Are credit cards rewards worth it?

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Earl Lemongrab
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Re: Are credit cards rewards worth it?

Post by Earl Lemongrab » Mon Oct 02, 2017 4:02 pm

I like credit cards. They add convenience, safety, and rewards. While I don't like spending (don't like it a lot) I don't mind owing money as long as it's not costing me any extra. I'm getting to use their money for free up to several weeks at a time. That makes me happy.

I just set the credit cards to send me reminders when it's time to pay. Then I go over the transactions to make sure nothing is out of the ordinary and pay with a bank transfer. Much easier than the days when you had to mail a check. Checking more often is a waste of time to me.

My go-to card is the BOA cash-back. With the boost from Preferred Rewards due to my Merrill Edge investments, I get 5.25% gas, 3.5% grocery, 1.75% other. Not the best possible, but pretty decent, especially as a high percentage of my spending falls into the first two.

Each spring I get a new card with a signup bonus to use to pay my insurance bill in June (this year $200 from Wells Fargo). That takes care of the minimum spend for the bonus at once.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

theplayer11
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Re: Are credit cards rewards worth it?

Post by theplayer11 » Mon Oct 02, 2017 4:24 pm

I kind of enjoy our free European vacations...yes, it's worth it

JRix
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Re: Are credit cards rewards worth it?

Post by JRix » Mon Oct 02, 2017 4:33 pm

After too many years of credit card companies making money off of me, I am now thrilled to be receiving money back from them!

Bank of America Cash Rewards: 3% gas
Amex Blue Cash Everyday: 3% groceries [I don't spend enough yearly to justify the annual fee for the Preferred]
Marvel Synchrony: 3% restaurants and entertainment
Capital One Quicksilver: 1.5% abroad to avoid foreign transaction fees
Discover & Chase Freedom: rotating 5% categories--a great quarter right now with Discover going with Amazon & Target and Chase going with WalMart
Citi Double Cash: 2% everything else

All of the above are set to pay in full each month.

Nate79
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Re: Are credit cards rewards worth it?

Post by Nate79 » Mon Oct 02, 2017 5:24 pm

It's amazing how such a very very minor incentive can excite people so much to use a product like credit card. I use them myself for almost all purchases, the cashback is nice and I try to maximize them as much as possible. However, I don't kid myself that the use of credit card is costing me much much more than the cashback incentives. Studies are very clear that spending goes up a significant amount over cash. I've considered going 100% cash but so far difficult to get over the hassle factor.

Maya1234
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Re: Are credit cards rewards worth it?

Post by Maya1234 » Mon Oct 02, 2017 5:30 pm

I pay off my credit card as soon as it hits a certain balance. I don't wait til the end of the month. I also monitor my cc every day. Have for many years since electronic monitoring was possible. It will reduce your end of month feeling and may help you feel that spending is more like a debit card. Don't throw away free money

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Earl Lemongrab
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Re: Are credit cards rewards worth it?

Post by Earl Lemongrab » Mon Oct 02, 2017 5:46 pm

Nate79 wrote:
Mon Oct 02, 2017 5:24 pm
It's amazing how such a very very minor incentive can excite people so much to use a product like credit card. I use them myself for almost all purchases, the cashback is nice and I try to maximize them as much as possible. However, I don't kid myself that the use of credit card is costing me much much more than the cashback incentives. Studies are very clear that spending goes up a significant amount over cash. I've considered going 100% cash but so far difficult to get over the hassle factor.
I don't believe, and will continue to argue, that this isn't true in all cases and can't possibly be proven to be true in all cases. The studies as they are set up can't prove that. As I've explained in my case I carefully analyze every purchase at some point and make a value judgment on whether to make it. How it's paid for never enters that.

I have the bare-bones spending to prove it. I can't possibly be spending way more with CC because otherwise my spending on discretionary items paid for that way would be almost non-existent. And as I have to eat and clothe myself, then that can't be.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

avalpert
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Re: Are credit cards rewards worth it?

Post by avalpert » Mon Oct 02, 2017 5:52 pm

Nate79 wrote:
Mon Oct 02, 2017 5:24 pm
It's amazing how such a very very minor incentive can excite people so much to use a product like credit card.
I don't really see how someone can call it a 'very very minor incentive' - particularly in a world were 10 basis point reduction in expenses are heralded.

If you reduce costs by 3.5% because of cash back using credit cards you reduce your needed retirement portfolio by 3.5%, by my numbers that could mean retirement 4-6 months earlier. It might not be life changing but it isn't minor either - it would take decades to get the same benefit from saving 10bp in expense ratios.

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Re: Are credit cards rewards worth it?

Post by bloom2708 » Mon Oct 02, 2017 5:57 pm

Are rewards cards worth it? Yes, if you don't over do it.

"Manufactured spend" can mean you are pre-paying for bills and items you would normally buy. But, you can get caught in a spend trap and start buying things you don't need to earn more rewards.

Have 1-3 cards that give you the rewards you want. Pay the bill off each month. I am one of those silly people that pays our credit cards off 2 times per month. Each time we get paid I zero them out. I charged something, got the reward and paid it off. I'm not interested in milking it for all it's worth.

We use the Costco Visa, Amazon Prime Rewards and a Upromise card that sends rewards to our 3 kids 529 accounts. Not getting rich, but taking what we can get.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

Nate79
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Re: Are credit cards rewards worth it?

Post by Nate79 » Mon Oct 02, 2017 6:04 pm

avalpert wrote:
Mon Oct 02, 2017 5:52 pm
Nate79 wrote:
Mon Oct 02, 2017 5:24 pm
It's amazing how such a very very minor incentive can excite people so much to use a product like credit card.
I don't really see how someone can call it a 'very very minor incentive' - particularly in a world were 10 basis point reduction in expenses are heralded.

