Are complicated credit card cash back strategies worth it?

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hungrywave
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Are complicated credit card cash back strategies worth it?

Post by hungrywave » Wed Nov 13, 2019 2:52 am

UPDATE: Thank you all for your wisdom and input! My takeaways include:
- Cash back rewards may pale in comparison to any low-value spending they encourage. Simplicity (eg a single card) may be a way to reduce the risk of adverse behavior changes caused by chasing/optimizing rewards.
- Signup bonuses (eg travel hacking) have gotten harder so hacker beware.
- The Barclaycard Uber card is or will soon not be 4% cash back for dining.
- I think that my spending on staples such as gas and groceries is probably minimally affected by rotating rewards. I actually worry more about the grease that something like 5% back on Amazon gives to my purchasing habits. But I'm not willing to give up 3% cash back (comparing 2% Fidelity to 5% Amazon) to only use a single card. That's a 150% increase in cash back!
- Thank y'all, again!

Dear Bogleheads,

Barclaycard Uber gives 4% cash back at restaurants
Chase Amazon Rewards gives 3% cash back at Amazon and Whole Foods
etc
etc

Elan Fidelity Rewards gives 2% cash back all the time and the money can be automatically sent to your Fidelity brokerage account.

Travel rewards hacking aside, does it make sense to try to maximize cash back by utilizing certain cards for certain situations, including when cards rotated cash back rewards? Or am I just tricking myself into spending more money by having a card for every occasion?

Part of my likes to think that I'm being smart by increasing my cash back rewards 50-100% over Fidelity's standard 2%. But another thinks that my psychology may negate any advantage and then some (eg oooh! I have a card for Whole Foods so let's go there!).

What do you think?
Last edited by hungrywave on Tue Nov 19, 2019 7:11 pm, edited 1 time in total.
The world is largely random so don't sweat the small stuff.

muffins14
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Re: Are complicated credit card cash back strategies worth it?

Post by muffins14 » Wed Nov 13, 2019 3:17 am

As a baseline, people have to avoid the “the more I spend, the more I save!” idea.

For me, it’s just not worth the mental effort spent over-optimizing any more than using my 5% at amazon/Whole Foods and 2% elsewhere. No more churning either. Even the 5% amazon card is barely worth checking an extra account, but it has a high limit so I keep it.

At some point the random daily fluctuations in the market are so much more than what you’d likely save via a years of cash back optimization that each person needs to learn their utility function for reward vs time/mental space.

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Re: Are complicated credit card cash back strategies worth it?

Post by HomeStretch » Wed Nov 13, 2019 3:23 am

It’s worthwhile to me to use higher-reward (>2%) cash back cards for highest expenses (restaurant, grocery, gas and phone/cable/internet) and a 2% card for everything else.
hungrywave wrote:
Wed Nov 13, 2019 2:52 am
Barclaycard Uber gives 4% cash back at restaurants
The Uber card recently announced restaurant benefit will be reduced to 3%, phone insurance will be eliminated and card will no longer give cash back (rewards will be in uber cash).
viewtopic.php?f=2&t=293641

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Re: Are complicated credit card cash back strategies worth it?

Post by vtMaps » Wed Nov 13, 2019 3:55 am

hungrywave wrote:
Wed Nov 13, 2019 2:52 am
my psychology may negate any advantage and then some (eg oooh! I have a card for Whole Foods so let's go there!).

What do you think?
I think you need to work on your psychology. --vtMaps
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RickBoglehead
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Re: Are complicated credit card cash back strategies worth it?

Post by RickBoglehead » Wed Nov 13, 2019 4:15 am

Depends on how much one spends. If you cannot stop spending money somewhere just because you get a discount (cash back), you have problems we cannot help with.

We rotate 3 cards for normal spending. Chase for quarterly, but only for categories we normally use ( not using PayPal just to get 3% more), Costco for gas, restaurants/travel, Costco, and Citi DoubleCash for the main card.

