that it required no sacrifice on our part. It wasn’t about cutting back or working harder—just saving and investing the free money credit card issuers send us every month.

In this article, I’ll share exactly how we did it and, more importantly, how you can do it, too.

How Much Wealth Can You Build With Credit Card Rewards?

Let’s start by asking a simple question–is the strategy worth the effort? Here’s a table showing how much wealth you could build per $1,000 spent monthly on a rewards credit card. I’ve assumed an 8% annual return on your investments.

	Annual Rewards	1 Year	3 Years	5 Years	10 Years	20 Years	30 Years
1%	$120	$124	$403	$729	$1,801	$5,690	$14,086
1.5%	$180	$186	$605	$1,094	$2,702	$8,535	$21,128
2%	$240	$249	$807	$1,459	$3,602	$11,380	$28,171
2.5%	$300	$311	$1,009	$1,824	$4,503	$14,225	$35,214
3%	$360	$373	$1,211	$2,188	$5,404	$17,070	$42,257
3.5%	$420	$435	$1,413	$2,553	$6,304	$19,915	$49,299
4.0%	$480	$497	$1,615	$2,918	$7,205	$22,760	$56,342
4.5%	$540	$560	$1,816	$3,283	$8,106	$25,605	$63,385
5.0%	$600	$622	$2,018	$3,647	$9,006	$28,450	$70,428

Now, you may wonder how anybody could average 5% in rewards on all purchases. Agreed. It’s tough, although you can earn 5% cash back on many spending categories, as you’ll see below.

Let’s assume you average 3% in rewards for every dollar charged to a card. Here’s the wealth you could build over time.

Monthly Spending	1 Year	3 Years	5 Years	10 Years	20 Years	30 Years
$1,000	$373	$1,211	$2,188	$5,404	$17,070	$42,257
$2,000	$746	$2,422	$4,377	$10,807	$34,140	$84,513
$3,000	$1,119	$3,633	$6,565	$16,211	$51,210	$126,770
$4,000	$1,492	$4,844	$8,753	$21,615	$68,280	$168,026
$5,000	$1,865	$6,055	$10,942	$27,019	$85,350	$211,283
$10,000	$3,730	$12,110	$21,883	$54,037	$170,700	$422,565

To put these numbers into perspective, the median retirement savings for those 55 to 64, according to the Federal Reserve, is just $185,000.

How to Pick Your Credit Cards for the Rewards Stacking Strategy

If you’re still with me, let’s dive into the details of the Rewards Stacking Strategy.

We first need to decide on the credit cards we’ll be using to maximize our rewards. To do this, we need to consider two very important questions:

1. How many credit cards do you want to carry, and 

2. How much do you spend each month, and on what?

How Many Cards Should You Carry?

There is no one “right” answer to this question. Some want the simplicity of using just one card, while others feel they are missing out if they don’t have at least 27 (seriously!).

The more cards you carry, the higher the average rewards you can earn, at least to a point. Why? Many cards pay 4%, 5%, or even 6% cash back, but only on select categories of purchases. Thus, you could have separate cards for gas, groceries, streaming, travel, restaurants, and the list goes on.

Some keep it simple with one card, some go extreme with a dozen or more, and many take the middle road with two to five cards. You need to decide what is best for you.

Based on your answer to this question, we’ll look at specific credit cards to consider in just a moment.

How Much Do You Spend Each Month By Category?

The second question we need to answer is how much we spend each month and in what categories. The answer to this question is critical in determining the best credit card strategy.

NOTE: If you opt for the One Card Strategy, you can skip this question in most cases. Why? You’ll want to find the single card that pays the highest rewards on all purchases (see below).

For example, a family of four will spend much more on groceries than a retiree living alone. Thus, a family of four could benefit from a credit card with higher rewards at the supermarket. The retiree, in contrast, may want a card that pays higher rewards on healthcare costs or travel.

If you track your spending, this step is easy. Simply pull up all of your spending for the past year by category. This is easy to do with some of the more popular budgeting apps. Armed with this information, we can now move to specific credit card setups.

Credit Card Combos

Now the fun begins. With answers to the two questions above, we can decide on the specific credit cards that will enable you to maximize your rewards.

I’ve divided this section based on the number of cards you want to use, from one to three. Of course, you could use this same process to add even more cards to your arsenal.

One Card Setup

If you want to carry just one card, aim for a card that pays at least 2% cash back on all purchases. There are several 2% reward cards with virtually no strings attached in the credit card space. Here are a few options:

Wells Fargo Active Cash	2% cash back on all purchases	No annual fee	$200
Citi Double Cash	2% cash back on all purchases	No annual fee	$200
Synchrony Premier World Mastercard	2% cash back on all purchases	No annual fee	None
SoFi Unlimited 2% Credit Card	2% cash back on all purchases	No annual fee	None
Fidelity Rewards Visa Signature Credit Card	2% cash back on all purchases	No annual fee	None*

*Occasionally, Fidelity customers may receive signup bonus offers via mail.

