Building a Credit Card Portfolio (around $2,000 spending per month)

See also:

• Building a Credit Card Portfolio (around $500 spending per month)
• Building a Credit Card Portfolio (around $5,000 spending per month)

For this second part of the Building a Credit Card Portfolio series, I will focus on people who only spend about $2,000 a month on all their credit card bills put together. This is generally for small families of about 4 people, (2 adults and 2 children).

If you spend $2,000 a month, let’s say people generally have the approximate following breakdown:

• $200 at department stores (including clothing)
• $200 miscellaneous (generally one time payments such as car or home insurance, car maintenance, buying large furniture, etc.)
• $300 on recurring bills (such a phone, Internet, cable, memberships, subscriptions, etc.)
• $300 on restaurants and other entertainment
• $400 vacation (generally on hotel and/or airfare, averaged out for the entire year, budget of $4,800 per year on vacation)
• $600 on gas and groceries

Keep in mind that the above numbers are averaged out throughout the year.

I would recommend the following credit cards to consider:

Capital One Aspire Travel World MasterCard

• $120 annual fee
• Earn 35,000 sign up bonus points after your first purchase
• Earn 10,000 anniversary bonus points
• Earn 2 points per $1 spend on all other purchases

Scotia Momentum Visa Infinite Card

• $99 annual fee (waived if you apply before October 31, 2014)
• Earn 4% cash back on gas and grocery purchases (on your first $25,000 of annual spending on these categories)
• Earn 2% cash back on drug store purchases and recurring bill payments (on your first $25,000 of annual spending on these categories)
• Earn 1% cash back on all purchases made above the $25,000 threshold on the categories listed above
• Earn 1% cash back on all other purchases

Scotiabank Gold American Express Card

• $99 annual fee
• $29 for additional cardholders
• Earn 30,000 sign up bonus after your first purchase (accounts need to be opened before October 31, 2014)
• Earn 4 points for every $1 you spent on gas, grocery, dining and entertainment purchases
• Earn 1 point for every $1 spent on all other purchases

MBNA Smart Cash Platinum Plus MasterCard

• No annual fee
• Earn 5% cash back (on the first 6 months) on gas and grocery purchases on $400 worth of monthly (calendar month) purchases
• Earn 2% cash back (after the first 6 months) on gas and grocery purchases on $400 worth of monthly (calendar month) purchases
• Earn 1% cash back for all other purchases on $1,250 worth of monthly (calendar month) purchases

Chase Amazon.ca Rewards Visa Card

• No annual fee
• Earn $20 Amazon.ca bonus sign up gift certificate
• Earn 2% cash back on Amazon.ca purchases
• Earn 1% cash back on all other purchases
• No foreign transaction fees

There are so many different combinations that you can do, even with other credit cards not listed above. Below, I will list 3 possible combinations that you can consider to build your credit card portfolio:

1) Capital One Aspire Travel World MasterCard, Scotia Momentum Visa Infinite Card, Chase Amazon.ca Rewards Visa Card

If you use your Capital One at department stores ($200),  miscellaneous items ($200), restaurants and other entertainment ($300) and vacation ($200 mostly for airfare, the other $200  on hotel and other travel related expenses will be on another credit card) equals $900 monthly in spending. That gives you 1,800 points per month, which can be leveraged to give you up to $18 cash back per month. In one year, that’s up to $216 in cash back. The Capital One annual fee is $120, but they give you up to $100 worth of points annually (if points are leveraged to its maximum). Therefore, you can be paying as low as $20 in annual fee. So $216 – $120 + $100 = $196.

If you spend $300 on recurring bills, as well as $600 on gas and groceries, that’s $900 spending on your Scotia Momentum. You get 2% return on recurring bills, which comes out to $6 per month or $72 per year. Furthermore, you are getting 4% return on gas and groceries, which comes out to $24 per month or $288 per year. If you subtract the annual fee, you get $72 + $288 – $99 = $261.

Finally, if you spend the remaining $200 per month on your Chase Amazon.ca on purchases that help you avoid the foreign transaction fee, let’s say you only receive the 1% cash back because you did not make a purchase on Amazon.ca, that gives you another $2 per month or $24 annually.

