Surprised by Costco Citi VISA first statement

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Allocationist
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Surprised by Costco Citi VISA first statement

Post by Allocationist »

I got our first statement for our new Costco Citi VISA card. Our plan was to use this card only for purchases that received a 4% reward (gas), a 3% reward (restaurants and "eligible travel"). All other purchases were going on our new Fidelity 2% cash back VISA.

The Costco Citi VISA statement we just received placed over $12,000 of our purchases in the 1% rewards category. We could not determine from the statement which of our purchases fell into the 1% reward category. I called Citi and found that our charge (over $10,000) for an upcoming trip with roadscholar dot org (a large world-wide travel agency) was categorized as an "educational charge" and our trip insurance payment to tripinsurancestore dot com was categorized as "insurance." We also received 1% for a museum visit that was categorized as "entertainment."

Had we charged the Road Scholar trip and the trip insurance using our Fido VISA we would have gotten 2% cash back. Instead we ended up with a 1% "reward" from Costco. This cost us over $127 missing cash/rewards in our first month of use.

My point in bringing this up is to alert board participants to my experience so they can use caution in selecting which card to use in the future.
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Re: Surprised by Costco Citi VISA first statement

Post by madbrain »

Allocationist wrote: My point in bringing this up is to alert board participants to my experience so they can use caution in selecting which card to use in the future.
Unfortunately, this is not specific to Citi or the Costco card. The problem is the very misleading marketing by the card issuers, which, IMO should not be allowed.

Ie. the issuers advertise "x%" on "travel" , "dining", or "groceries", but in fact they only go by certain merchant codes.

The problems are :
1) the issuer doesn't tell you the merchant codes that get the rewards
2) the merchants don't tell you their merchant code before you make the purchase.

This is why I really dislike the cards that offer specific categories of rewards.

For $10,000 spending, you would have been much better off billing your purchase to a new credit card with a sign-in bonus; or better yet, get 2 cards and split the charge in half - one on each card.

For example, 2 Chase Sapphire Preferred (one for you, one for your spouse - no fee the first year) would earn you 100,000 in Chase UR points as a sign-up bonus, plus another 20,000 points if you add each others as authorized users as sign-up bonus, plus another 10,000 points for the $10,000 spending (this is assuming you split the $10k charge in half, one in each card).. The 130,000 rewards points you end up with could be redeemed for $1300 cash, if cash is what you want. But since you travel, you could redeem them for $1,625 in travel booked directly through Chase.

So, you really missed on much more than $100. And there are other offers like the new CSR card that could get you even more back. Of course, these are all introductory signup offers - you don't get that rate of rewards on an ongoing basis. But it still would be no worse than 1% cash redemption rate afterwards.
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Re: Surprised by Costco Citi VISA first statement

Post by whodidntante »

I've had similar snafus with my Chase Freedom card. With 10 grand in charges, you should have opened a new card that offers a bonus.
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Re: Surprised by Costco Citi VISA first statement

Post by tibbitts »

Allocationist wrote:I got our first statement for our new Costco Citi VISA card. Our plan was to use this card only for purchases that received a 4% reward (gas), a 3% reward (restaurants and "eligible travel"). All other purchases were going on our new Fidelity 2% cash back VISA.

The Costco Citi VISA statement we just received placed over $12,000 of our purchases in the 1% rewards category. We could not determine from the statement which of our purchases fell into the 1% reward category. I called Citi and found that our charge (over $10,000) for an upcoming trip with roadscholar dot org (a large world-wide travel agency) was categorized as an "educational charge" and our trip insurance payment to tripinsurancestore dot com was categorized as "insurance." We also received 1% for a museum visit that was categorized as "entertainment."

Had we charged the Road Scholar trip and the trip insurance using our Fido VISA we would have gotten 2% cash back. Instead we ended up with a 1% "reward" from Costco. This cost us over $127 missing cash/rewards in our first month of use.