If you reduce costs by 3.5% because of cash back using credit cards you reduce your needed retirement portfolio by 3.5%, by my numbers that could mean retirement 4-6 months earlier. It might not be life changing but it isn't minor either - it would take decades to get the same benefit from saving 10bp in expense ratios.
When I say very minor I mean in terms of annual income. Credit card spending as a percentage of annual income for me is maybe 30%. 3% cashback on 30% is 1%. So it's basically like getting an extra 1% back every year, or put another words like getting a 1% raise. To me that's very minor. I'm not going to get rich off of it and I believe that probably the extra spending by using credit cards outweighs the extra 1% I'm getting. Again, don't get me wrong. I use them. But I'm not delusional enough to think that I'm getting rich off of cash back. And in the end I'm probably worse off when you count the extra spending.

jwaxjwax
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Re: Are credit cards rewards worth it?

Post by jwaxjwax » Mon Oct 02, 2017 6:11 pm

And don't forget that most good cards now offer big bonuses to sign up, worth hundreds of dollars if you spend a few thousand on the card in the first few months. :moneybag

THY4373
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Re: Are credit cards rewards worth it?

Post by THY4373 » Mon Oct 02, 2017 6:12 pm

bloom2708 wrote:
Mon Oct 02, 2017 5:57 pm
"Manufactured spend" can mean you are pre-paying for bills and items you would normally buy. But, you can get caught in a spend trap and start buying things you don't need to earn more rewards.
That is NOT manufactured spend. Prepaying bills and/or buying stuff you need (or don't need) is just regular spend, you are just changing the timing. Manufactured spend is buying cash, cash equivalents or quasi-cash equivalents that are then used to pay off the credit-card bill. You are essentially buying money with your credit card and then using that money to pay off the credit card. MS allows one to scale beyond their regular spend or even one's income.

THY4373
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Re: Are credit cards rewards worth it?

Post by THY4373 » Mon Oct 02, 2017 6:14 pm

Nate79 wrote:
Mon Oct 02, 2017 6:04 pm

When I say very minor I mean in terms of annual income. Credit card spending as a percentage of annual income for me is maybe 30%.
All depends on how you do it. My credit card "spend" has (sometimes vastly) exceeded my annual income for the last five years.

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Re: Are credit cards rewards worth it?

Post by BogleBoogie » Mon Oct 02, 2017 6:18 pm

RDHlooking4FIRE wrote:
Mon Oct 02, 2017 6:57 am
I charge everything on my credit card for the 2% cash back (citi double cash). I also like seeing how much I spent each month. I PAY MY BALANCE IN FULL EVERY MONTH. But I hate seeing that I owe.

Id rather use my debt card. Is the 2% cash back worth it. Do you use debt or credit and if credit what rewards card do you use?

Thanks
How much do you spend each month? Multiply that by 12 and then by 2% and you'll get your annual reward and you can decide if it is worth it for you. The major upside, as I understand it, is when you get a fraudulent charge it is much easier to get reimbursed on your credit card than your debit card. I'm not sure if your debit card even is protected in that regard, while credit card is.

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rocket354
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Re: Are credit cards rewards worth it?

Post by rocket354 » Mon Oct 02, 2017 6:37 pm

For me, definitely. I have a 5% gas card, an effective 4% grocery card (6% but with annual fee), a 3% restaurant card, a 3% amazon card, and a 2% everything else card. It takes no time as whenever I buy something I just grab the correct card for the job. It might not add up to a ton of money over the course of the year, but it's many hundreds of dollars that are free. That's worth it to me.

Also, I've been CC bonus chasing, to the tune of over $4000 for this year, at a rate of nearly $600/hr for time spent researching bonuses, signing up for cards, and managing the accounts. Is that worth it? Again, it definitely is to me.

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flamesabers
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Re: Are credit cards rewards worth it?

Post by flamesabers » Mon Oct 02, 2017 6:44 pm

Nate79 wrote:
Mon Oct 02, 2017 5:24 pm
It's amazing how such a very very minor incentive can excite people so much to use a product like credit card. I use them myself for almost all purchases, the cashback is nice and I try to maximize them as much as possible. However, I don't kid myself that the use of credit card is costing me much much more than the cashback incentives. Studies are very clear that spending goes up a significant amount over cash. I've considered going 100% cash but so far difficult to get over the hassle factor.
I think there is a lot more then just method of payment that influences how much of a spendthrift/saver one is. For instance, throughout my teen years and early twenties I paid for everything with either cash or my debit card. While I was never in danger of being broke or otherwise being forced to live paycheck to paycheck, I did buy stuff with cash that I wouldn't bother to purchase with a credit card in the present. If anything, I would say using a credit card makes me more mindful of my spending as I have to review everything I purchased in one month at the end of every statement cycle. In contrast, with cash or a debit card, you never have to do this so long as you have enough money in your wallet or your checking account.

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Hyperborea
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Re: Are credit cards rewards worth it?

Post by Hyperborea » Mon Oct 02, 2017 7:10 pm

THY4373 wrote:
Mon Oct 02, 2017 6:12 pm
bloom2708 wrote:
Mon Oct 02, 2017 5:57 pm
"Manufactured spend" can mean you are pre-paying for bills and items you would normally buy. But, you can get caught in a spend trap and start buying things you don't need to earn more rewards.
That is NOT manufactured spend. Prepaying bills and/or buying stuff you need (or don't need) is just regular spend, you are just changing the timing. Manufactured spend is buying cash, cash equivalents or quasi-cash equivalents that are then used to pay off the credit-card bill. You are essentially buying money with your credit card and then using that money to pay off the credit card. MS allows one to scale beyond their regular spend or even one's income.
Actually one of the best manufactured spends I remember hearing about was people buying coins from the US Mint using the credit card. The shipping was free and they would arrive at their home and they would then take the rolled coins to the bank and deposit them. Use the deposit to pay off the credit card. I think some people "spent" 10s of thousands this way. This was maybe 15 years ago that this went on. At one time too, you could buy US Savings Bonds with a credit card and those would be good for points too.