That is a grand total of $196 + $261 + $24 = $481

2) Capital One Aspire Travel World MasterCard, MBNA Smart Cash Platinum Plus MasterCard, Chase Amazon.ca Rewards Visa Card

• $200 at department stores (including clothing)
• $200 miscellaneous (generally one time payments such as car or home insurance, car maintenance)
• $300 on recurring bills (such a phone, Internet, cable)
• $300 on restaurants and other entertainment
• $400 vacation (generally on hotel and/or airfare, averaged out for the entire year, budget of $4,800 per year on vacation)
• $600 on gas and groceries

Let’s say you maximize the 2% return on $400 a month spending on gas and groceries on your MBNA, you will be getting $8 a month, for a total of $96 per year.

If you spend $300 on recurring bills, $200 on the remaining gas and groceries, $200 at department stores, $200 on miscellaneous items, $300 at restaurants and other entertainment and $200 on vacation expenses, that equals $1,400 in spending on your Capital One. That gives you 2,800 points per month, which can be leveraged to give you up to $28 cash back per month. In one year, that’s up to $216 in cash back. The Capital One annual fee is $120, but they give you up to $100 worth of points annually (if points are leveraged to its maximum). Therefore, you can be paying as low as $20 in annual fee. So $336 – $120 + $100 = $316.

Finally, if you spend the remaining $200 per month on your Chase Amazon.ca on purchases that help you avoid the foreign transaction fee, let’s say you only receive the 1% cash back because you did not make a purchase on Amazon.ca, that gives you another $2 per month or $24 annually.

That is a grand total of $96 + $316 + $24 = $436

3) Capital One Aspire Travel World MasterCard, Scotiabank Gold American Express Card, Chase Amazon.ca Rewards Visa Card

• $200 at department stores (including clothing)
• $200 miscellaneous (generally one time payments such as car or home insurance, car maintenance)
• $300 on recurring bills (such a phone, Internet, cable)
• $300 on restaurants and other entertainment
• $400 vacation (generally on hotel and/or airfare, averaged out for the entire year, budget of $4,800 per year on vacation)
• $600 on gas and groceries

If you spend $600 on gas and groceries, as well as $300 at restaurants and other entertainment, that equals $900 spending on your Scotiabank Gold (assuming that all vendors accept American Express). You get 4% on all those purchases, which comes out to $36 per month or $432 per year. If you subtract the annual fee, you get $432 – $99 = $333.

If you spend $300 on recurring bills, $200 at department stores, $200 on miscellaneous items and $200 on vacation expenses, that equals $900 in spending. That gives you 1,800 points per month, which can be leveraged to give you up to $18 cash back per month. In one year, that’s up to $216 in cash back. The Capital One annual fee is $120, but they give you up to $100 worth of points annually (if points are leveraged to its maximum). Therefore, you can be paying as low as $20 in annual fee. So $216 – $120 + $100 = $196.

Finally, if you spend the remaining $200 per month on your Chase Amazon.ca on purchases that help you avoid the foreign transaction fee, let’s say you only receive the 1% cash back because you did not make a purchase on Amazon.ca, that gives you another $2 per month or $24 annually.

That is a grand total of $333 + $196 + $24 = $533.

Conclusion

The American Express Gold Rewards Card is actually another great one to consider, so long as they continue to waive the first year $150 annual fee. The other highlights of the credit card are as follows:

• Earn 25,000 points when you spend $500 in the first 3 months
• Earn 10,000 points for each approved referral
• Earn 2 points for every $1 spent on eligible travel (flights, hotels, car rentals, cruises, etc.) purchases, as well as gas, groceries and drug stores.
• Earn 1 point for every $1 spent on all other purchases.

I believe that this is a great credit card to have so long as the first year fee is waived, but it is more difficult to justify the $150 annual fee beyond the first year. The same reasoning would apply to many other credit cards out there. Furthermore, the reason I picked the credit cards listed above, is because those credit cards offer enough value to justify the annual fee compared to many of he other credit cards out there.

The bottom line is that you need to figure out what your month expenses, determine the maximum benefits that you can receive, subtracts the annual fees, then you will be able to determine which credit card(s) make the most sense for you.