Over the past year I have got into Free money by using Cash back credit cards. I now have 3 cards which give me cash back from all different purchases. If you have a Chase card, they give you this wonderful year end summary that graphs where you are spending. I took a look at this to see where I have spent the most money in one year to see where I can maximize my cash back reward.
As you can see from the chart, my top 3 categories of spending are not in any categories which my Chase card gives 3% cash back. Although I use this card everywhere because of the 25% bonus when you save up $200 in rewards, if I used a different card with more cash back on every purchase I would be doing much better. Right? Maybe…
Check your year end credit card summaries and see where you could be getting the most cash back. Unfortunately for me, Auto, Merchandise and Restaurants are not common cash back categories on most cards. If there were a card out there that would reward me for spending so much money on my car I would get that in a heartbeat. Those cards simply do not exist.
Realizing this information I started to look for cards that offer more than 1% cash back on all purchases. So far I have found two potential cards to get, the Capital One Card Lab, and American Express Blue Cash. In the past year I’ve estimated I put an average of $20,000 dollars on my credit card. I came up with that number because I have almost reached $200 in rewards from Chase and mostly at 1% in only 10 months. You can do the math.
There is a promotion for the Capital One Card Lab if you pick 1% cash back, you can select a bonus of 2% cash back on everything for the first 12 months. This would be a great card to get if I was going to spend a lot of money in 1 year. Sadly this card will go back to 1% after the promotional period. This would be a fine card for me in a short term, and then I would go back to the Freedom.
The AMEX Blue Cash is pretty good if I spent well over 20,000 dollars. This is much harder to do because this card is not as widely accepted. This card is 1.5% cash back after the first $6500, not a bad deal for a bawler. After doing the calculation based on $20,000 dollars, it falls short of my Chase card, and Capital One in the lowest percent category. In the Everyday Purchases category this card spikes at 5% cash back. Sounds great, but takes some dough to get there.
I am not making the switch over to the AMEX yet and sticking with my Chase card. Anyone else using a worthy card?
August 20th, 2008 at 12:22 pm
I have a solution/comment:
Why not get two of these cards to maximize your savings? Sure, it will take longer to aquire cashback on two separate cards, but the payout amount will be ultimately higher. Since the freedom card rewards extra points for the top three categories you use-why not double it up with two cards to get 6 categories? See I already have the Chase cash plus rewards card where I already get gas/groceries triple points. So the Chase Freedom card can supplement my other card in different categories. One card will be gas, groceries, and drugstores while another one can be utilities, department stores, and fast food. Is that allowed? Also, is the $250 cash back at $200 at an earning rate of 1%? Meaning 2000 points is equivalent to the $200-which you can then convert to $250?
August 20th, 2008 at 3:30 pm
That is a very interesting idea Josh. I am not sure if you can get two Chase Freedom cards. I know my father had two but that was sort of a mistake. I will look into this.
I do separate out my purchases to maximize my rewards. I never use my Freedom card for Gas. I have two other cards for Gas. One is 5% at Shell. The other is the Discover Open Road which is 5% at all gas stations, for the first 100 dollars in gas a month. I normally go to Shell so I don’t carry around the Open Road Card.
Every month my cellphone bill is one of my top 3 categories. The other two switch from fast food, drug store, convenient stores, and movies. As you can tell from the categories this is not a card that benefits online shoppers. Now Chase offers an additional cash back bonus for shopping through their rewards site. I recommend that when you are shopping online.
My $250 cash back was at $200 pretty much at a rate of 1% but only because most of my purchases on the card are at 1% and not in the 3% categories. I believe its 20,000 points. You earn 1 point per dollars or 1% per dollar. So 20,000 points translates to $200. You can reach $200 either at a 3% rate or 1% rate. With the $50 signing bonus, that comes even faster.
I like where your head is at with the two freedom card idea. I want to do that haha. Thanks for the comment!
August 20th, 2008 at 3:54 pm
I used the Blue Cash card for 3 years. At first I was really jazzed by that 5%, but by the end, I felt really jipped. See, the 5% only kicks in AFTER the $6,500 (as was noted in the article) which means two things: A) there is a mental push to spend as much money as possible on that card to get past the $6,500 point and B) you lose out on all the earnings of the original $6,500. But the real kicker for this card is that they pay you on an annual basis! PLUS, they don’t GIVE you the cash, they just give you a credit on your card.
For the reasons listed above, I switched to AMEX’s One card. It gives me 1% on all my purchases regardless of total amount spent (i.e. no $6,500 initial floor) AND it gives me the money on a monthly basis AND it puts the money in a high yield savings account. I average about $1,000 a month in expenses and the savings have really added up – I’ve earned more using the 1% config than I ever did when I had the 5% config! Plus I get easier and faster access to my money! To top it all off, the card has the great protections associated with AMEX (plus exceptional customer service).
I’m not a fanboy or nothing, I have used other cards, like BOFA’s credit rewards, but my experience with AMEX has been incredible! The only downside is that there is a annual fee for the One card ($35), but AMEX offsets that by giving you a sign on bonus of $50 (I believe) AND the first month free. In total, I’ve made almost twice as much as the Blue Cash Card (Excluding the annual fee).