Other benefits of using a card over cash is the extended warranty on products. I had a $600 TV set replaced earlier this year through the credit card coverage. There's also the travel insurance on some cards and auto insurance. I've also had to use the dispute resolution to deal with a merchant who didn't deliver - that wouldn't work with a debit card.

For me, the cards are split between a Chase Sapphire Reserve, CapitalOne Venture, and an Amazon Prime card. Each is used for different broad categories of things. I'm not extreme about point hunting but I'll do a little bit of extra work to collect them.

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blaugranamd
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Re: Are credit cards rewards worth it?

Post by blaugranamd » Mon Oct 02, 2017 7:15 pm

RDHlooking4FIRE wrote:
Mon Oct 02, 2017 6:57 am
I charge everything on my credit card for the 2% cash back (citi double cash). I also like seeing how much I spent each month. I PAY MY BALANCE IN FULL EVERY MONTH. But I hate seeing that I owe.

Id rather use my debt card. Is the 2% cash back worth it. Do you use debt or credit and if credit what rewards card do you use?

Thanks
Lets see: if you pay your balance in full monthly, then there is ZERO difference in expense between the two. Credit cards give you: accidental damage protection, car rental/trip insurance, extended warranties, zero liability fraud protection, money back.

IMO, using a debit if you're fiscally responsible is foolish.
-- Don't mistake more funds for more diversity: Total Int'l + Total Market = 7k to 10k stocks -- | -- Market return does NOT = average nor 50th percentile, rather 80-90th percentile long term ---

Doom&Gloom
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Re: Are credit cards rewards worth it?

Post by Doom&Gloom » Mon Oct 02, 2017 7:23 pm

Earl Lemongrab wrote:
Mon Oct 02, 2017 5:46 pm
Nate79 wrote:
Mon Oct 02, 2017 5:24 pm
It's amazing how such a very very minor incentive can excite people so much to use a product like credit card. I use them myself for almost all purchases, the cashback is nice and I try to maximize them as much as possible. However, I don't kid myself that the use of credit card is costing me much much more than the cashback incentives. Studies are very clear that spending goes up a significant amount over cash. I've considered going 100% cash but so far difficult to get over the hassle factor.
I don't believe, and will continue to argue, that this isn't true in all cases and can't possibly be proven to be true in all cases. The studies as they are set up can't prove that. As I've explained in my case I carefully analyze every purchase at some point and make a value judgment on whether to make it. How it's paid for never enters that.

I have the bare-bones spending to prove it. I can't possibly be spending way more with CC because otherwise my spending on discretionary items paid for that way would be almost non-existent. And as I have to eat and clothe myself, then that can't be.
Even studies that do a very good job at predicting how groups of people will behave do a very poor job at predicting how an individual will behave.

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Ged
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Re: Are credit cards rewards worth it?

Post by Ged » Mon Oct 02, 2017 7:24 pm

RDHlooking4FIRE wrote:
Mon Oct 02, 2017 6:57 am
I charge everything on my credit card for the 2% cash back (citi double cash). I also like seeing how much I spent each month. I PAY MY BALANCE IN FULL EVERY MONTH. But I hate seeing that I owe.

Id rather use my debt card. Is the 2% cash back worth it. Do you use debt or credit and if credit what rewards card do you use?

Thanks
2% is the default minimum. For most people it means $1000 a year, more depending on how much you travel or if you live it up.

Some people play it like a game to increase the returns. I don't.

I think the 2% is worth it IF you can pay off the balance in full every month. If you go into debt it is a trap.

I use 2% or better credit cards for almost all of my purchases - Amazon Prime, Fidelity and Costco credit cards.

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Pajamas
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Re: Are credit cards rewards worth it?

Post by Pajamas » Mon Oct 02, 2017 7:36 pm

Maybe you should get a charge card rather than a credit card. Years ago, American Express exclusively issued charge cards and it was newsworthy when they started issuing credit cards. (If I remember correctly the first one was called "Blue" but the card was clear translucent plastic with a round blue logo.) I think Diner's Club was also a charge card when it started but I have no idea if they even still issue charge cards.

I don't see any difference between having a credit card and paying it off monthly vs. a charge card, though.

TheHouse7
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Re: Are credit cards rewards worth it?

Post by TheHouse7 » Mon Oct 02, 2017 7:40 pm

I found giving up ~$200 in rewards per year was easy. I hate thinking about payments.
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mfrank732
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Re: Are credit cards rewards worth it?

Post by mfrank732 » Mon Oct 02, 2017 7:51 pm

Sign up bonuses and introductory bonuses are where you can really reap in the benefits. I should in total for the year make an additional $800 dollars from sign up bonuses alone, and never once did I buy something that was not a regular purchase. Not only do the sign up bonuses and cash back add up, but I also have made quite a bit from referral bonuses. At the end of the day, rack up as much money as possible back from these offers interest free. Building credit is personally a hobby for me, and have made multiple presentations for school on the subject of building credit, and how to maximize these incentives. Discover It card offers some bonuses can add up quite a bit in the first year. All cash back in the first year is doubled, and if you are refereed from a card member you get $50 for your first purchase, then double that at the end of the year. You have a $100 dollar bonus starting off with only purchase, then add the 5% rotating cash back bonuses and double that at the end of the year. One thing to consider though is that certain purchases such as utilities and gasoline may charge extra for using a credit card, so compare the cash back to the fee charged.

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Earl Lemongrab
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Re: Are credit cards rewards worth it?

Post by Earl Lemongrab » Mon Oct 02, 2017 7:53 pm

TheHouse7 wrote:
Mon Oct 02, 2017 7:40 pm
I found giving up ~$200 in rewards per year was easy. I hate thinking about payments.
What's one or two more payments? You have to pay all of the other bills one way or another.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

user5027
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Re: Are credit cards rewards worth it?

Post by user5027 » Mon Oct 02, 2017 7:55 pm

The university my daughter did her bachelors at accepted tuition payments with a credit card with no fee. I generated enough rewards on a Home Depot credit card to buy a refrigerator. Every time I open the fridge I think of that. Just as she graduated they announced they would begin charging a fee like my son's school always did.