My point in bringing this up is to alert board participants to my experience so they can use caution in selecting which card to use in the future.
I can't imagine why you would think Roadscholar would necessarily be categorized as a travel agency. How many travel agencies do you know that ask for donations? Even the website asked "what do you want to learn?"

And you're surprised that travel insurance was categorized as insurance? Or a museum "entertainment"?

You're always taking a chance with categories unless you have specific experience with the same card. Very few merchants will/can tell you how your charges will be categorized, and frankly with the purchases you gave, I would have gone for the 2% sure thing.

As for opening cards for bonuses, you have to decide how serious you want to be about that, and for most of us we'll run out of gas on our credit score or max the number of cards an issue will give us at some point. $10k in expenses doesn't necessarily justify opening a new card, although if you were able and wanting to open a new card anyway, then with some cards it can be good to do so when you're planning certain purchases. I know that I couldn't get a new card right now if I wanted one, because I took a significant hit in my credit score having to cancel some very old (1980s) cards with high limits. The 2% cards aren't a bad compromise.
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Re: Surprised by Costco Citi VISA first statement

Post by tomd37 »

Allocationist,
As mentioned by a previous poster, it all depends on how the merchant is registered (i.e., merchant code). It took me almost two years working with my nearest Publix Supermarket to get them to change their merchant code to reflect they are a grocery store. All the other Publix stores around us were coded correctly except for this one. American Express eventually gave me proper cash rebate credit, which in my case is 5% once the first tier of $6,500 is reached each year.
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Re: Surprised by Costco Citi VISA first statement

Post by evestor »

This is why I lean to simpler 2% cash back across the board cards. The games are rarely worth it unless you are REALLY sure.
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Re: Surprised by Costco Citi VISA first statement

Post by celia »

Allocationist wrote: roadscholar dot org (a large world-wide travel agency) was categorized as an "educational charge" and our trip insurance payment to tripinsurancestore dot com was categorized as "insurance." We also received 1% for a museum visit that was categorized as "entertainment."
None of these sound like travel to me. Is that what you were expecting, though?
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wjo
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Re: Surprised by Costco Citi VISA first statement

Post by wjo »

Because of these problems with knowing what counts for variable rewards cards, I have been very happy with fixed reward cards. Currently I use the Barclay's Arrival Plus card - 2.1% cash back and no foreign transaction fees. The no foreign transaction fees and additional .1% cash back generally pay for the annual fee compared to say, Fido's 2% card that does have transaction fees.
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Re: Surprised by Costco Citi VISA first statement

Post by cheesepep »

Seems like Costco did their job well. Nothing to talk about here.
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Re: Surprised by Costco Citi VISA first statement

Post by Zott »

evestor wrote:This is why I lean to simpler 2% cash back across the board cards. The games are rarely worth it unless you are REALLY sure.
I agree with this, I don't have the temperament to deal with the complications.

OP--enjoy your trip, that's the most important thing, forget the small stuff. :happy
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Re: Surprised by Costco Citi VISA first statement

Post by oldcomputerguy »

My wife and I went to Costco last weekend and signed up for membership (mainly because we were disenchanted with Sams Club). I looked at the Costco Visa card, and noted the 4% cash back on gas. I thought seriously of signing up for it and using it just for gas purchases (rather than my existing Fidelity 2% cash back Visa), when I happened to read the fine print, and noted that there was a cap on the 4% cash back for gas, after which the cash back rate reverted to 1%. Thanks, but no, I'll keep using my Fidelity card.
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Re: Surprised by Costco Citi VISA first statement

Post by cherijoh »

tomd37 wrote:Allocationist,
As mentioned by a previous poster, it all depends on how the merchant is registered (i.e., merchant code). It took me almost two years working with my nearest Publix Supermarket to get them to change their merchant code to reflect they are a grocery store. All the other Publix stores around us were coded correctly except for this one. American Express eventually gave me proper cash rebate credit, which in my case is 5% once the first tier of $6,500 is reached each year.
It is even more specific than that - each individual swipe machine has a code embedded in it and that dictates how the transaction get categorized. So a grocery store or big box retailer could have different merchant categories across the different cashier positions.

