Are Credit Card Rewards Really Worth It? My Thoughts on SUBs and Cash Back

How much work is it worth putting into earning credit card rewards?

A Reddit poster asked this question recently. The Redditor was doing something called “SUB-churning” or opening up new credit cards to try to earn the signup bonus available to new cardmembers for spending a certain amount within a set period of time. The poster was also trying to decide whether it made sense to just get a flat 2% cash back or to sign up for cards that offered bonus cash back on different kinds of spending, like 5% back on gas or groceries.

So, the big questions the poster had: Is it worth it to keep up the SUB churning and keep claiming new signup bonuses, and is it worth it to try to optimize which card you use for each purchase to get extra bonus rewards on as many items as possible?

Is it worth signing up for cards to get a new cardholder bonus?

First things first: Signing up for a bunch of different credit cards to get a bonus for new cardholders usually is not worth the effort for a few different reasons.

One issue is that credit card companies usually don’t like this. Eventually, they will stop approving you for new cards if you’re opening too many over time. Some card companies even have specific rules, like limiting you to opening five total cards within a two-year period. 

Opening up cards too often can also damage your credit score by lowering your average age of credit and resulting in too many inquiries on your credit record. When you go to borrow for something big, like a house or a car, this can come back and bite you, leaving you paying a higher interest rate for a much larger loan.  Plus, if you have too many cards, you increase the chances of missing a payment, which can do even more serious damage to your score. 

That’s not to say you should never sign up for a new cardmember bonus. But doing this more than once every year or so probably isn’t the right financial move — so wait for a really impressive bonus if you want to make this part of your credit card plans. 

Is it worth chasing bonus rewards?

When it comes to deciding whether to chase bonus rewards or not, that question is a little more difficult to answer. If you spend a lot in certain bonus categories like dining out, groceries, or gas, it can make sense to have a card that gives you extra rewards for spending in that area. However, ultimately, if you try to push this optimization process too far, then you run into problems, including having too many cards, risking missed payments, spending too much time managing this process for too little gain, and forgetting which card to use when.

A general, all-around great cash back card that provides 2% back can be much easier to handle and still allow you to earn a good amount of rewards. And you’ll do even better if you can qualify for loyalty programs some cards offer that give you a boost in credit card rewards for meeting certain requirements regarding account balances on linked checking, savings, or investment accounts. 

If you do want to try to maximize rewards, you may decide to have just two or maybe three cards at the most — one that gives you added cash back or miles on the thing you spend the most on, and then a general-purpose cash back card that gives you 2% back on everything else.  This should be simple enough to manage without too much difficulty, and you should still be able to earn fairly generous rewards as long as you pick the right two cards to use.