Amex gives me 5% on gas. Some stations charge ten cents a gallon to pay with a credit card. The breakeven is $2 a gallon.

MikeG62
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Re: Are credit cards rewards worth it?

Post by MikeG62 » Mon Oct 02, 2017 8:32 pm

tomd37 wrote:
Mon Oct 02, 2017 10:18 am
I sometimes question some of the responses I read about cash rebate cards. If one receives an annual cash rebate of $2,500 using a 2% cash-back card that means charging $125,000 annually that card. Under what conditions would a person make personal charges of $125,000 to a credit card to obtain such results? :confused
I don't spend more simply to obtain CC rewards, I am just thoughtful about how I pay for the things we buy.

Pretty much anything that can be paid with a CC is charged. This includes monthly utilities (electric/gas, cell phone, cable/internet), health insurance premiums and all OOP's (my DW and I are early retirees and buy our insurance in the marketplace), auto/homeowners/personal liability insurance premiums, groceries, restaurants, gas, lawn service, all travel related expenses (we travel a lot) and all other monthly purchases (cloths, stuff for the house, stuff for our daughters, etc..). The cards I use are:

Chase Sapphire Reserve (3% on all travel and restaurants)
Fidelity 2% Cash Back
Amex Blue Preferred (6% on groceries)
Pen Fed (5% gas)
Amazon Prime (5% on all Amazon purchases)
Chase Freedom/Discover (rotating 5% categories)


The rewards really do add up - annually in the $3,000 to $4,000 range (I do spend/charge a bit more than the figure you threw out above).

As a former finance guy, I do not find this hard or complicated or difficult to keep straight. I've been doing it for so many years it is just second nature to me. Now when I die (hopefully not for a really, really long time) my wife will probably ditch all these cards and just use the Fidelity 2% card. In the meantime we will keep on doing it this way.
Last edited by MikeG62 on Tue Oct 03, 2017 6:36 pm, edited 1 time in total.

AlphaLess
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Re: Are credit cards rewards worth it?

Post by AlphaLess » Mon Oct 02, 2017 8:34 pm

TomatoTomahto wrote:
Mon Oct 02, 2017 7:03 am
I use credit rewards cards. We usually earn about $2500/year, but the past 12 months I think we are on track for $3000.

Amex Blue Preferred - Groceries
Amazon Prime Store Card - 5% on Amazon
PenFed for gasoline
Fidelity 2% Visa and Citi Double Cash 2%- everything else

I think it is worth it. We have the cards autopay in full every month; no human intervention required.
Tomato: ballpark, how much spend do you charge in each category?

E.g., assuming that all of your spend is 2%, I can back out: $125K / year in charges / spend.
Or, assuming that all of your spend is 5%, I can back out: $50K / year in charges / spend.

Based on your description, it is somewhere in the middle.

Just curious: more than anything, I am curious to know your weighted average cash-back rate (rather than how much you spend, but one gives the other).

Thanks

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TomatoTomahto
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Re: Are credit cards rewards worth it?

Post by TomatoTomahto » Mon Oct 02, 2017 9:06 pm

AlphaLess wrote:
Mon Oct 02, 2017 8:34 pm
Just curious: more than anything, I am curious to know your weighted average cash-back rate (rather than how much you spend, but one gives the other)
I’m already in bed (early morning tomorrow), but I will look at Quicken tomorrow afternoon and see if I can get an annual spend and reward with each card. I think Amex is the only one that will have different tiers (ie, 6% for first $6k of groceries, 1% thereafter), but let me see what I can extract. Now I’m curious also.

NB: my wife insists on her Amex Card, which give (shudder) points, which I won’t calculate.

engineer1969
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Re: Are credit cards rewards worth it?

Post by engineer1969 » Mon Oct 02, 2017 9:25 pm

While I take full advantage of rewards credit cards (we have 4 separate rewards cards), I don't like the concept of them overall.

Credit card companies need to offer the rewards to entice the customers who want to pay fully each month so they can charge a fee to the vendor for that customer's transactions. That fee effectively raises the cost the vendor charges for their merchandise, but the vendor will likely sell more due to the convenience of using credit cards which pressures the price downward.

I'd be happier paying lower prices at the store, but like the good feeling of getting cash back as well. I'm not sure how all these market forces pan out in the end but it seems like someone has to be carrying the losing stick between the customer, vendor and credit card company and I don't think it is the credit card company.

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Hyperborea
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Re: Are credit cards rewards worth it?

Post by Hyperborea » Mon Oct 02, 2017 9:46 pm

engineer1969 wrote:
Mon Oct 02, 2017 9:25 pm
While I take full advantage of rewards credit cards (we have 4 separate rewards cards), I don't like the concept of them overall.

Credit card companies need to offer the rewards to entice the customers who want to pay fully each month so they can charge a fee to the vendor for that customer's transactions. That fee effectively raises the cost the vendor charges for their merchandise, but the vendor will likely sell more due to the convenience of using credit cards which pressures the price downward.

I'd be happier paying lower prices at the store, but like the good feeling of getting cash back as well. I'm not sure how all these market forces pan out in the end but it seems like someone has to be carrying the losing stick between the customer, vendor and credit card company and I don't think it is the credit card company.
I think all of us are paying more on purchases for the convenience. Maybe those of us who use credit cards and pay them off every month are breaking even or maybe not. We likely aren't winning but just losing less. The mid-ground losers are those paying with debit or cash. I'm not sure why anyone does this these days unless they can't handle using a card without falling into the next category down. The big losers in this game are those who use credit cards and don't pay them off every month. The only ones possibly winning are the extreme card swapper picking up multiple new cards yearly and maximizing the use of their rewards.

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TomatoTomahto
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Re: Are credit cards rewards worth it?