Kudos to you for persevering with your local Publix store.

EDITED to Add: Here is a link to a lookup table of Merchant category codes.
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Re: Surprised by Costco Citi VISA first statement

Post by heartwood »

cherijoh wrote:
tomd37 wrote:Allocationist,
As mentioned by a previous poster, it all depends on how the merchant is registered (i.e., merchant code). It took me almost two years working with my nearest Publix Supermarket to get them to change their merchant code to reflect they are a grocery store. All the other Publix stores around us were coded correctly except for this one. American Express eventually gave me proper cash rebate credit, which in my case is 5% once the first tier of $6,500 is reached each year.
It is even more specific than that - each individual swipe machine has a code embedded in it and that dictates how the transaction get categorized. So a grocery store or big box retailer could have different merchant categories across the different cashier positions.

Kudos to you for persevering with your local Publix store.

EDITED to Add: Here is a link to a lookup table of Merchant category codes.
Thanks for the link.

The published code may not apply, as with the Publix store above. My wife recently spent time at a national spa. The deposit paid by phone to the central booking office was coded as travel. The company has a specific code in its name in the list of codes. However at checkout the balance was charged, in the same national name, to a code of golf courses - public. Since it's a one time charge and the difference between the 3% travel and 1% other charge in actual dollars is not worth the followup in terms of time, we'll chalk it up to a teaching moment.

If you buy wine at a Costco where you pay at the Costco register you get the Costco 2% on your Costco Citi Visa and, if an executive member, also get the 2% annual rebate. If the liquor store is beyond the Costco register but still in the same building, affiliated with but not owned by Costco, in most instances you get 1% and zero annual rebate.

I agree with several above: it's too much effort.
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Re: Surprised by Costco Citi VISA first statement

Post by kjvmartin »

I have been sorely disappointed by the Citi Costco Rewards. I think this has been a miss-step for a company that otherwise makes good decisions.

First, I still don't have my 2 replacements from when they closed the Amex. We moved before the transition, and though we changed our address with Costco and Amex the same day we moved, somehow this was inadequate. Our old address was on the transfer list already. My card finally arrived weeks late, and my wive's card is still in transit (again). I've been on hold and the phone with Citi for hours.

The Amex Costco card gave a 3% gas reward at my Kroger gas station, where I use "fuel points" for $0.10 to $1.00 off per gallon. I called Citi to ask, in advance, and they said I would get the 4% reward at that Kroger gas station. My first statement came and I had tested it, only purchasing gas there 1 time. It was 1%. I called back and they had no record of ever telling me I would ever get the 4% reward at Kroger.

I never waited on hold once for Amex if I had to call them. That's the kind of customer service I really appreciate. Citi is a train wreck, by comparison.

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Re: Surprised by Costco Citi VISA first statement

Post by pshonore »

smartinwate wrote:My wife and I went to Costco last weekend and signed up for membership (mainly because we were disenchanted with Sams Club). I looked at the Costco Visa card, and noted the 4% cash back on gas. I thought seriously of signing up for it and using it just for gas purchases (rather than my existing Fidelity 2% cash back Visa), when I happened to read the fine print, and noted that there was a cap on the 4% cash back for gas, after which the cash back rate reverted to 1%. Thanks, but no, I'll keep using my Fidelity card.
How much do you drive? I believe the cap is $7000 in purchases/year; that's a of miles; maybe 30000 - 60000 miles/yr depending on local price and how much your car uses.
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Re: Surprised by Costco Citi VISA first statement

Post by mikep »

I only use it for gas now. Chase freedom gets Costco in store purchases and dining to get 5% and I get Costco cash cards by the end of the quarter to max out (don't wait too long, since chase goes by the ship date which is 1.5 weeks later if ordered online). Chase sapphire preferred gets travel for the travel insurance, for which 2x UR is roughly 3% anyway.
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Re: Surprised by Costco Citi VISA first statement

Post by KlingKlang »

