My spouse and I are between jobs right now as we are transitioning to new career situations. Our financial situation is stable and our prospects are good, but we will be without steady income for a few months. In order to keep our finances stable, we decided to implement a family budgeting plan to help us not accidentally overspend without having to do tedious bookkeeping. It seems like a good idea to have several credit cards, each one for specific categories of spending, with its own tight limit. This way we can define budget targets at a high level without having to micromanage our spending.
The issue here is that we currently have a limited number of credit cards. My go to credit card is one that gives me 6% cash back on most purchases and is also otherwise very convenient. Due to my responsible behavior, the company granted me a limit equivalent to about 6 months' worth of my income. I rarely approached this limit. I can ask them to lower the limit of this card dramatically, so I can use it as my everyday spending card, and they will surely agree. Unfortunately in doing this I would be losing a significant source of credit for emergencies. If I suddenly decide that I need credit, and ask them to increase my limit back to its current level, I think they will refuse because I no longer have the income that originally justified the high limit.
I can simply set aside my 6% cashback card aside as an "emergency card", and buy some reloadable gift cards with a small limit to use for everyday spending. The problem there is I would be giving up my 6% cashback, and at best I could probably get 2% cash back.
The ideal situation would be to have a credit card with large limit, cashback irrelevant, that is only used rarely for significant planned purchases. Then I could lower the limit on my 6% card to use daily, and I would still have the other card in case I suddenly need money. But wouldn't it be very difficult to apply for a new credit card when I don't have any income, even though my credit score is very good?
However, the situation is currently lopsided in that I have two cards:
- One card with no cashback that has a limit of 3x my former income.
- One card with 6% cashback that has a limit of 6x my former income.
By the end of the year I am likely to have an income 3-4x of my former income. But getting to that point without straining our savings would be much easier if I could restructure my credit card situation. Is it worth for me to try and apply to banks for credit cards, or should I just stop worrying about the 6% cash back for now, and just use the reloadable gift cards?
As a remark, we have liquid assets that could easily cover about double of all these combined limits, as well as illiquid assets of similar quantity. It would just be nice to have the option of borrowing instead of dipping into the assets.
Addendum in Response to one of the Answers: One answer described what I proposed as "playing games". However, the money we managed to save up was saved largely by playing such "games". At times when we stopped playing these games, we went grossly over budget.