Post by TomatoTomahto » Tue Oct 03, 2017 10:02 am

TomatoTomahto wrote:
Mon Oct 02, 2017 9:06 pm
AlphaLess wrote:
Mon Oct 02, 2017 8:34 pm
Just curious: more than anything, I am curious to know your weighted average cash-back rate (rather than how much you spend, but one gives the other)
I’m already in bed (early morning tomorrow), but I will look at Quicken tomorrow afternoon and see if I can get an annual spend and reward with each card. I think Amex is the only one that will have different tiers (ie, 6% for first $6k of groceries, 1% thereafter), but let me see what I can extract. Now I’m curious also.

NB: my wife insists on her Amex Card, which give (shudder) points, which I won’t calculate.
Okay, here's a followup, with a few surprises (for me) for the previous 12 months:

Amex Preferred Blue $10.2k, with $7.8k for groceries, so overall, maybe 4% rebate, but minimal impact
Amazon $8.6k, this surprised me, but I guess I use if often, but for small amounts, 5% but minimal impact
Citi Double Cash $96k, 2% overwhelming impact
Fidelity 50k, 2% overwhelming impact
PenFed gas card; almost no impact, I use electricity, kids don't drive much any more, and DW apparently uses her Amex

Fwiw, my wife spent $48k on her Amex, for points

So, I have been surprised that Amazon total was so low. CC card use for 12 months was $165k for cash back cards and $48k for points. So, not so far from tomd37's guess. I think I need to buy more on Amazon :D

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Ice-9
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Re: Are credit cards rewards worth it?

Post by Ice-9 » Tue Oct 03, 2017 10:23 am

I actually have been tracking my credit card rewards performance for several years. These numbers are not perfect, because I used monthly statement spending amounts for simplicity, so cards with statement dates earlier in the month include more of December 2015's spending.

But in 2016 I earned approximately an average of 3.27% cashback overall:
$395 AMEX 6% on groceries as well as various random offers with specific retailers
$236 Chase Freedom 5% on rotating categories
$206 Chase Ink 3% on restaurants, office supply, home improvement
$230 Citi Doublecash 2% on everything (only last few months of year)
$200 Quicksilver 1.5% on everything (replaced late in the year by Citi Doublecash)
$163 Discover 5% on rotating categories
$50 Chase Amazon 3% at Amazon (replaced this January with 5% on Amazon)

I've surpassed my 2016 total already in 2017, largely thanks to charging new windows on the Citi Doublecash 2% card.

Crisium
Posts: 75
Joined: Thu Dec 22, 2016 9:52 am

Re: Are credit cards rewards worth it?

Post by Crisium » Tue Oct 03, 2017 10:58 am

Nate79 wrote:
Mon Oct 02, 2017 5:24 pm
If anything, I would say using a credit card makes me more mindful of my spending as I have to review everything I purchased in one month at the end of every statement cycle. In contrast, with cash or a debit card, you never have to do this so long as you have enough money in your wallet or your checking account.
Agree. I always keep some cash in the wallet for the rare cash purchases. Sometimes that's money I withdrew from the ATM months ago. I already consider it written off to an extent as I don't see it when I check my accounts. So buying that cash-only $7 lunch at the farmers market is mentally easier. But charging a $7 lunch on a CC makes me chide myself a bit more, as that's over triple what my lunches normally cost and I will be reminded of it again when I look at the account.

Jags4186
Posts: 1380
Joined: Wed Jun 18, 2014 7:12 pm

Re: Are credit cards rewards worth it?

Post by Jags4186 » Tue Oct 03, 2017 11:08 am

TomatoTomahto wrote:
Tue Oct 03, 2017 10:02 am
TomatoTomahto wrote:
Mon Oct 02, 2017 9:06 pm
AlphaLess wrote:
Mon Oct 02, 2017 8:34 pm
Just curious: more than anything, I am curious to know your weighted average cash-back rate (rather than how much you spend, but one gives the other)
I’m already in bed (early morning tomorrow), but I will look at Quicken tomorrow afternoon and see if I can get an annual spend and reward with each card. I think Amex is the only one that will have different tiers (ie, 6% for first $6k of groceries, 1% thereafter), but let me see what I can extract. Now I’m curious also.

NB: my wife insists on her Amex Card, which give (shudder) points, which I won’t calculate.
Okay, here's a followup, with a few surprises (for me) for the previous 12 months:

Amex Preferred Blue $10.2k, with $7.8k for groceries, so overall, maybe 4% rebate, but minimal impact
Amazon $8.6k, this surprised me, but I guess I use if often, but for small amounts, 5% but minimal impact
Citi Double Cash $96k, 2% overwhelming impact
Fidelity 50k, 2% overwhelming impact
PenFed gas card; almost no impact, I use electricity, kids don't drive much any more, and DW apparently uses her Amex

Fwiw, my wife spent $48k on her Amex, for points

So, I have been surprised that Amazon total was so low. CC card use for 12 months was $165k for cash back cards and $48k for points. So, not so far from tomd37's guess. I think I need to buy more on Amazon :D
The real question is what the heck is all that spending on? I’m assuming you’re not a secret MSer ;-)

DTSC
Posts: 1167
Joined: Mon Oct 20, 2008 9:47 am
Location: Illinois

Re: Are credit cards rewards worth it?

Post by DTSC » Tue Oct 03, 2017 11:13 am

Absolutely!

The key thing is to apply for new cards every 90 days to get the significant sign up bonuses. If you get 50,000 miles for spending $3000 in 3 months, that's 16% cash back (assuming 1 point = $0.01). What if you got 10-20% back on all your expenses each year? Heck, I even pay my property taxes with credit cards to get the bonuses.

No, it won't ruin your credit; my credit score is still >800

We haven't paid for the last 40 nights in hotels.

We have flown over 30 round trips for free or close to free (taxes only)

Learn more at sites like Millionmilesecrets.com

Nate79
Posts: 1351
Joined: Thu Aug 11, 2016 6:24 pm
Location: Portland, OR

Re: Are credit cards rewards worth it?

