Over $700: I'm Going to Earn More Credit Card Rewards This Year

Last year I earned almost $500 in cash from my Blue Cash from American Express card. My stats for the year back then were (FYI, my anniversary date with the card is January, so my rewards are based on February through January charges):

• Amount charged to the card: $26,279.67
• Amount earned back as rebate: $482.38
• Rate of rebate: 1.84%

I said that I wanted to beat that this year and I'm going to do so. Here are my results through November (on my December statement):

• Amount charged to the card: $25,834.77
• Amount earned back as rebate: $461.62
• Rate of rebate: 1.79%

Here's where I stood through November last year:

• Amount charged to the card: $22,455.33
• Amount earned back as rebate: $392.63
• Rate of rebate: 1.75%

A few overall thoughts on these facts and some other credit card items I have going:

1. My charges for December this year were very high, so I'll be past $500 easily with a month left to spare.

2. My rate of rebate will go up as well since I'll be at the higher levels of the Amex rebate for the next two months. I'd like to get to 1.9% (even with rounding), but I'm not sure I can make it.

3. As I've said, I plan to use a hybrid card system in 2008 to maximize my cash back credit card rewards. As a result, I got a Chase Freedom Cash Visa Card, used it, and got a $100 reward incentive. Then, they send me a second application, I filled it out, got another card, used it, and got another $100. So now, I should be over $700 total counting these two bonuses.

4. I'm working through my strategy for 2008 charging -- trying to fine tune the specifics. For sure I'll be using both the Blue Cash from American Express card and the Chase Freedom Cash Visa Card, but just how remains to be seen. Stay tuned.

Comments

[Steve]

In three months of using the Chase Freedom Visa we've already earned $250 in rewards. We've actually earned $200 but once you have $200 you can request a $250 check, which we've done. I looked hard at both cards you mention and for us the simplicity of only using one card outweighed the small difference in rewards by using both cards. The $50 bonus you get each time you're patient pretty much wipes any advantage the hybrid strategy brings anyway.

[PT]

I'm considering an AMEX Blue. I travel overseas a bit. Do you know if they charge currency translation fees?

[FMF]

Steve --

Actually, if you only can choose one card and you charge a lot, the Amex card is better. See this for specifics:

http://www.freemoneyfinance.com/2007/09/how-you-can-ear.html

PT --

Sorry, I don't know.

[Rob]

I thought you got "up to 5%" with the Amex once you charged over $6,500+... why is your percentage still below 2%?

[FMF]

Rob --

A couple reasons:

1. The 5% is only on gas, groceries, and food after $6,500. All other charges get 1.5%.

2. The rates below $6,500 are low, and those are, of course, factored into my annual return.

[Rob]

Ok that makes sense. I just got Blue Cash last month and am hoping I can do as well as you have. Thanks!

[Money Blue Book]

Credit reward cards are definitely the way to go. But if you are not responsible with handling revolving debt...that is another wrinkle entirely..I personally use this combo - Citi Driver's Edge, Citi mtvU, and the Fidelity Investment Card.

[91030Mom]

I am still happy with my 2% HSBC Cash back card. It makes it very simple, and I've managed to get them to up our limit to $3,000. One of the main reasons we hadn't used it more was because of the low limit (previously 2k).

For 2007 we redeemed $425. I think they have a $400 yearly limit, but a little bit of it was earned in 2006, not redeemed 'til '07.

We opened the HSBC card in Sept of 06 and I ran a report from then to end of '07 and total charged was 21K, 2% is $420, so it really is a "true" cash back.

We also use the Chase Freedom for groceries, gas and fast food for the 3% (1% on all else). From Jan '07 to today (1/10/08), we've charged 23K on it (also used as a back up to the HSBC, since it had such a low limit and we'd constantly be bumping-up against it).

We only redemed $250 from Chase in '07 because we ended the year on the December statement (12/12) at about $190 in redeamable money, BUT if you hit $200, they send a check for $250 and you have to wait until the statement closes (it'll close on 1/12-yeay!). So if I include this $250 coming in a say a week or so, I calculate roughly 2.2% cash back from Chase.

I think we're going to hit the HSBC 2% limit earlier this year because of the higher credit limit, so I'll have to figure out what to do. The card is soly in my husband's name, maybe I'll apply for one under my name and see if I can get another one! :-)

I'm thinking also of opening up a driver's card, it that Citi? For 6 months for the 5% cash back, I think I read about that, I'll have to do more leg work.

I too would LOVE to do better in '08 as well!

[91030Mom]

PS: Of course these cards have no fees and of course they're paid off completely at the end of the month!
:-)

[Sarah]

...Not if you don't charge more than you already have in the bank. I would bet most people in the U.S. have at least $26K in expenses a year!

[MelMoitzen]

$26K may *sound* like a lot of credit card spending, but it's important to note that a lot of institutions that typically didn't take credit cards a few years ago now do--so totals like that are not so astronomical anymore. My childrens' daycare/aftercare charges alone are $17,000/year, I do a lot of shopping for my elderly parents, I have business travel expenses, I'll be getting my eyes lasered--all of this goes (or will go) on the cards, unless there's an additional fee involved for charging (e.g. public utilities, tax authorities).

In 2007, we spent a little over $40K total with cards and earned $1,233 for an average of about 3%.

[FMF]

Mel --

3%? Did you do this with a card(s) that are widely available? If so, care to give us the details? I'd love to hear how you did it.

[Ken]

$523 on the AMEX Blue last year
$194 on Costco AMEX (we put travel, dining and Costco purchases on this)
Over $400 on Chase BP Visa (used where AMEX isn't taken, and to pay for child care for 2 kids)

[MelMoitzen]

It's a hybrid approach and yes, there is a grandfathered 5% g/g/d Chase card involved that's no longer available--and I'm sure it's only a matter of time before Chase converts this to a 3% (3.75% if you wait to redeem) card. But even when that happens, I don't think it won't affect my % all that much.

So, here's the entire run-down:

--Chase Visa Rewards: 5% on g/g/d
--Discover: 5% on changing categories (currently airlines, hotels, car rentals this quarter)
--Costco Amex: 3% on dining out (all types of restaurants)/2% travel. We also did all our online holiday shopping with this card, as they had a special offer in December giving back 3% on all online purchases. (Watch your junk mail carefully, I almost threw this offer out.)
--Costco Business Amex: Don't have this one yet, but I'll be replacing the above Costco card with this when Chase kills my 5% card, as this will add 5% gas to above Amex categories.
--Chase Professional MasterCard: 3% on dining out (all types of restaurants), gas, office supplies, hardware/home improvement.
--Orchard Bank/HSBC MasterCard: This is the card of last resort since it offers 2% on EVERYTHING ELSE, but limits the rebate to $400/year ($20K in charges). So we're careful about using up our rebate on this one when we can get 2% (or more) on another card.
--We also have a few store-specific cards with rewards programs that offer 5% back in store gift cards/certificates that are essentially same as cash, since we'd be shopping at those stores anyway.

Most of the cards I've listed give back 1% for categories not listed, but I only charge appropriately with each card to earn the maximum available. Since I got the Orchard/HSBC card, NOTHING earns less than a 2% rebate.

I could do a little better by adding a 3(.75)% Chase card to cover a few more categories like cell-phone bills, but at this point that's probably overkill. When Chase forces me into that card, I'll make that work.

Anybody who's not averaging 2% on up to $20K of charges ought to seriously re-examine their "strategy" since that can be easily attained using just one card.

[FMF]

Mel --

Good stuff. If you're willing to do all that work, you sure can earn higher rewards. ;-)