I am actually having better results with Costco Citi VISA card than with Costco AmEx for restaurant charges. I gave up on using the AmEx at restaurants because many of them didn't accept it and it didn't give the restaurant bonus 90% of the time.
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Re: Surprised by Costco Citi VISA first statement

Post by oldcomputerguy »

pshonore wrote:
smartinwate wrote:My wife and I went to Costco last weekend and signed up for membership (mainly because we were disenchanted with Sams Club). I looked at the Costco Visa card, and noted the 4% cash back on gas. I thought seriously of signing up for it and using it just for gas purchases (rather than my existing Fidelity 2% cash back Visa), when I happened to read the fine print, and noted that there was a cap on the 4% cash back for gas, after which the cash back rate reverted to 1%. Thanks, but no, I'll keep using my Fidelity card.
How much do you drive? I believe the cap is $7000 in purchases/year; that's a of miles; maybe 30000 - 60000 miles/yr depending on local price and how much your car uses.
Yes, you're absolutely correct; I had misread the fine print. I just went back to Costco and checked the small print again. The cap is not one-time as I thought I had read, it's per year. The cap amount is $7,000 which works out to $134.61/week, way more than I and DW together drive, so based on that we'd never bump our heads against the limit.
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Re: Surprised by Costco Citi VISA first statement

Post by oldcomputerguy »

heartwood wrote: If you buy wine at a Costco where you pay at the Costco register you get the Costco 2% on your Costco Citi Visa and, if an executive member, also get the 2% annual rebate.
Not in our local store here. There's a sign posted in the wine section stating that, due to state law, they are unable to give the 2% Executive membership bonus on wine purchases. YMMV.
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Re: Surprised by Costco Citi VISA first statement

Post by grabiner »

tomd37 wrote:Allocationist,
As mentioned by a previous poster, it all depends on how the merchant is registered (i.e., merchant code). It took me almost two years working with my nearest Publix Supermarket to get them to change their merchant code to reflect they are a grocery store. All the other Publix stores around us were coded correctly except for this one. American Express eventually gave me proper cash rebate credit, which in my case is 5% once the first tier of $6,500 is reached each year.
Similarly, when I had a Shell card, one Shell station didn't register as a gas purchase, and rebated 1% rather than the correct 5%. After two failures (both corrected when I called customer service), I quit buying gas there.
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Re: Surprised by Costco Citi VISA first statement

Post by madbrain »

smartinwate wrote:My wife and I went to Costco last weekend and signed up for membership (mainly because we were disenchanted with Sams Club). I looked at the Costco Visa card, and noted the 4% cash back on gas. I thought seriously of signing up for it and using it just for gas purchases (rather than my existing Fidelity 2% cash back Visa), when I happened to read the fine print, and noted that there was a cap on the 4% cash back for gas, after which the cash back rate reverted to 1%. Thanks, but no, I'll keep using my Fidelity card.
Yes, there is a cap - on $7000 of gas purchases per year. The average nationwide gas prices for mid grades is $2.458 per gallon according to AAA . So you are talking about 2847 gallons of gas/year.

The US average MPG is currently at about 25 for new cars. 8 years ago, it was 20 MPG. Let's assume yours get 20MPG.
So, you can get about 57,000 miles a year out of those 2847 gallons of gas.
That would be a lot of miles, if it's just you and your wife.

The average mileage per year for a US driver, for all genders and ages, is 13,000 , according to DOT. So, the 57,000 miles are enough to cover a family of 4 drivers with, on average.

You only mentioned you and your wife. Unless your vehicles are very significantly less efficient than the average, or you are driving far more miles than the average, it's difficult to see how you could exceed the $7,000 cap with just 2 drivers.