The only forced spending I ever did was when Amex gave money for Small Business Saturday. One year we had breakfast and dinner out, plus a bunch of craft beer.
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Re: Are complicated credit card cash back strategies worth it?

Post by Stinky » Wed Nov 13, 2019 5:07 am

We actively use four cards. Costco for gas, restaurants, and Costco; Amazon for Amazon only; Target for Target only; and Citi Double Cash for everything else.

I guess we could get a few more rebate dollars by using more cards. For me, it’s just not worth spending the mental energy.
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Re: Are complicated credit card cash back strategies worth it?

Post by onourway » Wed Nov 13, 2019 6:10 am

It entirely depends on what your total annual spending is. If your spending is low, you might be talking the difference of a couple hundred dollars or less which probably isn’t worth the hassle for many people to manage a bunch of cards. Our spending between personal and business is well into the six figures, so I find it worthwhile because it’s thousands of extra dollars per year tax free. I also find that because of how we manage our finances (with YNAB) it takes very little extra effort to have 5 cards rather than 1. It’s a few extra minutes per month typically.

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Re: Are complicated credit card cash back strategies worth it?

Post by hoffse » Wed Nov 13, 2019 6:36 am

Cash back credit card rewards are tax-free, so that can be pretty valuable if your marginal rate is high and you are a big spender.

If you never shop at Whole Foods and now you start shopping there because you get 5% back vs 2% back at a less expensive grocery store then you are losing money. But if you shop there anyway, then yes use the Amazon card if you have one.

I’m currently in the process of jumping through a bunch of hoops to get the Altitude Reserve card almost exclusively for Costco. We spend so much money there anyway that an effective 4.5% back (vs 2%) is worth the hassle.

If you are going to spend the money anyway, you might as well maximize. We spend a lot on travel and eating out for work, all of which is reimbursable, so we have a chase sapphire reserve for that. The points we get from reimbursed expenses more than pays for the fee (compared to a free card), and we get free family travel as a bonus. We spend a lot on utilities (ours accept cc payments with no fees), so I have a 5% card for that. I have to pay our daycare bill every month so I can work, and ours accepts credit cards. I get 2% back there.

We earn several thousand dollars a year tax-free on purchases we are making anyway. I do have the 5% Amazon card, but only shop at Whole Foods a couple times a year for special occasions. We use the amazon card almost exclusively for amazon. YMMV.

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Re: Are complicated credit card cash back strategies worth it?

Post by Dottie57 » Wed Nov 13, 2019 6:39 am

muffins14 wrote:
Wed Nov 13, 2019 3:17 am
As a baseline, people have to avoid the “the more I spend, the more I save!” idea.

For me, it’s just not worth the mental effort spent over-optimizing any more than using my 5% at amazon/Whole Foods and 2% elsewhere. No more churning either. Even the 5% amazon card is barely worth checking an extra account, but it has a high limit so I keep it.

At some point the random daily fluctuations in the market are so much more than what you’d likely save via a years of cash back optimization that each person needs to learn their utility function for reward vs time/mental space.
Agree. Two cash back credit carts: Fidelity and Costco.

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Re: Are complicated credit card cash back strategies worth it?

Post by z3r0c00l » Wed Nov 13, 2019 6:49 am

It is worth opening a few cards with bonuses, and then strategically using a few cards for their high % items. An extra 1% back on food, a big budget item for me which I will spend no matter what, amounts to $70 per year. Is it worth holding an extra few grams of plastic in my wallet for $70 per year? I'd say so.

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Re: Are complicated credit card cash back strategies worth it?

Post by sam1838 » Wed Nov 13, 2019 6:58 am

I've tracked different credit card strategies based on my spending in a spreadsheet for years. It turns out that 2 credit cards gets me 80-90% of my possible end of year rewards. While you can have more, there are definitely diminishing returns.

Typically, you want a baseline card like the 2% Citi Doublecash and whichever other card fits you best. Amazon Prime, Wells Fargo Propel, and Amex Blue Cash Preferred are all options.

