How do you manage cash back rewards?

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mjd0717
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How do you manage cash back rewards?

Post by mjd0717 » Tue Aug 08, 2017 9:46 am

When a cash back balance appears on your credit card statement, what do you do with the money? This question assumes one is able to pay off the CC each statement period and not carry a balance (since those that carry a balance should use the cash back reward toward paying the balance).

- immediately apply cash back reward to your balance.
- save it in the cash back reward "bank" to use down the road.
- cash out the reward and spend it.
- cash out the reward and invest it.

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flamesabers
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Re: How do you manage cash back rewards?

Post by flamesabers » Tue Aug 08, 2017 9:48 am

I do the first option. Money is fungible. One less dollar I have to spend on my CC bill is one more dollar I have elsewhere to use.

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Toons
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Re: How do you manage cash back rewards?

Post by Toons » Tue Aug 08, 2017 9:49 am

2 cards
Amazon Prime Card 5%back on purchases statement credit
Other Master Card,,,percentages back on purchases,receive check once per year.
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

chevca
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Re: How do you manage cash back rewards?

Post by chevca » Tue Aug 08, 2017 9:51 am

I use the Ally CC and send that cash back rewards to my Ally savings account. They give a 10% bonus for sending them to an Ally account. So, I save it.

Although, I often pay the CC balance off from the Ally savings account. So, maybe I pay the future balance with it? :happy

Broken Man 1999
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Re: How do you manage cash back rewards?

Post by Broken Man 1999 » Tue Aug 08, 2017 10:05 am

Most times I just use the rewards as a statement credit. Though sometimes the card offers something for a discount, like a $25 dining card for $20. In those cases I would purchase the discounted dining card.

I've yet to see products other than a dining card that were worth spending rewards on, seems the merchandise is grossly overpriced, or outdated tech stuff.

Broken Man 1999
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H-Town
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Re: How do you manage cash back rewards?

Post by H-Town » Tue Aug 08, 2017 10:11 am

mjd0717 wrote:When a cash back balance appears on your credit card statement, what do you do with the money? This question assumes one is able to pay off the CC each statement period and not carry a balance (since those that carry a balance should use the cash back reward toward paying the balance).

- immediately apply cash back reward to your balance.
- save it in the cash back reward "bank" to use down the road.
- cash out the reward and spend it.
- cash out the reward and invest it.
I want to maximize the values:

- If it's purely cashback and I can't use it for hotels/travels, I'll cash out immediately to my checking account. It's 1 cents per points no matter what. The sooner I get the cash, the better.
- If it's Chase UR points or AMEX MR points, I hold onto it for a good deals on flights and hotels. This gives me much better value than 1 cents per points. Sometimes it's 2-3 cents per points.

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mhc
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Re: How do you manage cash back rewards?

Post by mhc » Tue Aug 08, 2017 10:20 am

Cap one card automatically credits against balance one $25 accrues

Chase Amazon 5% back credits against future purchases.

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lthenderson
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Re: How do you manage cash back rewards?

Post by lthenderson » Tue Aug 08, 2017 10:48 am

We just cash ours out once a year and use it towards the purchase of holiday gifts in December. Any extra we use for gift cards on ourselves.

peek
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Re: How do you manage cash back rewards?

Post by peek » Tue Aug 08, 2017 10:52 am

I either get a statement credit or have them mail a check depending on the card. If a check I deposit it into our vacation savings, if a credit I transfer the amount out of cash into vacation savings. This goes for both rewards and card open bonuses. This year a good amount of our vacation was funded through points and account open bonuses.

michaeljc70
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Re: How do you manage cash back rewards?

Post by michaeljc70 » Tue Aug 08, 2017 10:53 am

I usually wait until I have more than $100 and then just have it applied to my bill.

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Doom&Gloom
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Re: How do you manage cash back rewards?

