This Is the Most Important Factor I Look at When Applying for a Credit Card

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  • The upside of using credit cards is getting cash back on purchases.
  • I tend to favor credit cards that reward me generously in my most expensive spending category.

There's a reason I focus on one specific spending category.

I'm not the type of person who applies for a new credit card every few months. I know some people who are constantly getting new credit cards, largely to capitalize on sign-up bonus opportunities. But I'm well aware that applying for too many credit cards within a short period of time could actually damage my credit score. And also, I don't want to be tempted with too large a credit limit. So generally, I limit myself to a single new credit card every year to err on the side of caution.

Meanwhile, there are certain criteria I look at when deciding whether to put in a credit card application or not. For one thing, I'm not a fan of annual fees, so if I'm going to be paying one, it needs to be justifiable. But the most important factor I look at when choosing a credit card is cash back -- specifically, in one key spending category.

I'm all about cash back at the grocery store

My biggest monthly expense right now is my mortgage, which I don't pay using a credit card. Second to that, the biggest monthly expense category in my household is food (because our cars are paid off, we spend less on transportation than on groceries).

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Simply put, my family eats a lot. There are five of us, and we eat a lot of fruits and vegetables, which are more expensive than filler foods like pasta and rice. We also enjoy experimenting with different proteins and indulging in nicer cheeses (at least the grown-ups do -- my kids are more than content to put Kraft singles on their sandwiches).

All told, that amounts to a lot of money being spent at the supermarket. This especially applies these days, what with inflation driving the cost of food upward.

That's why I aim to apply for credit cards that offer a nice amount of cash back for grocery purchases. With the amount I spend at the supermarket every year, getting 3% back versus 2% means getting a lot of extra cash in my pocket.

Assess your spending habits before applying for a credit card

If you're ready for a new credit card, it's a good idea to comb through your expenses beforehand to see which ones are the largest. It may be that you spend $500 a month on gas because your office is far away and your kids' sports leagues have you traveling all over the place on weekends. If so, it could pay to find a credit card that rewards you nicely every time you fill up at the pump.

The more in tune you are with your spending, the easier it becomes to maximize credit card rewards. For me, there are months when I look at my grocery tab and gasp. Between my neighborhood supermarket, Costco runs, and occasional trips to Trader Joe's, it's not unheard of for me to spend well over $1,000 a month to put food on the table. But knowing I'm being rewarded generously by my credit card for those purchases definitely helps soften the blow.

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