I view cash back credit cards as a great way to get money back on purchases I would have made anyway. I use credit cards for as much of my spending as I can and make sure to pay in full to avoid interest. In 2022, my total rewards haul was $1,701 ($1,606 if you take out the $95 annual fee I paid for one of those cards). That works out to an average return of 2.1 percent on every dollar I spent (1.9 percent if you subtract the annual fee from the value of the rewards).

I’m only using two credit cards these days, down from a high of six at one point. The Blue Cash Preferred® Card from American Express is my favorite, since my family of four spends a lot on groceries. This card gives 6 percent cash back at U.S. supermarkets (up to $6,000 in annual purchases, then 1 percent cash back after that). It also gives 6 percent cash back on select streaming services, 3 percent cash back on U.S. gas station purchases and public transit and 1 percent on everything else. My average return per dollar spent on this card was 2.2 percent in 2022 (1.9 percent if you subtract the $95 annual fee from the rewards).

I also really like my other card, the Chase Freedom Flex℠. Its biggest selling point is a series of rotating 5 percent cash back categories. Note that activation is required, and the 5 percent rate applies on up to $1,500 in eligible purchases each quarter; it drops to 1 percent after that. This year marked my favorite set of 5 percent categories. I maxed out three of the four quarters (mostly on groceries, live entertainment and PayPal purchases) and came close in the other quarter, which featured Amazon.com.

Freedom Flex cardholders also get 5 percent cash back on travel booked via the Chase Ultimate Rewards portal, 3 percent cash back on dining and at drugstore purchases and 1 percent cash back on everything else. In 2022, I got an average of 2 percent cash back on every dollar I spent via my Freedom Flex card.

The biggest hole in my strategy

An obvious way I could boost my overall cash back return would be to add a card with better rewards on my “everything else” spending, which is a significant amount. The Wells Fargo Active Cash® Card is a good candidate, since it gives an unlimited 2 percent cash rewards on purchases. The Citi® Double Cash Card is another good one. It awards 1 percent cash back when you make a purchase and another 1 percent when you pay it off — effectively 2 percent cash back on all purchases. Neither card charges an annual fee.

Interestingly, my current two-card strategy is netting out with slightly less than a 2 percent overall return. I’m earning more on some purchases and less on others. This is why I think a flat-rate 2 percent cash back card is a surprisingly favorable option for many people. Someone who wants to keep their card strategy very simple and still earn a solid return could use this as their only card. If you want to pursue an even higher rebate, you could use the 2 percent card as a foundation and supplement it with other cards that offer better rewards in key categories.

If I kept using the higher Blue Cash Preferred and Freedom Flex categories but replaced my 1 percent earnings with 2 percent payouts, I would earn another $667 per year, which would bring my personal average return to 2.7 percent. Honestly, I probably should. The math certainly adds up. I would do even better in year one thanks to the sign-up bonus.

Why haven’t I? A couple years ago, I went on a card canceling spree after feeling like expanding to six cards was too many. Several of the benefits overlapped, I was paying three annual fees and my wife, in particular, was having a hard time following when to use each card for maximum effect.

I have to say, I do enjoy the simplicity of a two-card strategy, and the two cards that I use also provide many additional benefits. As I’ve grown older, I’ve come to appreciate these intangibles even more.

Other things I like about my cards

Good customer service makes a big difference to me, and no one does it better than American Express. They’ve topped the J.D. Power U.S. Credit Card Satisfaction list in 12 of the 16 years it has been compiled, with second-place finishes on the other four occasions.

Chase came in fourth in 2022, but personally, I’ve found them to be very good at customer service as well. The Freedom Flex has strong travel insurance coverage, which helped me get more than $1,000 back last year from a canceled hotel stay.

I also really like how both of my cards offer generous purchase protection and extended warranty benefits. A few years ago, Chase covered $299 in damages to my wife’s Apple Watch.

How to optimize your credit card rewards strategy in 2023

What works best for me may not work best for you, of course. Choosing the best credit card is a very subjective, individual decision.

The first big question I’d urge you to ponder is whether or not you carry a balance. Especially with credit card rates at record highs (the current national average is 19.6 percent), it doesn’t make sense to pursue rewards if you’re paying that much in interest just to earn 1, 2 or even 5 percent in cash back or airline miles. If you have credit card debt, prioritize your interest rate, perhaps via a 0 percent balance transfer card.

As long as you can pay in full and avoid interest, then rewards are free money. Credit cards offer far superior rewards programs and buyer protections than debit cards, cash and other payment methods. Consider how you spend your money (since different cards emphasize different rewards categories) and think about how much work you’re willing to put in.

Think about how you want to use these rewards, too. Cash back is generally simpler and offers universal appeal, whereas travel rewards are potentially more lucrative (especially if you’re willing to jump through some hoops to find the best deals and travel on the optimal dates).

I know some people who are happy to juggle 30 different credit cards and others who’d rather stick with just one or two. I should point out that if you plan to amass many different cards, it’s best to do so gradually because applying for too many cards in short order can hurt your credit score.

The bottom line

It’s a good idea to compare cards at least once a year because your lifestyle changes and the market does, too. Adding a card with a lucrative sign-up bonus could put hundreds, maybe even thousands, of dollars back in your wallet. Especially with inflation continuing to run hot, that’s welcome news. The best of both worlds is when you can combine a lofty initial bonus with a card that also meshes well with your ongoing spending habits.

Have a question about credit cards? E-mail me at ted.rossman@bankrate.com and I’d be happy to help.