TD Bank exec says to pick credit cards like Warren Buffett
Are You chasing credit card points or just losing money.
The short version
- Chris Fred, the head of credit cards at TD Bank, says most people should stop.
- Churning multiple cards takes too much mental math for daily shopping.
- A simple flat two percent cash back card often wins out in the end.
Check your wallet this week before You pull out another piece of plastic at the register. Chris Fred, the head of credit cards and unsecured lending at TD Bank, says the secret to credit card perks is the same as the philosophy used by Warren Buffett, the billionaire investor and head of Berkshire Hathaway.
Buffett always preaches his circle of competence, which means sticking to what You know and leaving the rest alone. Fred says that advice applies directly to the way people handle credit cards and reward points. According to Fortune, while advanced card churners juggle multiple cards for dining, travel, and groceries, the average person loses out on the mental math.
A premium card might give You four times the points on dining, but drop down to one percent on basic goods and pharmacies at your local strip. When You add up the spreadsheet work and the annual fees, cardholders often fail to beat a simple, flat rate cash back card.
TD Bank offers cards with a blanket two percent cash back on everything, removing the need to day trade at the checkout counter. The practice of chasing rewards goes back decades, from the famous pudding promotion in 1999 that netted one million frequent flier miles to today's online forums.
But Fred says people always think they can beat a guaranteed two percent return, and on average, they simply do not. For most business owners and shoppers with a million things on their mind, skipping the spreadsheet and grabbing a flat cash back card leaves You without a care in the world.
Sometimes the best financial move is the one that lets You sleep at night without checking a chart.
Photo: MBisanz, CC BY-SA 3.0, via Wikimedia Commons
