The Island Approach works great with cash back credit cards, assuming you’re comfortable managing multiple credit card accounts. For example, here are a few scenarios for how cash rewards can fit into your credit card arsenal:
Cash Back + 0% APR – You’re not going to find the best rewards and the best 0% deal on the same credit card. But you can get both if you get two cards: a cash back credit card for everyday expenses and a 0% card for big-ticket purchases or balance transfers.
Getting the best terms isn’t the only benefit, either. By separating your everyday spending from balances that you’ll carry from month to month, you’ll reduce the amount accruing interest. And if you ever see finance charges on your everyday card, you’ll know to cut back.
Cash Back + Points or Miles – You can really rake it in if you pair an everyday cash rewards card with a card (or cards) offering especially attractive rewards in some of your biggest spending categories. Just make sure to take annual fees into account.
You can also do a combo of these two approaches, using 0% cards in addition to multiple rewards cards. But whether you should is another story. A lot depends on personal preference. But your credit standing will play a role, too. And remember, repeatedly applying for credit cards in a short time period is bad for your credit score.
If you aren’t sure how your credit is doing these days, you can check your latest credit score for free on WalletHub.
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