Diversification of points is a huge point of discussion in the points and miles world. Whether you should diversify depends on how much you spend on your cards and your willingness to get new cards. Other indirect factors include income, credit score, credit history, and risk aversion. These indirect factors could influence how much you can spend on your cards and your willingness to get new ones.

Your mileage may vary as different people have different financial circumstances. That’s why the post is divided into four parts. Each part represents a potential circumstance given the two criteria. The terms “higher”, “lower”, “fewer”, and “more” used in this post are relative. There are no exact numbers attached to them because your mileage may vary.


I: Higher Spend, Fewer Cards

Should you diversify your points when you have a few cards and spend a lot on them? The short answer is “no”. People in this category should select one points currency and collect as many points as possible within that currency. This way, your spending will be more efficient, and your points will accrue faster.

The best type of points for this group are transferrable points. All you have to do is pick one based on your travel needs. Chase Ultimate Rewards (UR) Points are the best for domestic travel and hotel redemptions. American Express Membership Rewards (MR) Points are best for domestic and international travel, especially airfare. And Citi Thank You (TY) Points are my favorite for international travel. I fall into this category and I have chosen Chase UR points as my primary currency.


II: Lower Spend, Fewer Cards

People in this category are often either just starting out or want to keep things simple. A lot of people start off in this category but move to another one later in their credit journey.

Most people in this category opt for cash back because it’s simple and the cards (oftentimes) have no annual fee. Flat rate cards, such as the Citi Double Cash, are best for a primary card. You can also pair the flat rate card with a 5x rotating card like the Chase Freedom to increase your rewards.

Alternatively, you can collect transferrable points as long as there are downgrade options. Chase Ultimate Rewards and Citi Thank You Points are two great “ecosystems” that have both valuable points and no annual fee cards.


III: Higher Spend, More Cards

Those in this category have money to spend and don’t mind getting more cards. You may have seen other posts around Travel Update and Boarding Area talking about credit card inventories. Many of these bloggers have at least 20 cards for various reasons, putting them into this category.

The best strategy for this group is to hunt for sign-up bonuses. Your spending will be most efficient trying to get bonuses instead of collecting one points currency. Therefore, you should diversify your points because you will get more value from sign-up bonuses than normal spend. You will also have collections of multiple types of points, increasing the potential for discounted or free travel.


IV: Lower Spend, More Cards

This group does not mind having more cards at their disposal, but they don’t have as much money to spend. Diversification is recommended here as well, but it must be done strategically.

People in this category should also hunt for sign-up bonuses. However, they should only look for those with lower minimum spends. There are many cards out there with bonuses that have a minimum spend of at most $1,000. Look for cards with that minimum spend depending on what type of travel you want to do. For example, the American Express Hilton Honors Card has a bonus worth 75,000 points that can be earned after spending $1,000.

Alternatively, most cash back cards have minimum spend thresholds of either $500 or $1,000. These cards won’t get you points and miles, but they have bonuses that are easy to hit. Most of these cards also have no annual fee, making them great foundation cards for your credit history.


Final Draw

Whether you should diversify your points ultimately depends on how many cards you want and how much you can spend. Your mileage may vary as everyone’s financial situation is different. But there is always going to be a strategy in play. The key is to find one that works for you and create a plan to get the right cards.