So you’re in your 40s. You established credit accounts years (perhaps decades) ago and have maintained those accounts wisely over time. Now your credit is in excellent shape, and your total credit card debt sits at a very attractive $0. You never charge more than you can afford in a given month and you always pay your statement balance in full and on time.
If this description sounds like you, first of all, kudos on the hard work. Good credit doesn’t happen by accident. It takes years of consistent discipline.
But it’s also smart to make sure that your great credit is working for you and not just sitting on a shelf somewhere collecting dust. In fact, now may be the perfect time to take a look at your credit card strategy and see how much value you’re getting from it. If you’re leaving points, miles or cash-back opportunities on the table, it’s probably time for an adjustment.
Keep reading for an overview of three types of credit cards every 40-year-old should have. Are you missing any? If so, you may want to think about adding a new piece of plastic to your wallet.
A Travel Rewards Card
If you don’t already have a great travel rewards credit card, or if you have a card that’s not giving you enough bang for your buck, it might be worthwhile to open a new account. Travel rewards cards, especially when they offer a lucrative sign-up bonus, can easily add up to valuable points and miles that you can redeem for free travel or other rewards.
However, keep in mind that travel reward cards often charge an annual fee — sometimes a hefty one. The Platinum Card from American Express, for example, charges its cardholders a $550 annual fee.
For many people, the benefits of premium travel rewards cards can outweigh the cost. Plus, if you get to take advantage of a sign-up bonus, like the Amex Platinum card’s current welcome offer of 60,000 points, you might get far more value in points or miles than you pay in an annual fee. In the case of the Amex Platinum, the card’s 60,000-point welcome bonus is worth an impressive $1,200, according to TPG valuations.
There are also plenty of less-expensive travel cards available if a $550 annual fee is a big turnoff to you.
A Cash-back Card
There’s no question that you can earn great rewards by using the right travel rewards card strategy. However, for some people, the process of keeping up with points and miles — especially over multiple credit cards — feels like too much.
If you find yourself in that camp, a solid cash-back credit card option might be a good fit for you. The Citi Double Cash Card is a great example. Not only does the card feature no annual fee, it allows cardholders to earn 2% cash back on purchases across the board — 1% at the time of purchase and an additional 1% when you pay your bill.
Keep in mind, cash-back cards might not give you the best value available, especially when you consider that other rewards cards will allow you to earn 3, 4, or even 5x rewards on popular spending categories such as dining and travel. But a simple cash-back card can make the process of understanding and managing your rewards simpler.
A Co-branded Credit Card
Do you have a certain airline you travel with frequently? Is there a particular hotel brand that you enjoy above others? If so, a co-branded airline or hotel credit card might make a great addition to your wallet.
It’s important to understand that all co-branded cards are not created equal. In many instances a quality travel card, like the Chase Sapphire Reserve, will outshine a co-branded card in point-earning potential and other perks. However, you’d be mistaken to believe that’s always the case. There are times when spending on a co-branded credit card makes more sense from a value standpoint.
The Hilton Honors American Express Aspire Card is one example. The card will earn you 14x points (8.4% in value) on purchases at Hilton brand hotels. By comparison, the Chase Sapphire Reserve only gives you 3x points (6% in value) for that same purchase. Of course, 6% value isn’t shabby by any means, but in this case it’s not the top value you could earn.
Getting a co-branded card with every airline or hotel chain probably isn’t a good choice, either. But if you have a few particular brands that you frequent more than others, you might benefit financially from signing up for a co-branded card — especially one with an attractive welcome bonus or other annual perks.
One Size Fits All?
There’s no such thing as the perfect credit card strategy that works for every 40-year-old in the country. You’ll have to decide for yourself which cards fit your spending habits and which rewards are the most beneficial to your lifestyle.
That being said, having at least one solid credit card option from the three categories above can be helpful for most people. If you’re worried about keeping track of your rewards, tools like Award Wallet can make the process a lot easier.
Finally, remember to manage your credit cards carefully with on-time payments and by paying off your full statement balance each month. Managing your credit cards (and the rest of your accounts) well is key to earning great credit — the most valuable reward of all.
This story was originally published on The Points Guy. Sign up for the TPG daily newsletter and wake up to unbeatable flight deals, travel industry news, and credit card bonuses that let you travel first-class to some of the world’s most incredible destinations at a fraction of the price.