FYI, we live in California, which has some of the highest gas prices. We drove a combined 30,000 miles with 2 cars in the last year.
We spent less than $1200 on gas. My husband's car is a 2011 Prius, which takes regular. Mine is 2015 Volt, which takes premium. Of course, my Volt was driving on battery 83% of the time, not gas. But still, with the remaining $5800, we could buy about 2000 more gallons of gas, and drive another 80,000 miles. Ie. total of 110,000 miles with $7000 of gas.
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Re: Surprised by Costco Citi VISA first statement

Post by BeneIRA »

mikep wrote:I only use it for gas now. Chase freedom gets Costco in store purchases and dining to get 5% and I get Costco cash cards by the end of the quarter to max out (don't wait too long, since chase goes by the ship date which is 1.5 weeks later if ordered online). Chase sapphire preferred gets travel for the travel insurance, for which 2x UR is roughly 3% anyway.
One note: I thought the same, that my travel insurance on Chase Sapphire Preferred would get me 2% back. Nope. I bought it from a pretty well known travel insurance carrier, too. Just the 1%. I was disappointed, but I let it go.
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Re: Surprised by Costco Citi VISA first statement

Post by madbrain »

celia wrote:
Allocationist wrote: roadscholar dot org (a large world-wide travel agency) was categorized as an "educational charge" and our trip insurance payment to tripinsurancestore dot com was categorized as "insurance." We also received 1% for a museum visit that was categorized as "entertainment."
None of these sound like travel to me. Is that what you were expecting, though?
I think it's all due to the clever marketing - you are buying travel, the card is advertised as offering 3% on travel, thus you make that association, and you simply don't think about all the merchant coding that goes on behind the scenes.

IMO, this is deceptive marketing, and shouldn't be allowed. They need to made it clear in the advertisement that these rewards only apply to only specific merchant codes, not specific types of purchases. I am sure they have fine print to cover their ass, but I can't believe this hasn't gone to court yet. Maybe it went to arbitration.
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Re: Surprised by Costco Citi VISA first statement

Post by heartwood »

Further to my comments above, I got my statement this afternoon. I decided to call and question the spa coding as well as others. They make you listen to all the details of your account with no ability to interrupt. It's a several minute recitation,all computer voiced. Then the computer voice asked for my security word,as a favorite place to visit perhaps as a child? I didn't recall setting that up,so it repeated the question many times before finally connecting to a rep. At least five minutes to get a human.
As expected I was told they have no control over the code a merchant uses,but one time only they adjusted the amount.I also questioned Uber and some public transportation charges not credited as travel. I was told travel is very specific, airlines,hotels,etc if coded correctly, but not Uber or similar. At least Fido Visa is a no brained 2 pct on all.
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Re: Surprised by Costco Citi VISA first statement

Post by oldcomputerguy »

madbrain wrote:
smartinwate wrote:My wife and I went to Costco last weekend and signed up for membership (mainly because we were disenchanted with Sams Club). I looked at the Costco Visa card, and noted the 4% cash back on gas. I thought seriously of signing up for it and using it just for gas purchases (rather than my existing Fidelity 2% cash back Visa), when I happened to read the fine print, and noted that there was a cap on the 4% cash back for gas, after which the cash back rate reverted to 1%. Thanks, but no, I'll keep using my Fidelity card.
Yes, there is a cap - on $7000 of gas purchases per year. The average nationwide gas prices for mid grades is $2.458 per gallon according to AAA . So you are talking about 2847 gallons of gas/year.

The US average MPG is currently at about 25 for new cars. 8 years ago, it was 20 MPG. Let's assume yours get 20MPG.
So, you can get about 57,000 miles a year out of those 2847 gallons of gas.
That would be a lot of miles, if it's just you and your wife.

The average mileage per year for a US driver, for all genders and ages, is 13,000 , according to DOT. So, the 57,000 miles are enough to cover a family of 4 drivers with, on average.

You only mentioned you and your wife. Unless your vehicles are very significantly less efficient than the average, or you are driving far more miles than the average, it's difficult to see how you could exceed the $7,000 cap with just 2 drivers.