Some cards pay more than 2% cash back on all purchases. Keep in mind that all of these cards have strings attached. Still, they may well be worth it.

Alliant Cashback Visa Signature Credit Card	Earn 2.5% cash back on your first $10,000 of qualifying eligible purchases each month (1.5% for purchases over $10,000	No annual fee	You must also have an Alliant High-Rate Checking that meets certain qualifications.
Robinhood Gold Card	3% cash back on all purchases	No annual fee, but it requires membership in Robinhood’s Gold program, which costs $50 if paid annually.	Cash back rewards can only be deposited into a Robinhood account.
Bank of America Premium Rewards Credit Card	Earn at least 2.625% on all purchases	$95	It requires the Platinum Honors Tier, which in turn requires $100k or more in BofA and/or Merrill accounts.
Fidelity Rewards+*	Earn up to 3% on all purchases	None	Requires at least $2M in investments managed at Fidelity

*Fidelity Rewards+ is part of the Fidelity Rewards Signature Visa Credit Card for those who qualify.

Two Card Combo

Adding a second card can greatly increase your average rewards rate. The big question is how to decide on a second card and how much it will increase our wealth over time. 

The first thing to note is what the reward rate is on your first card. That rate sets the floor for all future reward cards. For our purposes, we’ll assume that your first card pays a base rate of 2% cash back on all purchases.

Next, we want to identify the five expense categories where we spend the most money. For many, the top five will likely fall into some combination of these categories (Source: BLS):

• Groceries
• Travel
• Restaurants
• Utilities
• Healthcare
• Entertainment
• Clothing

You’ll note that I haven’t included a mortgage or rent payment, car payments, or student loans. Housing is by far the largest expense category for many people. If you own your home, however, mortgage payments generally cannot be made on a credit card. The same is generally true for student loans and car payments. Credit cards are not accepted.

If you rent, however, you do have an option. The Bilt Mastercard pays 1% cash back on rent, with no annual fee. It’s a low rewards rate, but it is the best available option on rent that I can find.

You can find your second card once you know where you spend the most money. For the 2-card combo, the second card should cover as many of your top categories as possible. While there’s no way for me to predict what that will be for you, I think the following cards are good options for the majority of people who want a 2-card combo:

In addition to the above, you might also consider one of these cards:

• U.S. Bank Cash+® Visa Signature® Card: 5% cash back on travel book through the Rewards Center.
• Citi Shop Your Way Mastercard: 5% in points at gas stations, 3% at grocery stores and restaurants, and periodic higher reward offers. Rewards can’t be redeemed for cash, but can be redeemed for gift cards at Amazon.
• Redstone FCU Visa Signature Card: 5% cash back at restaurants and gas stations, 3% on groceries, discount stores, wholesale clubs, utilities, phone and streaming services, and 1.5% on all other purchases.

What’s the Value of a 2-Card Combo?

Here, the question is how much you can increase your average reward rate above the baseline of 2%. Depending on your spending categories, it should be easy to get to 2.5%, and I shoot for 3%. 

As the table above shows, a jump from 2% to 3% can add tens of thousands of dollars to one’s wealth over time.

Three Card Trifecta

Moving to a third card is ideal in two circumstances. You have a specific category where you spend a lot of money each month or you are a frequent traveler. For example, if you put a lot of miles on your car, a card that pays 5% cash back on gas could be worth it. For travelers, it’s worth adding either a generic travel card or brand-specific cards issued by airlines, hotels, or both.

Certain credit card trifectas are popular. These include three-card combinations from Chase, Capital One, American Express, or Citi. However, just because they are popular doesn’t mean they are right for you. You still need to compare your spending patterns to the rewards offered by these cards.

5% Cash Back Cards

Recall that in the table of how much you might earn over time, I included a row for 5% rewards. It’s extremely difficult to average 5% cash back on all of your purchases. You can, however, earn 5% back on a lot of your purchases. It does require carrying several cards.

To help you decide if aiming for 5% is for you, here are some cards that pay 5% in rewards on select purchases.