I only carry two cards in a (nice) rubber band wallet (and no cash/debit), so I also make sure I have one Visa and one Mastercard from different issuing banks for redundancy reasons. I use more cards through Google Pay though.

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Re: Are complicated credit card cash back strategies worth it?

Post by carolinaman » Wed Nov 13, 2019 7:28 am

I have two CCs: Citi Costco Visa and Wells Fargo Visa. The Costco card offers 4% on gas, restaurants and travel, 2% at Costco and 1% otherwise. WF offers 1.5% everywhere. 4% gets my attention, the rest no so much. The benefit I value most is the 2 year extended warranty with the Costco card. I bought a $2k TV in 2018 (at Best Buy, not Costco). 16 months later it died with a bad panel. Citi reimbursed me in full for the cost of the TV. I always use this card when purchasing appliances, electronics and other major purchases. I also took advantage of the price rewind benefit on the Costco card but that has been discontinued.

I usually get a few hundred dollars each year from the use of both cards. I could get a lot more if I used those cards for all our purchases. But I was raised to use credit sparingly and instinctively do not like to charge most of our purchases. I try to use my CC where it makes sense, or is simple like gas and travel, and use debit cards otherwise.

The short answer to your question is no, complicated CC strategies are not worth it to me. I personally would like to have the option of paying cash/debit at reduced rate and forfeit all cash back benefits, but that is not going to happen.

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Re: Are complicated credit card cash back strategies worth it?

Post by DVMResident » Wed Nov 13, 2019 7:36 am

My thought process is how much time it takes to track, find, apply, and deal with. While I was a grad school, I use to hurt down every sign up deal because it was meaningful amount. I had more time in those days.

These day, it’s one card every few years. Once in a while one on SlcikDeals will catch my eye. These have a hefty sign up bonus (which I focus on over % back) and good features with no annual fees. $500 for WF Propel was the last one.

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Re: Are complicated credit card cash back strategies worth it?

Post by Jack FFR1846 » Wed Nov 13, 2019 7:44 am

If your psychology has you shopping just because you can save 5% somewhere, then I would suggest you need only 0% back cards and stop shopping. If you don't shop at all, you save 100% rather than wasting 95% by using a 5% card.

I tend to use an absolute ton of cards and add in master card gift cards and happy cards and store cards in my manufactured spending and gas points and grocery antics. Off the top of my head, what I'm using:

Subway gift card (got gas points plus cash back credit card rewards). I eat at Subway every week day and would with no gift card.
Happy card: good at Auto Zone, Burger King and Home Depot. At HD, I can buy other gift cards with it and tend to get stop & shop and BP gas with Applebees, taco bell and wendys on occasion.
Sears Citi is giving me 20X thank you points. Will be 8% and be used towards CVS gift cards. Good at gas, restaurant, grocery
Discover (me 5%, wife first year 10%) for gas
I have 9 cards I use only for tradelines. I tend to buy $4 in gas with each one if I don't remember to use it elsewhere. Many people add to their Amazon account, which would be easier, I guess.
Wells for low balance forgiveness. I use it to buy $1.90 a month in gas for free.
My normal spend cards are double cash and Fidelity.
When getting gas at exxon/mobil, I do 3 rewards. EM rewards, entering my number at the pump, use my sears card for that 8% back and getupside app for usually around 12 cents a gallon back.
Currently, I have a Mastercard gift card from a stop & shop gift card promo last month ($500 buy got me $1.50 per gallon discount, bought 20 gallons with it)

Is all this worth it? To me, it is. I'll easily take in $1k a month. And that isn't by buying stuff I wouldn't normally buy. My latest addition is a Citizens bank Visa that gives me 5% until April. DS's community college bill for the spring is due Dec 15 and can be paid with a credit card for no fee and is $4500 and they later apply a $390 scholarship which will come back as a check. So there's a one time $225 cash back.
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Re: Are complicated credit card cash back strategies worth it?