Post by Doom&Gloom » Tue Aug 08, 2017 11:10 am

If it is a cash back only card, I let it accumulate to $100 and then apply $100 to my balance. That makes tracking so much easier for me if I ever have a need to track it.

MikeG62
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Re: How do you manage cash back rewards?

Post by MikeG62 » Tue Aug 08, 2017 2:18 pm

Depends on the specific CB card, but generally speaking I try to let the CB build and use it in larger chunks. It feels more impactful this way.

For example, had $600 in CB that accumulated on one of my cards. Cashed that out (ACH to my bank account) and used for pocket money on a recent trip/vacation.

To harvest it monthly makes the CB feel more like a rounding error.
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Sheepdog
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Re: How do you manage cash back rewards?

Post by Sheepdog » Tue Aug 08, 2017 3:03 pm

I apply the rewards as a CC credit as soon as eligible. That means that year-to-date, I have not had to pay $1005.75 (rewards to date) to the CC, so I have that extra $1005.75 available to spend in other places.
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

BigMoneyNoWhammies
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Re: How do you manage cash back rewards?

Post by BigMoneyNoWhammies » Tue Aug 08, 2017 3:09 pm

mjd0717 wrote:When a cash back balance appears on your credit card statement, what do you do with the money? This question assumes one is able to pay off the CC each statement period and not carry a balance (since those that carry a balance should use the cash back reward toward paying the balance).

- immediately apply cash back reward to your balance.
- save it in the cash back reward "bank" to use down the road.
- cash out the reward and spend it.
- cash out the reward and invest it.
With my cashback card I am able to apply any cash back towards payment of the balance, and I do so every few months. the 1.5% CB I get is essentially a 1.5% discount on whatever I purchased, so I put it back towards the card. Would rather have the improved credit utilization ratio of carrying a smaller balance than the extra cash in my pocket or putting it towards some sort of gift card.

FedGuy
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Re: How do you manage cash back rewards?

Post by FedGuy » Wed Aug 09, 2017 6:34 am

It depends on the card. I have about half a dozen cash back credit cards, with most of them giving me a statement credit. Some cards, though, either require you to get the cash back in a particular way or make it much easier to do so; for example, the cash back from my Fidelity credit card goes into my Fidelity checking account and eventually goes towards my annual IRA contribution. The Citi Double Cash card penalizes you a bit for taking a statement credit (since some of the rewards are calculated based on how much of your bill you pay off, and if you get a statement credit you don't get cash back for the amount of the credit), so I have the cash back put into my Citi savings account.

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bottlecap
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Re: How do you manage cash back rewards?

Post by bottlecap » Wed Aug 09, 2017 6:41 am

Cash is fungible and interest rates are nil, so unless you carry a balance, there is no difference that you do with it.

However, we just apply it to that months charges.

JT

spammagnet
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Re: How do you manage cash back rewards?

Post by spammagnet » Wed Aug 09, 2017 7:06 am

+1 about cash being fungible.

We do whatever results in the rewards having higher value, according to the rules of the card provider. Beyond that, we use YNAB for budgeting. All inbound cash goes into a single pool to be assigned to the "task" you deem most important at the time, regardless of source.

takeshi
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Re: How do you manage cash back rewards?

Post by takeshi » Wed Aug 09, 2017 9:24 am

mjd0717 wrote:immediately apply cash back reward to your balance.
This. That said, do what works for you versus what's popular. Consider anything specific to the given card such as better reward value for a given redemption option, etc.

inbox788
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Re: How do you manage cash back rewards?

Post by inbox788 » Wed Aug 09, 2017 1:32 pm

I think 2% cash back cards are the best BH rewards akin to 60/40 low cost index funds.

https://www.fidelity.com/cash-managemen ... ature-card
https://www.citi.com/credit-cards/credi ... redit-card

Sure you can chase higher rewards, but the time and effort involved may not be worth the extra return from active management.

I launder all my bills through the credit card that allow me and apply the cash bonus to my credit card bill as soon as I can or whenever I notice. This amounts to about a 2% discount on all credit card purchases (and some bills). And all for minimal effort.