Post by Nate79 » Tue Oct 03, 2017 11:18 am

THY4373 wrote:
Mon Oct 02, 2017 6:14 pm
Nate79 wrote:
Mon Oct 02, 2017 6:04 pm

When I say very minor I mean in terms of annual income. Credit card spending as a percentage of annual income for me is maybe 30%.
All depends on how you do it. My credit card "spend" has (sometimes vastly) exceeded my annual income for the last five years.
Can you explain how your credit card spend has exceeded your incoming for 5 years?

SEAworld9
Posts: 37
Joined: Fri Jun 23, 2017 10:13 am

Re: Are credit cards rewards worth it?

Post by SEAworld9 » Tue Oct 03, 2017 11:23 am

i use credit cards for every single thing i buy. i never have cash and try to never use it. all the bills are paid in full each month with autopay, and i monitor charges each month as well. for me credit cards are essentially debit cards, i don't buy things i can't afford.

i have 17 credit cards in total; about 6 or 7 get regular use depending on the spend. this includes premium cards such as the CSR and AMEX platinum, as well as fee-free cards that sit in a drawer. i've run models on each and all that i have are giving me a return that i want. others that don't get canceled (like the citi prestige which i canceled a few months ago).

are they worth it? it depends on what you personally value, your spending/paying habits, and how good you are at redeeming.

Jags4186
Posts: 1380
Joined: Wed Jun 18, 2014 7:12 pm

Re: Are credit cards rewards worth it?

Post by Jags4186 » Tue Oct 03, 2017 11:49 am

Nate79 wrote:
Tue Oct 03, 2017 11:18 am
THY4373 wrote:
Mon Oct 02, 2017 6:14 pm
Nate79 wrote:
Mon Oct 02, 2017 6:04 pm

When I say very minor I mean in terms of annual income. Credit card spending as a percentage of annual income for me is maybe 30%.
All depends on how you do it. My credit card "spend" has (sometimes vastly) exceeded my annual income for the last five years.
Can you explain how your credit card spend has exceeded your incoming for 5 years?
Reimbursed business expenses is one that quickly jumps to mind. I regularly put $1500-$2000/mo of hotel stays/rental cars/meals/etc. on my card that gets reimbursed. Some people spend $10,000s/mo. Especially if they get to pay for their own airfare.

SEAworld9
Posts: 37
Joined: Fri Jun 23, 2017 10:13 am

Re: Are credit cards rewards worth it?

Post by SEAworld9 » Tue Oct 03, 2017 11:58 am

Jags4186 wrote:
Tue Oct 03, 2017 11:49 am
Nate79 wrote:
Tue Oct 03, 2017 11:18 am
THY4373 wrote:
Mon Oct 02, 2017 6:14 pm
Nate79 wrote:
Mon Oct 02, 2017 6:04 pm

When I say very minor I mean in terms of annual income. Credit card spending as a percentage of annual income for me is maybe 30%.
All depends on how you do it. My credit card "spend" has (sometimes vastly) exceeded my annual income for the last five years.
Can you explain how your credit card spend has exceeded your incoming for 5 years?
Reimbursed business expenses is one that quickly jumps to mind. I regularly put $1500-$2000/mo of hotel stays/rental cars/meals/etc. on my card that gets reimbursed. Some people spend $10,000s/mo. Especially if they get to pay for their own airfare.
he's alluding to manufactured spend, not reimbursed expenses. MS involves acquiring cash equivalents and then liquidating these to pay off the bill, reselling, or other tactics with the goal of getting the cost per point at low as possible from the arbitrage.

Jags4186
Posts: 1380
Joined: Wed Jun 18, 2014 7:12 pm

Re: Are credit cards rewards worth it?

Post by Jags4186 » Tue Oct 03, 2017 12:00 pm

SEAworld9 wrote:
Tue Oct 03, 2017 11:58 am
Jags4186 wrote:
Tue Oct 03, 2017 11:49 am
Nate79 wrote:
Tue Oct 03, 2017 11:18 am
THY4373 wrote:
Mon Oct 02, 2017 6:14 pm
Nate79 wrote:
Mon Oct 02, 2017 6:04 pm

When I say very minor I mean in terms of annual income. Credit card spending as a percentage of annual income for me is maybe 30%.
All depends on how you do it. My credit card "spend" has (sometimes vastly) exceeded my annual income for the last five years.
Can you explain how your credit card spend has exceeded your incoming for 5 years?
Reimbursed business expenses is one that quickly jumps to mind. I regularly put $1500-$2000/mo of hotel stays/rental cars/meals/etc. on my card that gets reimbursed. Some people spend $10,000s/mo. Especially if they get to pay for their own airfare.
he's alluding to manufactured spend, not reimbursed expenses. MS involves acquiring cash equivalents and then liquidating these to pay off the bill, reselling, or other tactics with the goal of getting the cost per point at low as possible from the arbitrage.
I’m aware...when I had more time on my hands and when options were a little better I used to do $25k-50k/mo :-)

Some people do that and more in a day.

SEAworld9
Posts: 37
Joined: Fri Jun 23, 2017 10:13 am

Re: Are credit cards rewards worth it?

Post by SEAworld9 » Tue Oct 03, 2017 12:05 pm

Jags4186 wrote:
Tue Oct 03, 2017 12:00 pm
SEAworld9 wrote:
Tue Oct 03, 2017 11:58 am
Jags4186 wrote:
Tue Oct 03, 2017 11:49 am
Nate79 wrote:
Tue Oct 03, 2017 11:18 am
THY4373 wrote:
Mon Oct 02, 2017 6:14 pm


All depends on how you do it. My credit card "spend" has (sometimes vastly) exceeded my annual income for the last five years.
Can you explain how your credit card spend has exceeded your incoming for 5 years?
Reimbursed business expenses is one that quickly jumps to mind. I regularly put $1500-$2000/mo of hotel stays/rental cars/meals/etc. on my card that gets reimbursed. Some people spend $10,000s/mo. Especially if they get to pay for their own airfare.
he's alluding to manufactured spend, not reimbursed expenses. MS involves acquiring cash equivalents and then liquidating these to pay off the bill, reselling, or other tactics with the goal of getting the cost per point at low as possible from the arbitrage.
I’m aware...when I had more time on my hands and when options were a little better I used to do $25k-50k/mo :-)

Some people do that and more in a day.
awesome! yeah things have dried up over the last few years. takes more effort now (much more than i have time for) though i do find ways to where it makes sense (i'll cling to my ink bold till they rip it out of my wallet).

