A couple days ago, I was paying off one of my husband’s credit cards and I noticed that his reward terms were quite different from mine. This was an AMEX True Earnings card from Costco that we rarely use. Nevertheless, there were some cash rewards on it. So I read the terms as to how the cash rebate can be redeemed, and apparently they send a physical voucher every February with a paper statement. This is my husband’s card so I asked him if he saw the voucher in the February statement, and he looked at me quizzically and said he didn’t know what I was talking about. The good thing is that he never throws statements away, so after some furious digging, I found a voucher for $5.83 at Costco. I triumphantly handed the voucher to him and he laughed at me for a bit and said, “oh so this is what you were looking for.”
We have a couple other rewards cards. One is a Citi Professional which we use for restaurants, and the other is a Chase Cash Rewards card which still pays 5% on gas and grocery purchases (this card is no longer available to new customers). I have found that I had to keep up on these rewards programs, too. For example, the Citi card pays Thankyou points, which has been devalued more and more the last few years. 5000 Thankyou points used to get you a $50 gift card, but now you need 6000 points to get the same gift card. They are also removing quite a few gift cards from the program. I like my Chase Cash Rewards card because 5000 points is just equal to $50 cash, but I still have to redeem it once the statement closes. If I don’t redeem it then they don’t send the money to me automatically. I try to cash out the points as soon as possible because if I leave them then there’s a bigger chance of them being devalued or completely confiscated.
My husband used to be a big cash user, but now he likes rewards credit cards because whatever rewards we receive in the form of gift cards can be spent on entertainment without impacting the entertainment budget. In this manner, the rewards are actually rewards for him. It doesn’t really make us spend more than usual, and since we pay off all the cards every month, getting $50 every few months from buying groceries and gas is really a bonus. Even though keeping track of these rewards programs can be a bit annoying, I feel that it is necessary to get the most out of your credit cards.
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8 comments ↓
Good points. We have an Amazon.com card that we use for big purchases only — and cash/debit for the rest. We used to use credit cards, but then it was too easy to slip up and spend over-budget, so we’re only using it for big things that we can easily keep track of.
It’s nice to be able to buy stuff from Amazon once in a while. But we are also so happy to be off credit card debts!
ari
We have gotten off the “credit card for everything because you can get rewards” bandwagon. You will spend more with a cc and debit cards than you will with cash because there isn’t as much pain. Fill you wallet with two weeks of cash and watch how it disappears (gas, groceries, etc).
Also I think the dirty little secret that cc companies have is how much they are making off the transaction fees they charge merchants (which is then passed on to us). I got a taste of these fees through eBay when my customers would pay with Paypal. Every time you see someone use plastic for gas, groceries, fast food, anything and everything… just chalk up another 1 to 5% immediate payment to the cc companies. Incredible when you consider number of transactions.
Rewards are gimmicks.
BTW, if you think you must use a cc for online purchases then check out linking Paypal to transfer from your checking account.
I also think that rewards cards are great. Even though cash is always a good thing to have, the cards that offer carbon offsets and other environmental rewards are better. Then you don’t feel as guilty using your card because you know that a tree is being planted in your name! (That’s how i rationalize the spending)
Interesting post. I rarely use credit cards, but do use the discount cards for groceries, etc.
Thanks for stopping by my blog and confusing me!! Nice to know there’s another bag lady around!
You may be able to call and get Chase to change your card to a Chase Freedom card. I have that one and opted for the cash rewards. If you spend $20,000, you get $250 cash back. They also have 3% reward categories like fast food and groceries instead of the typical 1%. I called Chase and they changed me to this card for free with no hassle.
-Erica (Silicon Valley entrepreneur and renter; blogging at erica.biz)
Hey Erica, thanks for the suggestion. I don’t spend that much on my cards. I get 3% back on the Citi and Amex cards for restaurants, and 5% back on gas and groceries on my Chase card. I’m thinking of getting the Freedom card for things like utilities, though, since it’s the top 3 categories of spending gets 3%. There is also 1% for everything else on all the cards. Anyway, I use my Chase Card almost exclusively for gas and groceries, so if I spend $20k on my card I get $1000 back, and that’s better than $250 I think.
I manage my budget using the cash flow method and love using credit cards. Using my credit card allows me to keep money in my savings account longer and earn some interest. I simply transfer what I need to pay off the credit card balance right before I set up my credit card payment. This method also works with my husband - we used to use the cash/debit card method and had problems with cash flow because I like to keep most of my money in some sort of account that earns interest and my husband did not like having to constantly check if there was enough money in the checking account (usually there is not because of my preference to keep money in the savings account).
I also like credit cards because I can easily analyze my purchases and know where my money is being spent.
And finally, my Amex (Hilton Honors reward card) has this graph function I can use to analyze different spending categories. I am not the type to save receipts and input purchases, so I like that my Amex does this for me. While I dislike inputting numbers, I love analyzing numbers so the Amex fits my personality well.
I am a big fan of using credit cards. But I have also always been responsible with my cards and never carry a balance. Credit card rewards are the icing on the cake - I get free hotel rooms with mine and they are such a nice treat for when we go on vacation.
I don’t spend enough money to get any really big rewards…but I do love free stuff! I still remember how excited I was to get my first BR gift certificate….free money for clothes!
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