Post by RickBoglehead » Wed Nov 13, 2019 8:00 am

Jack FFR1846 wrote:
Wed Nov 13, 2019 7:44 am
Is all this worth it? To me, it is. I'll easily take in $1k a month. And that isn't by buying stuff I wouldn't normally buy. My latest addition is a Citizens bank Visa that gives me 5% until April. DS's community college bill for the spring is due Dec 15 and can be paid with a credit card for no fee and is $4500 and they later apply a $390 scholarship which will come back as a check. So there's a one time $225 cash back.
How many hours of your time does it take to do all this?

How do you factor in the loss of credit card benefits on some purchases? For example, if you bought a power tool at Home Depot? My Costco Visa would add 2 years to the warranty. Your Happy Card would add nothing?

Sears points require you to spend money at Sears, a company that is likely closing at some point and has horrible retail outlets. Not worth my time.

Wells Fargo low balance forgiveness means you have bank accounts there. Given the history at WF, opening up accounts that people didn't ask for, is the risk worth it?

I suspect that if you paid yourself $20 a hour for the time you think about this, drive to some of these places, and conduct the gyrations, the payback would be far less than $1,000 a month. I can see doing half of it.
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Re: Are complicated credit card cash back strategies worth it?

Post by anil686 » Wed Nov 13, 2019 8:05 am

Just to the OP - I have never found them worth it IMO. A solid cash back card with a defined percentage (1.5% or higher) is good enough. Is there something better? Probably there always will be transiently as your life situation changes. However, as stated above, the Fidelity card is good (if you have a Fidelity account). I have an old blue cash Amex card that I have had for over 25 years - it is the old one with the 5% back at grocery, gas and pharmacies and after $6500 spent a year, increases the rest of the purchases to 1%. It is not perfect but for free, it is pretty good. If I was a Bank of America customer - I would switch to their preferred rewards card and get the 2.5% roughly cash back. JMO though...

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Re: Are complicated credit card cash back strategies worth it?

Post by clammyhands » Wed Nov 13, 2019 8:05 am

I keep a note on my phone that I update quarterly with the best cards to use in different scenarios. I'm never carrying more than 3 or 4 cards. Although I have like 30 cards or something, very few manage to best the cash back cards below. I typically try to avoid complicated cards that have annual fees (even if you can offset the annual fees by spending x). Too much to keep track of.

Costco: Gas, restaurants, travel
Discover/Chase Freedom: Rotating quarterly 5% categories
US Bank: Fast food, internet 5% (can choose two 5% categories each quarter)
Target red: 5% at Target (this is in my Target app so don't have to carry it)
Amex Everyday: 3% groceries
Amazon: 5% Amazon, Whole Foods
Citi Double Cash: 2% everything else

arf30
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Re: Are complicated credit card cash back strategies worth it?

Post by arf30 » Wed Nov 13, 2019 8:09 am

You'll actually make more money from sign up bonuses, so we just use the 2% Fidelity card, 5% Amazon/Whole Foods card, and do the minimum spending on whatever card we're working on a bonus for.

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Re: Are complicated credit card cash back strategies worth it?

Post by MotoTrojan » Wed Nov 13, 2019 8:39 am

Absolutely, as are credit card sign-up bonuses but that isn't what you asked about.

My largest spend is on restaurants, followed up by travel and groceries. I use a Wells Propel and Visa Signature combo to get 4.5% back on dining, travel, and gas which can fund roundtrip flights for two annually. For groceries I have an Amex Bluecash to get 6% (my only card with an annual fee; $95). Then I use the Fidelity 2% (used to use Citi DoubleCash) for everything else, including places that don't accept Amex, car insurance, general shopping, etc...

This is entirely worth it for me. The sign-up bonuses take a lot more tracking/discipline but I don't find it hard to have a card for dining/travel, groceries, and one for everything else.

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Re: Are complicated credit card cash back strategies worth it?