Nate79
Posts: 1351
Joined: Thu Aug 11, 2016 6:24 pm
Location: Portland, OR

Re: Are credit cards rewards worth it?

Post by Nate79 » Tue Oct 03, 2017 12:07 pm

Jags4186 wrote:
Tue Oct 03, 2017 11:49 am
Nate79 wrote:
Tue Oct 03, 2017 11:18 am
THY4373 wrote:
Mon Oct 02, 2017 6:14 pm
Nate79 wrote:
Mon Oct 02, 2017 6:04 pm

When I say very minor I mean in terms of annual income. Credit card spending as a percentage of annual income for me is maybe 30%.
All depends on how you do it. My credit card "spend" has (sometimes vastly) exceeded my annual income for the last five years.
Can you explain how your credit card spend has exceeded your incoming for 5 years?
Reimbursed business expenses is one that quickly jumps to mind. I regularly put $1500-$2000/mo of hotel stays/rental cars/meals/etc. on my card that gets reimbursed. Some people spend $10,000s/mo. Especially if they get to pay for their own airfare.
My company stopped allowing personal credit card use for business expenses. Must use company credit card.

User avatar
TomatoTomahto
Posts: 6793
Joined: Mon Apr 11, 2011 1:48 pm

Re: Are credit cards rewards worth it?

Post by TomatoTomahto » Tue Oct 03, 2017 1:51 pm

Jags4186 wrote:
Tue Oct 03, 2017 11:08 am
The real question is what the heck is all that spending on? I’m assuming you’re not a secret MSer ;-)
You know, I was wondering about the spend myself. Big items:
Travel (10 day trip to Japan for DW and DS, flights and hotel already charged; 2 trips to Grand Cayman for 4; 1 trip to CA for 4; various business hotel stays for DW)
Vet (two of our animals have had a bad year, and the cost probably approaches $20k all in)
Electronics (got a new, expensive OLED TV; got a new PC; various Apple products)
Groceries (a lot of organic and fresh produce)
Meals out (DW and I often go to restaurants on the weekend, one of the kids has permission to charge some of his meals on our card)
Connectivity (4 cell phone plans, we spend a lot on cable&internet, Netflix)
Books (sometimes they're on Amazon, but the kids often buy textbooks at the school bookstore)
Who knows what else? I watch the credit card charges as they come in, and I haven't seen anything outrageous by itself, but I guess it adds up

I'm on the wrong coast to be a secret MSer. :sharebeer

DSInvestor
Posts: 10575
Joined: Sat Oct 04, 2008 11:42 am

Re: Are credit cards rewards worth it?

Post by DSInvestor » Tue Oct 03, 2017 1:55 pm

Since you have the CITI Double Cash card, take a look at CITI PRICE REWIND which is a service where you register your purchases made with citi credit cards and it will search for lower prices for 60 days from date of purchase. If a lower price is found, you will be refunded the price difference. I get around $1000/yr back from the price rewinds on top of the 2% cash back.

To access CITI PRICE REWIND visit http://www.citipricerewind.com and use the same username and PW as for your CITI online.

j0nnyg1984
Posts: 308
Joined: Sun Apr 24, 2016 9:55 am

Re: Are credit cards rewards worth it?

Post by j0nnyg1984 » Tue Oct 03, 2017 2:29 pm

David Scubadiver wrote:
Mon Oct 02, 2017 8:54 am
Although the tread is a repeat of many others, I do like to review now and again, what it is I do with my cards.

My Amex Blue Preferred costs me $95. I use it until I have charged $6,000 in groceries to earn the $360.
However, sometimes the card gets used for other purchases -- this year I have $2,072 in charges that earned me only 1% cash back.
If I instead only carried my Bank of America Travel Reward card, I would have earned $54.39 on those charges (instead of $20.72), so the card "cost" me another $33.67. By my math, I am earning 3.85% on groceries after fees and negligent use of the card. That is "worth" it to me because my alternative card would be BoA Travel Reward Card, earning 2.625% cash back as a platinum honors reward member.

BoA Cash Reward pays me 5.25% on gas, so that is the card that gets left in the glove compartment. It is sometimes used for groceries when I forget to bring my wallet to the store. It is "worth" it to me because it is free money.

I could never use a debit card for my regular purchases and leave the cash back on the table. Plus, doing so would require me to maintain more cash in my checking account than I like.
You should look into the new BoA Premium Rewards card. 3.5% cash back on travel and restaurants at our status level, 2.625% on everything else. 50k bonus points after 3k spend. It has a $95 AF, but gives $100 credit annually for GE / TSA Pre, and $100 annually for travel fee reimbursement. I'm psyched. The card can't get here quickly enough.

JBTX
Posts: 1522
Joined: Wed Jul 26, 2017 12:46 pm

Re: Are credit cards rewards worth it?

Post by JBTX » Tue Oct 03, 2017 2:40 pm

In my case I use a fidelity 2% card for everything, usually get at least $1000 or more back per year. However, my wife does most of her day to day spending on a debit card, because it allows her to control her individual spending better.

I have been doing a few of the big upfront reward cards lately, the ones with $500 or more. Maybe a few a year.

Would i spend less with a debit card? In my case, I'm pretty sure I wouldn't, because I keep a pretty big balance in my primary checking account as it is and set up everything on autopay such that I don't have to worry about running down the balance

David Scubadiver
Posts: 522
Joined: Thu Mar 24, 2016 8:40 am

Re: Are credit cards rewards worth it?

