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In a life where I am surrounded by optimization hacks and on the hunt for ways to buy back my time, there is one area you won’t find me hacking. My credit cards.
Before you get out the pitchforks, hear me out. I love a good sale. I can occasionally be swayed to an online shopping cart with a once-in-a-however-many-years opt-in offer. And yet when I am pulled into the online cart, it’s typically for something that I already need, but I may purchase it in advance of needing it.
Personally though, a sale is a one-time shopping event that takes 30 minutes of my time once every 3-4 months.
A credit card optimization strategy is more akin to a hobby. There is actual ongoing time devoted to the endeavor. I imagine people gathering to pick out their credit cards just like my husband gathers with his friends for his live fantasy football draft. Yes, readers, we are in that season.
Hobbies require time, dedication, research, etc. You willingly give your time in pursuit of an endeavor that brings you joy or fulfillment. If you’re in this camp, I am here for it. You’ve accepted this as a hobby and the amount of time you are putting into making it work. However, if you don’t consider your credit card optimization hacks a part of your hobby bucket, something tells me you haven’t looked at the ROI on the amount of time you’re spending eking out extra points and rewards vs time that could be spent in other areas.
Some of my closest friends are credit card optimizers. And they are astonished when I, someone who tracks her numbers so closely, admit that I do not partake in this particular hobby.
To me it’s a simple trade-off question. How much time will it take me to figure out the rewards programs and which partners to transfer to? What is the hourly rate on my time? Is it worth it? And a follow-up: what will I do with the money I’m “saving”? Is it being invested? Used to splurge on some other random online purchase? In addition, what spending am I being boxed into in order to maximize the rewards? I’m a family of four with an 11- and 8-year-old. Am I going to be relaxing in an airport lounge before my flight drinking a cocktail and eating snacks or running kids back-and-forth to bathrooms and refilling water bottles? Dear reader, it will be option B. While I admit the cards are phenomenal for solo travelers and business travelers whose lives are conducive to the kind of travel happening here, great.
For normal folks on a day-to-day, do the rewards really add up?
Is it really free money?
Credit card optimization gets sold to us as free money. We’ve got the bloggers, the optimizers and the card issuers themselves (in pursuit of the long-game) selling us the story: sign up, hit the spend threshold, collect the points, and voila! You can now redeem for a flight you would have paid for anyway. On paper, I’m not going to argue with this. The math works: annual fee is $95, the flight is worth $600, you’re up $505. Case closed.
Except that math only works for one reason. You’ve left out an entire column labeled “your time.”
You know… the time spent learning a new card’s categories for 2x, 3x, 4x points, the time tracking which one to use and where to use it, monitoring for the next great offer, reading the fine print on a transfer partner before you move 80,000 points into a program that just devalued…and if you’re partnered, the time spent instructing them on this month’s card to use and then getting over your annoyance with them when they “forget.” This does not equate to “free” and it’s not zero-cost labor. If you’re not considering your time spent as a “hobby” at this point, what you have is a second, unpaid, part-time job with irregular hours.
If you pause for a moment and ask yourself what your time is worth, what would your answer be? Now take a guess at how many hours a month go into researching, applying for, tracking, and redeeming across however many cards you’re running. Multiply. That’s the actual cost of the system you’re running, before you redeem a single point.
For some people, that number is still small. Two cards, ten minutes a month, fine. For the people I see running six or eight cards deep, chasing every sign-up bonus that lands in their inbox, that number is not small. It’s just invisible, because it doesn’t show up on a statement. Fun fact: time never does.
The Optimization That Is…and Sometimes Isn’t
A sign-up bonus usually requires hitting a spend threshold in a window. $4,000 in three months is a pretty common one. If that’s roughly what you’d have spent anyway, then yes, the bonus is an upside on your balance sheet (or cash flow).
The problem arises when a card or offer is signed up for, spending is restructured to achieve the offer, and before you know it you’re out more money in the pursuit of getting the “free” reward. It’s an easy transition to spending a bit more on the trip, the clothes, at the restaurant — all in the name of getting your “free” offer.
Cough, cough — in this case, it’s not free.