Post by Jack FFR1846 » Wed Nov 13, 2019 8:45 am

RickBoglehead wrote:
Wed Nov 13, 2019 8:00 am
Jack FFR1846 wrote:
Wed Nov 13, 2019 7:44 am
Is all this worth it? To me, it is. I'll easily take in $1k a month. And that isn't by buying stuff I wouldn't normally buy. My latest addition is a Citizens bank Visa that gives me 5% until April. DS's community college bill for the spring is due Dec 15 and can be paid with a credit card for no fee and is $4500 and they later apply a $390 scholarship which will come back as a check. So there's a one time $225 cash back.
How many hours of your time does it take to do all this?
No extra time beyond entering my rewards number at the pump, taking a picture of the receipt from the app, going to the gift card area at HD when I'm there anyways. I don't go out of my way and it's maybe minutes a week. If I'm not going to be at HD for a month, that's fine, I'll do my stuff there in a month. With all the car work I do, chances are the happy card is going to get partly spent at Auto zone.
How do you factor in the loss of credit card benefits on some purchases? For example, if you bought a power tool at Home Depot? My Costco Visa would add 2 years to the warranty. Your Happy Card would add nothing?
If I needed extra warranty, I'd use what's best for that. I do have both HD and Lowes cards for the cash back. I don't have a costco card because the nearest costco is an hour away.
Sears points require you to spend money at Sears, a company that is likely closing at some point and has horrible retail outlets. Not worth my time.
But the sears citi card is a citi card. I never get sears points and never shop at sears anymore. I cash those thank you points (citi) for whatever I want. At the moment, for us, that's CVS, where our prescriptions all come from. Last quarter, sears citi gave 10% back between $500 and $1000 calendar month spend as statement credit....so last quarter, I got $300 statement credits.
Wells Fargo low balance forgiveness means you have bank accounts there. Given the history at WF, opening up accounts that people didn't ask for, is the risk worth it?
I have no bank account at Wells. Just one credit card that I got originally for the $150 sign on bonus. I found that it's one of the better low balance forgiveness cards. All I have to do is remember to get under $2 in free something a month. Nobody wants this card for tradelines.
I suspect that if you paid yourself $20 a hour for the time you think about this, drive to some of these places, and conduct the gyrations, the payback would be far less than $1,000 a month. I can see doing half of it.
Certainly it take some remembering or in some cases, I write out what needs to be done. Yesterday, I made sure I did low balance for 4 cards, got gas at an Exxon station to add one more purchase as getupside is running a promo that after 5 $10 purchases, they add 20 cents a gallon, but of course I first inputted my number (telephone number) at the pump (for the exxonmobil rewards) and had to take a picture of the receipt (for getupside 12 cents a gallon back and to add towards the 5 purchases to get 20 cents a gallon later). I spent about $30 with the sears citi which will become $2.40 towards CVS gift cards, it happened to be 12 cents a gallon with getupside, so in the future, around a dollar in cash and exxonmobil rewards that I'm not even sure what they give me, but I cashed in $5 at the pump last week. All of this was a single gas fill up. Oh....the gas station is also the cheapest in the area. And later, I'll get that 20 cents a gallon added with the app. I could add that I decided not to eat lunch at subway yesterday, so went to Wendys, which the Exxon station is on the way to. It was raining and I didn't feel like walking in the rain to subway. Wanna guess how I paid for my Wendys meal?

This stuff is also fun for me. Tonight, I'll go to Stop & Shop as I have some shopping to do. I'll first buy a $100 happy card with my Sears Citi card ($8 towards CVS cards) which gives me a printed bar code good for $20 in groceries. I'll then get my Lego fluffy waffles, some fake eggs, mushrooms and whatever the wife wants for about $25. The code on the receipt will reduce that to $5, but I get credit for spending $25 towards gas points (1/4 of the way towards another 10 cents a gallon discount) and I'll pay the remaining $5 with Stop & Shop cards I got at Home Depot on the weekend when I needed oil at Auto Zone....100 yards away from HD, and cashed all my happy cards for stop & shop. Of course when I bought oil and a filter (they had a special if you bought both), I scanned my Autozone rewards which after 5 purchases of $20 or more gets me $20 off. And I paid with my happy card.
Bogle: Smart Beta is stupid

Nowizard
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Re: Are complicated credit card cash back strategies worth it?