Credit Card	Spending Category	Rewards
Chase Freedom Unlimited	Travel	5% cash back on all travel purchased through Chase Travel(SM)
Chase Freedom Flex	Travel & Bonus Categories	5% cash back on all travel purchased through Chase Travel(SM) and on up to $1,500 in combined purchases in bonus categories each quarter you activate.
Citi Custom Cash	Various	Earn 5% cash back on purchases in your top eligible spend category each billing cycle, up to the first $500 spent, 1% cash back thereafter.
Amazon Prime Card	Amazon, Whole Foods & Travel	Earn unlimited 5% back at Amazon.com, Amazon Fresh, Whole Foods Market with an eligible Prime membership and 5% back on Chase Travel purchases with an eligible Prime membership.
American Express Blue Cash Preferred Card	Groceries & U.S. streaming subscriptions	6% cash back on groceries up to $6,000 per year in purchases at U.S. supermarkets, then 1% and 6% cash back on select U.S. streaming subscriptions.
AAA Daily Advantage Visa Signature® Credit Card	Groceries	Earn 5% cash back on grocery store purchases. Combined earn of 5% cash back on grocery store and 3% cash back on wholesale club & gas purchases on the first $10,000 spent in a calendar year, then 1% thereafter.
U.S. Bank Cash+ Visa Siganture Card	Travel & Categories of Your Choice	5% cash back on your first $2,000 in combined eligible purchases each quarter on two categories you choose and 5% cash back and 5% cash back on prepaid hotels, air, and car rentals booked through the Rewards Center
AAA Travel Advantage Card	Gas & EV Charging	Earn 5% cash back on gas purchases and electric vehicle-charging stations up to $7,000 spent each year.
Abound Platinum Visa Credit Card	Gas	5% cash back on fuel purchases paid at the pump.

In addition to the above cards, you’ll also find store-branded cards that pay 5% cash back at their stores. For example, you can find 5% cards for Walmart, Target, and Krogers.

Credit Cards Linked to Investing Platforms

Several investment platforms have issued their cards. In some cases, the rewards are excellent. In other cases, they are mediocre. One advantage of these cards is that they will often deposit your rewards directly into the account you have on the platform. Still, I wouldn’t get one of these cards unless its rewards were excellent.

Here are a few to consider:

• Robinhood Gold Card: 3% cash back on all purchases
• Fidelity Visa: 2% cash back on all purchases
• Schwab Investor Card® from American Express: 1.5% cash back
• The Platinum Card® from American Express Exclusively for Charles Schwab: Not a great cash back option, but excellent travel benefits.
• The Platinum Card from American Express Exclusively for Morgan Stanley: Same as the card from Charles Schwab.
• Morgan Stanley Blue Cash Preferred American Express Card: Up to 6% cash back.
• The Owners Reward Card: Up to 10% cash back

My Card Setup

I have a simple strategy for credit card rewards. First, I get a card with a high reward rate on everyday purchases. Then, I add specific cards that offer significantly higher cash back on certain purchases, so long as the card doesn’t charge an annual fee.

Most purchases are currently made with the Bank of America Premium Rewards Credit Card. Because we have Platinum Honors tier with BofA, we get a 75% bonus on the rewards. That means all purchases earn at least 2.625%. We earn 3.5% on travel and dining. Note that Platinum Honors requires that you have at least $100,000 at Bank of America and/or Merrill.

We also used the Citi Double Cash and the Alliant cash back Visa signature card. When available, I plan to apply for the Robinhood Gold Card, which pays 3% cash back on all purchases.

We also use the Amazon Prime Card to shop at Amazon and Whole Foods. There is no annual fee, and it pays 5% cash back at Amazon and Whole Foods. We also carry other cards, such as the Chase Freedom Unlimited and Costco Visa card, but rarely use them.

How to Invest Your Credit Card Rewards

Investing your rewards is simple. Once every month or two, I cash in our rewards. In some cases, I apply the rewards as a statement credit. Either way, I take the reward amount to an investment account. In the past, I’ve used Vanguard and Betterment.

At the moment, I’m experimenting with Robinhood. They offer a 3% match on IRA contributions, which could be a great way to accelerate your wealth. In our case, I’ve invested our rewards in Berkshire Hathaway (BRK.A). Here’s a screenshot from the app:

How to Deal with Points and Miles

Many cards offer rewards in the form of points or miles. These rewards can sometimes be converted to cash or a statement credit. If you choose this option, you’ll want to ensure you get at least 1 cent for each point or mile.

In many cases, however, you get more value by redeeming points or miles for travel. If that’s the case, we take the better value. I then transfer what the cost of the travel would have been had I paid cash from my checking account to the investment account.

How Important are Signup Bonuses?

I love signup bonuses and take advantage of them when they make sense, but I never get a card just for the bonus. I know others do, but it’s just not been my approach. If this is important to you, you can check out our massive list of cards with signup bonuses here.

What About Interest Payments?

This is simple. Do not use this strategy unless you pay off your balance in full every month. The high interest rate credit card issuers charge will cost you more than the rewards you’ll earn.

Conclusion

Well, there you have it. That’s my approach to saving and investing our credit card rewards. If you know of great cards or strategies that have helped stack rewards, please let us know in the comments below.