Post by David Scubadiver » Tue Oct 03, 2017 4:09 pm

j0nnyg1984 wrote:
Tue Oct 03, 2017 2:29 pm
David Scubadiver wrote:
Mon Oct 02, 2017 8:54 am
Although the tread is a repeat of many others, I do like to review now and again, what it is I do with my cards.

My Amex Blue Preferred costs me $95. I use it until I have charged $6,000 in groceries to earn the $360.
However, sometimes the card gets used for other purchases -- this year I have $2,072 in charges that earned me only 1% cash back.
If I instead only carried my Bank of America Travel Reward card, I would have earned $54.39 on those charges (instead of $20.72), so the card "cost" me another $33.67. By my math, I am earning 3.85% on groceries after fees and negligent use of the card. That is "worth" it to me because my alternative card would be BoA Travel Reward Card, earning 2.625% cash back as a platinum honors reward member.

BoA Cash Reward pays me 5.25% on gas, so that is the card that gets left in the glove compartment. It is sometimes used for groceries when I forget to bring my wallet to the store. It is "worth" it to me because it is free money.

I could never use a debit card for my regular purchases and leave the cash back on the table. Plus, doing so would require me to maintain more cash in my checking account than I like.
You should look into the new BoA Premium Rewards card. 3.5% cash back on travel and restaurants at our status level, 2.625% on everything else. 50k bonus points after 3k spend. It has a $95 AF, but gives $100 credit annually for GE / TSA Pre, and $100 annually for travel fee reimbursement. I'm psyched. The card can't get here quickly enough.
I'd need to charge $10,857 in restaurants and travel annually before I made up the $95 annual fee. I think my expenses are likely to be below that, or at least not much above it in the years we don't go to Disney World or take a cruise. [$2,200 public transportation; $3,720 restaurants leaves me having to spend $4,937 in travel charges...maybe I exceed that regularly but I don't think by much. Still, I will keep the card in mind should those expenses increase!]

AlphaLess
Posts: 46
Joined: Fri Sep 29, 2017 11:38 pm

Re: Are credit cards rewards worth it?

Post by AlphaLess » Tue Oct 03, 2017 10:39 pm

TomatoTomahto wrote:
Tue Oct 03, 2017 10:02 am
TomatoTomahto wrote:
Mon Oct 02, 2017 9:06 pm
AlphaLess wrote:
Mon Oct 02, 2017 8:34 pm
Just curious: more than anything, I am curious to know your weighted average cash-back rate (rather than how much you spend, but one gives the other)
I’m already in bed (early morning tomorrow), but I will look at Quicken tomorrow afternoon and see if I can get an annual spend and reward with each card. I think Amex is the only one that will have different tiers (ie, 6% for first $6k of groceries, 1% thereafter), but let me see what I can extract. Now I’m curious also.

NB: my wife insists on her Amex Card, which give (shudder) points, which I won’t calculate.
Okay, here's a followup, with a few surprises (for me) for the previous 12 months:

Amex Preferred Blue $10.2k, with $7.8k for groceries, so overall, maybe 4% rebate, but minimal impact
Amazon $8.6k, this surprised me, but I guess I use if often, but for small amounts, 5% but minimal impact
Citi Double Cash $96k, 2% overwhelming impact
Fidelity 50k, 2% overwhelming impact
PenFed gas card; almost no impact, I use electricity, kids don't drive much any more, and DW apparently uses her Amex

Fwiw, my wife spent $48k on her Amex, for points

So, I have been surprised that Amazon total was so low. CC card use for 12 months was $165k for cash back cards and $48k for points. So, not so far from tomd37's guess. I think I need to buy more on Amazon :D
Tomato: thanks for the breakdown.

So, $165K spend on cash-back cards. That has got to yield at least:
- $400 on Amex PBlue
- $430 on Amazon
- $1,900 on Citi Double Cash
- $1,000 on Fido.

So that's $3,750 cashback. So roughly, 2.2%.
Probably similar on the Amex MR card.

Have you considered periodically opening new accounts to take advantage of one-time bonuses?

User avatar
TomatoTomahto
Posts: 6793
Joined: Mon Apr 11, 2011 1:48 pm

Re: Are credit cards rewards worth it?

Post by TomatoTomahto » Wed Oct 04, 2017 5:43 am

AlphaLess wrote:
Tue Oct 03, 2017 10:39 pm
So, $165K spend on cash-back cards. That has got to yield at least:
- $400 on Amex PBlue
- $430 on Amazon
- $1,900 on Citi Double Cash
- $1,000 on Fido.

So that's $3,750 cashback. So roughly, 2.2%.
Probably similar on the Amex MR card.

Have you considered periodically opening new accounts to take advantage of one-time bonuses?
No, I haven't, but perhaps I should. I don't open mail (snail or electronic) that I haven't asked for, so I seldom even know about offers. I also have a credit freeze on (now), so I'd have to thaw and refreeze; do card offers tell you which agency they will use?

mrsbetsy
Posts: 38
Joined: Mon Jun 26, 2017 12:16 am

Re: Are credit cards rewards worth it?

Post by mrsbetsy » Wed Oct 04, 2017 7:40 pm

Yes, yes they are!

We own a small business and we sell approximately 60K in product a month. Customer pays us in full, we order their product on Chase INK (currently). We make weekly payments on the card so it never carries a balance. Customer turn around is approximately 4 weeks from order to installation.

The more we charge, the better our business is going. Why would we ever use a debit card to place orders? That makes no business sense.

We offer the customer a 3% discount if they pay cash because CC fees eat into our profit margin.

So, oh yes! Do we ever enjoy using those points for a few business class vacations a year!

Reward points are not taxable, unlike checking and savings account bonuses. It's free money.

yougotitdude
Posts: 2
Joined: Fri Sep 15, 2017 12:40 pm

Re: Are credit cards rewards worth it?

Post by yougotitdude » Wed Oct 04, 2017 7:46 pm

With the Amazon prime 5% card, if one cancels prime after receiving the card can they still get the 5% cash back? Like if there is a shared prime account and more than one person wants the 5% cash back, is that doable? Thanks!

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