Post by Nowizard » Wed Nov 13, 2019 9:36 am

As with all financial issues, there are both pragmatic and personal, psychological aspects involved. Pragmatically and psychologically, this site reflects both wonderful, pragmatic advice and in-depth commentary that enters the point of diminishing returns from a pragmatic basis. That point is individually defined.

Tim

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Re: Are complicated credit card cash back strategies worth it?

Post by frugalmama » Wed Nov 13, 2019 9:52 am

vtMaps wrote:
Wed Nov 13, 2019 3:55 am
hungrywave wrote:
Wed Nov 13, 2019 2:52 am
my psychology may negate any advantage and then some (eg oooh! I have a card for Whole Foods so let's go there!).

What do you think?
I think you need to work on your psychology. --vtMaps
+1 I fund college accounts through maximization strategies and bonuses. Definitely worth it over the last 20 years as has completely paid for 1. I use 5-7 cards regularly though and I don't think of how much I'm getting back. Rather, the spouse and I see it as Restaurants go on X card, Groceries go on Y card. We don't see it as we are getting some sort of discount as I move that money directly to the 529s every time a statement generates.

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Re: Are complicated credit card cash back strategies worth it?

Post by michaeljc70 » Wed Nov 13, 2019 9:57 am

I generally don't bother. I use the Citi Double Cash back and am happy to get 2%. The exception would be when Discover has 5% for the holidays on Amazon or I will be making a big purchase and notice there is a 5% cash back on a particular card. If I get an extra 1 or 2% on gas for an entire year it won't amount to more than a few bucks. I just don't spend that much on gas, at restaurants or the stores they generally have as the bonus category.

Also, if i am doing a high spend for a sign up bonus I typically want to put everything on that new card to satisfy the required spend.

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Re: Are complicated credit card cash back strategies worth it?

Post by rich126 » Wed Nov 13, 2019 10:17 am

I think it depends on your needs and how much you are really saving.

For example my grocery bill is pretty low, maybe $3,000 a year. So 3% is $90 and 4% is $120. How important is it to me to save an extra $30? Ditto for gas, I currently fill up once every 2 weeks so we are talking maybe $900 in gas. Even 6% is only $54.

The numbers change if you are a big spender in a category or can churn money because you are running some kind of business. It also changes if you are running a very tight budget where every penny matters.

Certain cards will give you 3-5X on travel and if you do some traveling, that can add up. I find the initial sign up bonuses to be the big draw and then some of the perks with the cards (access to lounges, free bags, etc.). I signed up for one card recently and it came with a nice cash back bonus and larger 3/6% categories but when I thought about it, I'd end up making a profit after the annual fee, but I doubt it is worth keeping for more than a year.

I agree that you get to a point financially where you look at the numbers and go "It isn't worth my time". Others will always max out offers since they enjoy it. I've thought about opening various bank accounts to get a sign up bonus, especially since interest rates are so low but I've yet to do so. I will probably do it for one bonus but it just seems like a big hassle.

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Re: Are complicated credit card cash back strategies worth it?

Post by kinaokole » Wed Nov 13, 2019 10:23 am

I’ve never tried it, but it seems like a lot of hassle and potential to increase spending to justify the cards’ existence. Moreover, you are increasing your electronic footprint with attendant risk of identity theft and fraud. And there’s the issue of junk mail.

Personally I have one cash back card. I could probably get a better one, but that would require unfreezing my credit.

I realize bogleheads are more disciplined than average consumers, but I don’t think the bazillion dollar credit industry is providing rewards to help people get ahead - they know how the cards influence spending.
Last edited by kinaokole on Wed Nov 13, 2019 10:30 am, edited 1 time in total.

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Re: Are complicated credit card cash back strategies worth it?