The same thing can happen on the redemption side as well. Upgrading a flight because points cover most of it and the marginal cost feels invisible. Or a “free” hotel night turns into an extra night added to the trip, plus the dinners and incidentals that come with an extra night, none of which were free.
The savings and “free” money don’t make their way into your investment account. Instead, they’re parlayed into a nicer trip than you were planning to take. Which I’m not saying is a bad thing. I’m saying know that you did it. Know that the “free” is also causing you to level up in other areas and be aware of the deliberate choices that you’re making (and maybe admit them to yourself).
Let’s Look at the Numbers
The average American carries 3.7 to 3.9 credit cards, and that number climbs with age: Gen X cardholders average 4.4 active cards, which tracks, since cards accumulate over a working life the way old email subscriptions do. Every one of those cards is a set of categories, dates, and terms someone has to hold in their head, or they aren’t actually being optimized. They’re just open.
On the earning side, Americans collected $41.4 billion in credit card rewards in 2022, according to the Consumer Financial Protection Bureau, and redeemed roughly $35 billion of it. That leftover gap, close to $6 billion, sat unclaimed. Nearly one in four cardholders redeemed nothing at all that year. A little over half of rewards holders, according to a Coupon Chief survey, admit they don’t actively track their rewards balance in the first place. You cannot optimize a system you aren’t tracking. You’re just accumulating clutter that happens to be denominated in points instead of paper.
Annual fee revenue tells its own story. Total annual fee revenue nearly tripled from $3 billion in 2015 to $8.7 billion in 2024, even as the share of people paying fees at all declined slightly. Translation: fewer people are opting in, but the ones who do are paying more for increasingly premium, increasingly complicated products. One couple profiled by Yahoo Finance manages fourteen premium cards between them, paying around $2,600 a year in combined annual fees just to stay in the system. That’s not a hack. That’s a hobby with a subscription fee, and it may or may not be worth it depending entirely on what they’re actually getting back and what else that time could be doing.
Then there’s the behavioral piece, which I think matters more than any of the above. A widely cited MIT Sloan study using fMRI imaging found that credit cards don’t just remove the “pain” of paying with cash. They actively activate the brain’s reward circuitry at the moment of purchase, the same anticipatory pleasure response involved in other reward-seeking behavior. Cardholders in the study were more likely to buy higher-priced items, tip more, and make more impulse purchases. Rewards programs are layered directly on top of a payment method that’s already been shown to loosen spending.
None of this means rewards cards are a trap for everyone. A point is generally worth about one cent, and for someone who pays their balance in full every month and redeems consistently, that’s genuine value. But the data is fairly clear that the system, as most people run it, generates more unused points, more untracked balances, and more spending than it generates disciplined savings. The gap between what the system is capable of and what it actually delivers for most people is where the real cost hides.
A Question I Would Ask Myself (or You)
So here’s the question I’d actually ask, of myself or a client running a rewards system: when the points show up as savings, real dollar savings, on a flight, a hotel, a purchase — where does that saved money go?
If the answer is “it gets redirected, I spend less overall or the difference gets invested,” that’s optimization. You found value and you kept it.
If the answer is “I don’t know, I guess it just gets absorbed into other stuff,” that’s not optimization. That’s a very well-organized way of spending more while feeling like you’re being frugal. The feeling of winning and the reality of winning are not the same thing, and credit card rewards systems are extremely good at generating the feeling.
Don’t Cancel Your Cards
I don’t think the answer here is “cancel your cards.” Some of this is about genuinely free money for genuinely low effort, and we’re not going to walk away from that. A card with no annual fee that gives you 2% back on everything that you don’t have to think about costs you nothing and pays you something. Say yes.
However, if you’re managing more than two or three cards, ask yourself whether the hours are worth it at your actual rate. And every time a redemption saves you actual money, name where that savings is going to be directed before you spend it. That’s the only point in the process where you get to decide instead of just noticing later, if you notice at all.
The TL;DR: the cards aren’t the problem. Not being aware of the time and tradeoffs is.
Related: I Left Corporate. I Don’t Regret It. I Still Miss It.