I do have a Costco card, which is 3-4% for gas/travel/restaurants, and I have to think about using them, but more than once, I've charged some things only to discover it's not one of those categories and I wind up with only 1%. Just looking at the last 3 months, I've averaged 2.11%, 1.86%, and 2.79%. Note that I would have been better off using the 2% card on the middle month! Makes me wonder if it's worth bothering.

Depending on how much you spend, look at the dollar effects. If you spend $10k in a year, a 1% difference is only $100. If you spend less or the difference is less, it might not be worth the time and energy. Travel cards like airlines and hotels might give you more bang for your buck, so if you use the points for travel, it might yield a greater return.

BTW, I also, I have a 5% Target red card, which means 3% more for purchases. If I spend $1000, that's $30. I've spent more at Target in the past (bought a couple of iPads), but lately, I don't think I'll spend that much in a year. So, maybe it's time to cancel Target. Still, the free shipping is a nice perk. And maybe they'll improve a bit to rival Amazon. (I don't have the 5% Amazon card, maybe I should...I may get more back than with the Target card based on recent spending)

41fan
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Re: How do you manage cash back rewards?

Post by 41fan » Wed Aug 09, 2017 2:27 pm

We have a 2% Fidelity cashback card and an Amazon 5% card.

The Amazon card is my main one, but I usually only buy stuff on Amazon (5% back) or gas (gets 2% back towards Amazon purchases).

My wife's main card is the Fidelity card which gives 2% back on every purchase. We try to put all non-Amazon spending on that.

Historically, we have accrued the Amazon credit throughout the year and used it at Christmastime for gifts.

So far, we have used the 2% cashback at Fidelity to buy shares of ITOT. We've only had that card a few months, so we're still learning about buying ETFs with it.

H-Town
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Re: How do you manage cash back rewards?

Post by H-Town » Wed Aug 09, 2017 2:29 pm

inbox788 wrote:I think 2% cash back cards are the best BH rewards akin to 60/40 low cost index funds.

https://www.fidelity.com/cash-managemen ... ature-card
https://www.citi.com/credit-cards/credi ... redit-card

Sure you can chase higher rewards, but the time and effort involved may not be worth the extra return from active management.

I launder all my bills through the credit card that allow me and apply the cash bonus to my credit card bill as soon as I can or whenever I notice. This amounts to about a 2% discount on all credit card purchases (and some bills). And all for minimal effort.

I do have a Costco card, which is 3-4% for gas/travel/restaurants, and I have to think about using them, but more than once, I've charged some things only to discover it's not one of those categories and I wind up with only 1%. Just looking at the last 3 months, I've averaged 2.11%, 1.86%, and 2.79%. Note that I would have been better off using the 2% card on the middle month! Makes me wonder if it's worth bothering.

Depending on how much you spend, look at the dollar effects. If you spend $10k in a year, a 1% difference is only $100. If you spend less or the difference is less, it might not be worth the time and energy. Travel cards like airlines and hotels might give you more bang for your buck, so if you use the points for travel, it might yield a greater return.

BTW, I also, I have a 5% Target red card, which means 3% more for purchases. If I spend $1000, that's $30. I've spent more at Target in the past (bought a couple of iPads), but lately, I don't think I'll spend that much in a year. So, maybe it's time to cancel Target. Still, the free shipping is a nice perk. And maybe they'll improve a bit to rival Amazon. (I don't have the 5% Amazon card, maybe I should...I may get more back than with the Target card based on recent spending)
I would have to disagree. I can increase the rate of cash back/points with minimal effort. I pay for groceries with 6% rate from AMEX. I pay for gas with 3% to 5% rate. I pay for hotels with 5% rate. I pay for flights, and travel related expenses with 3% rate. Everything else I pay with 2% rate card. At redemption, I have various options to increase the value of points 1.5 to 2.5 times. With average annual household expenses of 60k, you can easily double the cash back from $1,200 with 2% card to $2,400, if not more. This might be small beans to some people, but $2,400 can get me and my wife two vacations.