FYI, we live in California, which has some of the highest gas prices. We drove a combined 30,000 miles with 2 cars in the last year.
We spent less than $1200 on gas. My husband's car is a 2011 Prius, which takes regular. Mine is 2015 Volt, which takes premium. Of course, my Volt was driving on battery 83% of the time, not gas. But still, with the remaining $5800, we could buy about 2000 more gallons of gas, and drive another 80,000 miles. Ie. total of 110,000 miles with $7000 of gas.
As I mentioned above, I had misread the fine print to mean a lifetime cap, rather than a per-year cap.
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Re: Surprised by Costco Citi VISA first statement

Post by j0nnyg1984 »

I've actually had an awesomely opposite experience with my BoA cash rewards credit card. Even purchases made inside the store (Shell, Minit Mart, Allsups, Stripes, Love, etc.) get coded as fuel and eligible for the maximum bonus cash back. Pretty nice!
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Re: Surprised by Costco Citi VISA first statement

Post by eskouster »

That's rough. Next time, use the Visa Supplier Locator, which tells you the categorization of every merchant ahead of time: https://www.visa.com/supplierlocator/search/index.jsp

I looked up "Road Scholar", and it indeed is classified as "SCHOOLS - 8299". Possibly because it's a non-profit.
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Re: Surprised by Costco Citi VISA first statement

Post by Atgard »

This is why the hassle of worrying about how something is coded just isn't worth it to me. I initially had a rotating category card, and half the time the stuff I bought didn't code what I thought (groceries at Target don't count, etc.). And it was way way too much time keeping up with changing categories, checking statements, and calling customer service. So I'm quite happy with my 2% card and never have to worry about it. My time is better spent elsewhere than trying to eke out another 1% on restaurants -- which is a rounding error in the grand scheme of things for me. My gas spending is only like $100 a month, so getting 4% instead of 2% is a whole $24 a year. Yay.

I also wonder if there is a psychological aspect... meaning you think "oh, I get 3% off at restaurants, so I can eat out more or order more appetizers." I know nobody would admit to it, but the amount of time & effort over 1–5% back leads me to believe that people do increase their spending... just like nobody admits it but data shows that people spend more with a CC than cash. I think the less I think about it (the 2% redemption happens automatically), the better.
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Re: Surprised by Costco Citi VISA first statement

Post by madbrain »

Atgard wrote: I also wonder if there is a psychological aspect... meaning you think "oh, I get 3% off at restaurants, so I can eat out more or order more appetizers." I know nobody would admit to it, but the amount of time & effort over 1–5% back leads me to believe that people do increase their spending... just like nobody admits it but data shows that people spend more with a CC than cash. I think the less I think about it (the 2% redemption happens automatically), the better.
The psychological effect of rewards overall is shown to increase spending on average. However, I don't think the goal of the rewards on certain categories is to increase your spending in that category.

Quite the opposite - it's to make you carry their card at all times so that you use it for as many purchases as possible, and particularly the ones that earn lower reward rates. If everyone used each card exclusively for purchases that earn the highest rate of rewards, the issuers could not afford to keep paying those high rates of rewards. The issuers make money when you use their card for the non-preferred purchases (typically only 1%, for cards that have categories with higher bonuses).

There are some categories that you can't really increase spending even consciously. For example, gas rewards. Unless you are going to buy a less efficient car because of the gas rewards, or consciously drive longer trips because of the gas rewards, which I can't imagine. Extra trips have many costs other than gas (wear and tear, depreciation, insurance due to more miles, etc). Less fuel efficient vehicles are bad for the planet.

Over the years, I have mostly been using the flat cashback credit cards, like the Fidelity Amex that earned 2%. And I have the Fidelity VISA that earns 2% now. But I'm not using it yet due to all the other new card signup bonuses. Once I run out of new card signup bonuses (presumably, the issuers can't afford to keep paying those over and over again forever), I will likely return to that Fidelity 2% card for all my spending.

The only exception would be for foreign spending when traveling, since that card has a 1% foreign transaction fee and thus only earns a net of 1%. For that, I would use a card with 0 transaction fee. And preferably one that earns rewards on travel and dining, since those constitute most of my spending when abroad.
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