I Love Consumer Expert Clark Howard’s 7 Rules for Credit Cards — Except He’s Got One of Them Totally Wrong

Insider Secret: If you can’t or won’t pay off your balances in full each month, do NOT get the best travel credit cards like the Chase Sapphire Preferred Card. But if you’re able to, you can see the world for a tiny fraction of the price. I have.

Clark Howard is a personal hero of mine. For decades he’s advocated for consumer rights. I love the rules he recently laid down for credit cards. But being someone with 20+ travel credit cards, I have to push back against one of his rules. Hey, that rule may be fine for the masses, but for us travel junkies here at Million Mile Secrets, we know differently.

Credit Card rules are made to be broken? Actually, Clark Howard is right about all these rules except for one that impacts people who want to travel! (Photo by Aerial-motion/Shutterstock)

Rules for Using Credit Cards

I’ll go over Clark’s rules and say how I view them for people who love to travel.

1. Own at least two credit cards

Clark recommends that you have two credit cards for a mix of credit, which is an important component of your overall credit score.

He says those cards should be from two different issuers, like Citi and Chase.

“If we hit a recession and credit card companies decide they don’t want you and one of them dumps you, you still have the other card. And if one of them cuts back your limit, you still have the other card.”

For couples, Clark says it’s important to have two credit cards per individual — not household.

I totally agree. Again, if you’re paying your bills in full and on-time, you can really kick butt with sign-up bonuses and ongoing perks. I have over 20 credit cards at the moment. My credit score is 800. My goal is not to have a credit score above that, but to use my excellent credit score to my advantage so I can travel.

The credit card I’m using the most right now is my Chase Sapphire Preferred Card.

2. Keep balances low and pay credit cards off each month

No matter the number of credit cards you have, you ideally want to keep your balances low and pay them off in full every month. Payment history and amounts owed make up a combined 65% of your FICO score.

Those who don’t carry a balance won’t pay interest charges and should focus on the cards that offer the best rewards.

Heck yeah!

3. Cash back credit cards are better than travel credit cards

When you’re comparing rewards credit card offers, Clark says simple cash back cards like the Citi Double Cash Card are best. This card offers up to 2% cash back: 1% when you buy and 1% as you pay.

Rewards cards that offer rotating 5% cash back categories are often too complicated to keep up with, Clark says.

As for travel rewards credit cards, Clark says you have to carefully consider the annual fees and whether you charge enough to justify the cost. That’s just not the case for most individuals.

However, if you fly a particular full-fare airline regularly, the lowest-tier annual fee card may be something worth looking into.

Ooh, no. Well, I suppose if you’re talking about “most individuals.”

There’s nothing wrong with cash back credit cards. I started out with those!

In fact, I’m still getting a lot of use out of my no-annual-fee Bank of America® Cash Rewards credit card.  It’s got a nice sign-up bonus and I continue to use it for 3% cash back for online purchases (that’s the category I selected) for up to $2,500 in combined quarterly purchases (then 1%). Basically, if I max out the 3% bonus I get $300 back each year.

But besides that, my spending all goes on travel credit cards because I realized, hey I love to travel, and by uncovering a few easy secrets, I could do way better than 2 or 3 cents back per dollar spent.

My favorite type of credit card is a flexible credit card. The Chase Sapphire Preferred Card is flexible in that you can use the points for cash back OR for travel. I have this credit card and it’s great. I’ve transferred my Chase Sapphire Preferred points to airlines for free flights to Europe. I’ve transferred my Chase Sapphire Preferred points to hotels for completely free stays at all-inclusive hotels in the Caribbean. It’s awesome. At Million Mile Secrets we show you exactly how to do that!

That’s me on my way to Europe! Instead of paying $8,000 for round-trip Business Class, I used points from my Chase Sapphire Preferred.

As far as rotating 5% categories being too complicated, nah. I have the Chase Freedom® card just for that purpose. I simply keep a note in my phone to remind me of the bonus categories. Previously, I just stuck a little sticker to the back of my Freedom card. In the past I’ve earned 5X points per dollar spent at grocery stores, gas stations and more!

4. Know your interest rates

If you can pay off your balances in full every month, your interest rates don’t really matter. You won’t pay interest. But if you think that you’ll have to carry a balance, you really have to know your interest rates.

Yes! Clark is absolutely right! Do NOT get trapped into paying high interest rates.

5. Don’t use balance transfer cards for new purchases

If you apply for a balance transfer credit card with hopes of getting out of debt quickly, don’t use that card for new purchases. You can’t get out of debt if you keep adding to it.

Absolutely. Travel credit cards and rewards cards of all kinds are only fun when you’re earning free stuff — not paying debt!

6. Keep old credit card accounts active

Do you have credit cards in the back of your wallet that you never use? Clark says that if you don’t keep your accounts active, your card issuer may decide to close them for you.

Yep. This has indeed happened to me.

You’ll keep your credit score high by never closing your no-annual-fee credit cards. The key is to use them every so often. I set a calendar reminder every 6 months for those few credit cards that I don’t use very often. I want it to be my decision to close a credit card, not the bank’s.

7. Avoid closing credit card accounts

Clark says it’s usually not a good idea to close or cancel a credit card account. The reason? Closing a credit card account, especially one with a high credit limit, may hurt your credit score.

On the other hand, it may be worth it to close a credit card account with a high annual fee if you’re not getting the benefits.

Before you call your credit card issuer to cancel one of those cards with an annual fee, ask for a retention offer or see if you can be downgraded to a version of the card with no annual fee.

Yes, Clark is spot on here. There have been times when I “downgraded” a credit card because the card perks changed or my situation changed and I no longer wanted to pay the annual fee. What I usually do is ask for the bank to change the card to a no annual fee version. For instance, I had a business credit card that was very similar to the Chase Ink Business Preferred Credit Card. But I was no longer using it that much and I knew I’d use the no-annual-fee Chase Ink Business Unlimited Credit Card a lot more. So Chase gladly switched the card for me.

What are your rules for using credit cards?