One final blurb, when you consider the cash back rewards, also look at what the card offers overall. The reason I went with the One card is because there is no credit limit (my other card had me at %1,500 for the first 6 months), AMEX has unlimited monthly spending (advantage of paying the annual fee). But unlike it’s other annual fee cards, you can pay the One card off over time AND AMEX will give you 1 month of ‘interest free protection’ each billing cycle. That means AMEX gives you two months without interest. However, you can’t transfer debt from other credit cards over…
I really did my research in trying to find the card that would be the best OVERALL. That’s why I stuck with AMEX and the One card over all others (btw, I’ve had cc’s from Chase, BOFA, Discover – and I’ve had the ‘points’ system, the miles system, and teh cash back rewards.) I still say, nothing beats monthly paybacks to a savings account.
August 20th, 2008 at 4:23 pm
Tuskan, thanks for the comment! I’ve run the number in my head over an over with the Freedom and the Blue cash, and every time it seems like the freedom is a much better deal. I think the number I had was the Blue Cash was only worth it if you spend well over 20k on the card in a year. I didn’t know their payout were only annually. That does not allow me the freedom like I would want.
I haven’t signed up for an AMEX card yet and I’m not sure when I will be. I do like the idea that there is no set limit. The small annual fee is not a big deal if the card comes with other perks. I know AMEX cards are like an elite club membership. You get access to events, and flights etc. I like that, but at my age I have no need for that. I have no doubts that I will eventually get an AMEX card, just not sure what one, and when.
Monthly payouts into a high yield savings account is awesome! Do you know what the percentage on that is? With the Freedom, you can chose to have the cash credited towards your balance or take a check. They go in increments of $50 dollars. My average monthly statement is about $1000 as well. I earned $200 in less than 1 year and have already received the check. I don’t mind that it’s not going into a High yield savings account only because my $200 turns into $250. A 25% bonus. You can’t get that in a bank account in 1 year. My $250 check went right into my MMA to earn more.
I’ve heard many great things about AMEX customer service and I can understand why you like them. I will be an AMEX card holder in the future for sure. Thanks for the info on the 2 months of interest free. That’s a nice safety to have. I really don’t pay attention to APR’s as I paid my cards off in full, but it would be nice to have my money sitting in the bank an extra month
August 21st, 2008 at 8:48 am
Hi,
The two Freedom cards idea may not work but as I said I have a Chase Cash plus rewards Visa that basically allows 5% on all gas/groceries/pharmacy purchases beyond just the first six months. (Which also allowed me to cancel my gas cards since this card covers all the stations.) Therefore I would use the freedom card on utilities/commuting/fast food instead.
I would opt for department stores but I seem to do all my shopping online so that idea is out.
Like you, I pay off all balances in full, so APR is not a concern and I also don’t want gift cards but cash back which I can get at 5000 points in the form of a $50 check.(There also is no dropoff in points unlike the other cards when you opt for cash payout instead of giftcards.)
This card may no longer exist however (I was possibly grandfathered in), but again it’s the CashPlus Rewards Visa. But looking at the 15 categories you can choose on the Freedom card I do have a few questions you may be able to answer:
1) First off I read there’s a three year window to redeem the points-is that accurate? Normally it takes me around 3 months to get 5000 points so I figure if I have two separate cash back cards, it would take twice the time to get 20,000 points meaning it would take roughly two years to get my 20,000 points. Then again, the ratio would be 3 points and not 5 so that figure would be closer to the 3 year limit.
2) Do you count the utilities option as one of your top 3? Because looking at the categories they count phone and cable/internet as two separate categories. However, my phone & internet are both Verizon, so I would only be able to qualify it on my list if it were combined.
3) Besides the $250 payout at 20000 points, what other payout options are there? I love the 25% increase but as mentioned earlier, I may not hit that plateau. I prefer no gift cards so are the options both points and cash as stated? If so, is the payout even for both forms? I wouldn’t mind either but again cash is preferable since with credit you can’t get more points back.
BTW, I called Chase to get the answers to some of these questions but the customer service lady said she couldn’t answer my questions other than it’s 3% & 1% depending on your purchases.
Thanks for the feedback & ideas.
August 21st, 2008 at 9:48 am
@Josh
If you shop online through Chase Rewards Plus, they tell you what your added bonus is with shopping at those stores online. You will earn your regular 1-3%, plus what ever each store on there says. For example Circuit City is an additional 4%, Dick’s sporting goods is an additional 8%, etc. There are 100’s of stores on there.
1) The points/cash on the freedom card will expire in 36 months (3 years). This may be kind of tight for you, but with the $50 signing bonus it will help you get to 20,000($200) sooner. You do have the option to credit the money to your balance if you want, in increments of $50 dollars. So if you are coming up on expired points and do not think you are going to make it to the $200. You can choose to take the cash you have earned. On the chase site, along with your rewards earning information, they will tell you how many points/dollars will expire and when. I had about $6.50 in rewards that were set to expire in 2010. I’ve used them already, so it’s no problem.
2) In my case, I was not able to put my utilities on my credit card. They only allowed direct deposits. If I was able to put them on the card I would have. Your situation may be different. Your Verizon bill will be either cable/internet or Phone. I would think it would go under cable/internet if it’s Fios. On my card Phone/cell phone is my Wireless Cellphone charge. That I am able to put on my credit card so that is always one of my top 3. If your Verizon bill is a combined 1 bill It will be in either of the categories, not both. So you would have one of them available for Utilities or Phone.
3)Cash payouts are in increments of 50 dollars. Either a check or credit to your balance. You also have the option to buy gift cards for a small gain. For example a $25 Gap gift card would cost you $20.
I am almost embarrassed by that customer service rep. I would hope they can provide better service, especially if I am talking them up