No one is perfect, but it can be instructive to consider what the perfect credit card user would look like.
First, a perfect credit card user would only use these products as a method of payment, not as a means of finance. By always paying each balance in full and on-time, our ideal cardholder would never pay a penny in interest payments or late fees while enjoying a high credit score.
This user would also choose the ideal card for his or her needs. For example, a frequent traveler would pick the best card to accrue as many points and miles as possible in his or her favorite loyalty program. On the other hand, one who is less interested in travel rewards would wish to maximize the cash back received from their reward credit cards.
Another factor would be holding the ideal number of credit cards. A higher spender would have more cards while a lower spender would probably have fewer. In this way, a higher spender could more easily justify paying multiple annual fees while having the ideal cards to earn extra rewards at the merchants frequented most often. At the same time, a lower spender would achieve the optimal ratio of rewards to fees with a fewer number of cards, most of which would have no annual fee.
Like a shrewd investor, the ideal cardholder would always be on the lookout for new cards that offer the opportunity to improve his or her portfolio. Such a cardholder would be able to recognize exceptional sign-up bonus offers as they appear and be poised to exploit them.
But furthermore, a perfect cardholder would be familiar with the terms and conditions of each of his or her cards. In this way, the cardholder would be familiar with all applicable fees as well as benefits. In fact, most credit cards come with a host of ancillary benefits that are available at no cost to the cardholder, yet few actual customers are aware of all of them.
Finally, the ultimate cardholder would be a master at working with the card issuers to leverage their loyalty whenever possible. No annual fee would be paid without first requesting it be waived, and the cardholder might even contact the bank on occasion to determine eligibility for any current promotions.
Clearly, the perfect cardholder would earn incredible rewards while paying few, if any fees. Undoubtedly, the business models of the card issuers would be unsustainable if we all suddenly became perfect cardholders. But don’t let that stop you. To put it another way, just because someone wins the jackpot, it doesn’t mean that the casino is losing money.