The process of deciding which card to use for a particular purchase is easier than your rationalization to stay with a basic 2% cash back. YMMV though.

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DaftInvestor
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Re: How do you manage cash back rewards?

Post by DaftInvestor » Wed Aug 09, 2017 2:32 pm

Depends on the card but in general - we just grab/use the money as we get it. Two examples:
5% Amazon cash-back just gets used for whatever the next purchase (or set of purchases) is/are.
2% citi cash-back gets sucked back into the same bank account I use to pay the bill - I simply grab the cash every month right after I pay the bill (we are splitting hairs but if I apply it to the balance I'm only technically getting 1.99% cash-back - to get the full 2% back I move the rebate back into my account).
The money just goes into cash-flow - for the months I have too much cash flow I make more than my typical monthly taxable investments (or boost EF) - so I suppose - some might be going to investments I wouldn't otherwise make.

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englishgirl
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Re: How do you manage cash back rewards?

Post by englishgirl » Wed Aug 09, 2017 3:36 pm

Personal cards - save it up and use it against vacation spending once a year. I feel like it helps defray the cost of a nice meal or a seat upgrade on the flight or something we wouldn't normally spend money on.
Business card - I cash out every month.
Sarah

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Re: How do you manage cash back rewards?

Post by brokendirtdart » Wed Aug 09, 2017 3:43 pm

Depends on the card for me, but other than my Amazon 5% Chase card or my now little used *Fido 2% card, my cash rewards go to a separate account set aside for moving expenses such as rental security deposits/utility hook up fees, uhaul rental etc.

With a job elated move every two or so years, a dedicated batch of cash can come in handy. When I don't move that year, it turns into part of my Roth contribution.

*Fido 2% card has been mostly replaced by my USAA 2.5% card.

inbox788
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Re: How do you manage cash back rewards?

Post by inbox788 » Wed Aug 09, 2017 4:54 pm

thangngo wrote:I would have to disagree. I can increase the rate of cash back/points with minimal effort. I pay for groceries with 6% rate from AMEX. I pay for gas with 3% to 5% rate. I pay for hotels with 5% rate. I pay for flights, and travel related expenses with 3% rate. Everything else I pay with 2% rate card. At redemption, I have various options to increase the value of points 1.5 to 2.5 times. With average annual household expenses of 60k, you can easily double the cash back from $1,200 with 2% card to $2,400, if not more. This might be small beans to some people, but $2,400 can get me and my wife two vacations.

The process of deciding which card to use for a particular purchase is easier than your rationalization to stay with a basic 2% cash back. YMMV though.
Yup, a lot of YMMV in these programs, but I'm focusing on simplicity and passivity. Some people don't mind half a dozen or a dozen credit cards. I prefer one or two. Every additional card bears an increasing complexity cost and diminishing returns. And it takes mindful use of specific credit cards to optimize the benefits, and I've made mistakes at times where trying for optimal strategy with my 2 card strategy yielded worse results than simply using a simpler 1 card strategy.

On the spending side, I've seen how limited some frequent flyer flights have gotten, and often see people choosing poor routing or extra stops to use their points. I've resigned to paying more for more convenient shorter flights. Something those airline AI programs are masters are figuring out and squeezing their customers for. Those points are not a valuable to me as cash and time. If the destinations you choose are available and convenient, the same points are even more valuable to you.

Also, when you say annual household expenses of $60k, do you mean total or credit card expenses? It might be about right for the average household expenses, but I think that's quite high for credit card spending. Big categories like home mortgage or rent and car payments/lease payments are not easily charged to a credit card.

And as far as vacations, the first $1200 with a 2% card is easy, so you're only getting one additional vacation from the extra work and complexity. I'm sure it's worth it for you or you wouldn't do it. I'm not sure the average BH would. I count a grocery card, gas card, hotel car, travel card, and everything else card, so total of 5 cards you're juggling. Have you figured out the order of benefit? Say you spend $5000/year on groceries @4% more than the 2% card, that's a $200 annual benefit. The 5% gas card if you spend $1000 in gas is $30. $20k in travel at 3% gets you $200 more than a 2% card. My spending in these categories is generally lower, so the benefits relatively less significant. I don't know my specific thresholds, but less than $50-100 makes me want to avoid the hassles more than chase the reward.

If you're after freebies from the credit card companies, the big rewards are in sign up bonus and you just have to churn your cards chasing the best deals. One or two good deals will get you a vacation. IMO, bigger bang for buck than an extra percentage or two here and there. But nothing is stopping you from doing both and getting a couple of additional vacations. More power to you.

H-Town
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Re: How do you manage cash back rewards?

Post by H-Town » Wed Aug 09, 2017 5:39 pm

inbox788 wrote: Also, when you say annual household expenses of $60k, do you mean total or credit card expenses? It might be about right for the average household expenses, but I think that's quite high for credit card spending. Big categories like home mortgage or rent and car payments/lease payments are not easily charged to a credit card.
I absolutely support simplicity. I practice simplicity with investment portfolio and with pretty much everything else. I preach that if you can't take something complicated and make it simple, then you probably don't understand it. My point regarding CC reward is that if it's not a hassle for someone, then it's worth going for the extra reward.

My credit card charge was close to 60k last year. My household is not the average household though. I also support my parents for groceries, bill pay, household items, and go on couple vacation trips with them every year,... My wife and I also travel a lot (5-8 trips a year), but we travel frugally. We use my beat-up car and stay at low-end hotel ($90 or less or free nights). We value memories and experience.
And as far as vacations, the first $1200 with a 2% card is easy, so you're only getting one additional vacation from the extra work and complexity. I'm sure it's worth it for you or you wouldn't do it. I'm not sure the average BH would. I count a grocery card, gas card, hotel car, travel card, and everything else card, so total of 5 cards you're juggling. Have you figured out the order of benefit? Say you spend $5000/year on groceries @4% more than the 2% card, that's a $200 annual benefit. The 5% gas card if you spend $1000 in gas is $30. $20k in travel at 3% gets you $200 more than a 2% card. My spending in these categories is generally lower, so the benefits relatively less significant. I don't know my specific thresholds, but less than $50-100 makes me want to avoid the hassles more than chase the reward.
I keep track of those spending in my budgets excel file. Budgeting has become my second nature. So it may not work with others. From last year:
12k groceries (average 5.5%): $660
5k gas (3%): $150
18k Travel (avg 3%): $540
23k other charges (2%): $460
Last year cashback/points was roughly $1.8k before any bonus points. Looking at it now, it was not 2.4k I mentioned earlier. I would gain only $650 compared to a 2% flat card.
If you're after freebies from the credit card companies, the big rewards are in sign up bonus and you just have to churn your cards chasing the best deals. One or two good deals will get you a vacation. IMO, bigger bang for buck than an extra percentage or two here and there. But nothing is stopping you from doing both and getting a couple of additional vacations. More power to you.
I agree with you here. I got 100,000 points (more than $1,000 value) from Chase Reserve card, 70,000 points from Chase Preferred card, 100,000 points from IHG hotel card, $250 statement credit from AMEX card. But I stop there. Personally, I don't like to go over 5 cards.

3dream3
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Re: How do you manage cash back rewards?

Post by 3dream3 » Wed Aug 09, 2017 10:04 pm

I actually do a mix of things. I mainly use the Citi Double Cash card and just let the cashback accrue until i can either apply it on vacation costs or some other big purchase. For some reason it just feels nice thinking that I`m saving or not spending as much when I do it this way. I also use Discover sparingly and just reapply the rewards to the balance each month. Then we also have the Costco Citi card so have no choice but to wait for the check when they send it once a year.

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