Post by michaeljc70 » Wed Nov 13, 2019 10:24 am

rich126 wrote:
Wed Nov 13, 2019 10:17 am
I think it depends on your needs and how much you are really saving.

For example my grocery bill is pretty low, maybe $3,000 a year. So 3% is $90 and 4% is $120. How important is it to me to save an extra $30? Ditto for gas, I currently fill up once every 2 weeks so we are talking maybe $900 in gas. Even 6% is only $54.

The numbers change if you are a big spender in a category or can churn money because you are running some kind of business. It also changes if you are running a very tight budget where every penny matters.

Certain cards will give you 3-5X on travel and if you do some traveling, that can add up. I find the initial sign up bonuses to be the big draw and then some of the perks with the cards (access to lounges, free bags, etc.). I signed up for one card recently and it came with a nice cash back bonus and larger 3/6% categories but when I thought about it, I'd end up making a profit after the annual fee, but I doubt it is worth keeping for more than a year.

I agree that you get to a point financially where you look at the numbers and go "It isn't worth my time". Others will always max out offers since they enjoy it. I've thought about opening various bank accounts to get a sign up bonus, especially since interest rates are so low but I've yet to do so. I will probably do it for one bonus but it just seems like a big hassle.
Even if you are a big spender, don't many of those quarterly categories max out at $1500 of spending?

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Re: Are complicated credit card cash back strategies worth it?

Post by sunny_socal » Wed Nov 13, 2019 10:32 am

I use this combo:

- Costco for gas (4%) and restaurants (3%)
- Alliant Visa for all else (2.5%)

Since Shell is the lowest price gas in my region I got their cash-back card, provides another 2% instantly at the pump - this is effectively 6% cash back. (ie. I run the gas card followed by my Costco Visa)

If I had enough savings to qualify for the BofA cash back card I'd get that.

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Re: Are complicated credit card cash back strategies worth it?

Post by rivercrosser » Wed Nov 13, 2019 12:43 pm

I try to keep it simple. Chase Amazon, 5% back on most purchases. I had the prime account anyway. Also have a Visa Cash+ through US Bank. Currently getting back 5% on electric, and phone bill which includes my home phone, internet, cell phones. And 2% back on gas.

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sunny_socal
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Re: Are complicated credit card cash back strategies worth it?

Post by sunny_socal » Wed Nov 13, 2019 2:20 pm

rivercrosser wrote:
Wed Nov 13, 2019 12:43 pm
I try to keep it simple. Chase Amazon, 5% back on most purchases. I had the prime account anyway. Also have a Visa Cash+ through US Bank. Currently getting back 5% on electric, and phone bill which includes my home phone, internet, cell phones. And 2% back on gas.
Rather misleading IMO. It's really like this:
- 3% on amazon and whole foods (BTW WF is a rather expen$ive store to begin with...)
- 2% on gas, restaurants, drug stores
- 1% everything else

On average it's not much different than a straight 2% card like Fidelity. Pretty easy to beat.

remomnyc
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Re: Are complicated credit card cash back strategies worth it?

Post by remomnyc » Wed Nov 13, 2019 2:37 pm

sunny_socal wrote:
Wed Nov 13, 2019 2:20 pm
rivercrosser wrote:
Wed Nov 13, 2019 12:43 pm
I try to keep it simple. Chase Amazon, 5% back on most purchases. I had the prime account anyway. Also have a Visa Cash+ through US Bank. Currently getting back 5% on electric, and phone bill which includes my home phone, internet, cell phones. And 2% back on gas.
Rather misleading IMO. It's really like this:
- 3% on amazon and whole foods (BTW WF is a rather expen$ive store to begin with...)
- 2% on gas, restaurants, drug stores
- 1% everything else

On average it's not much different than a straight 2% card like Fidelity. Pretty easy to beat.
Amazon rewards is 3%. Amazon Prime is 5%.

EnjoyIt
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Re: Are complicated credit card cash back strategies worth it?

Post by EnjoyIt » Wed Nov 13, 2019 3:06 pm

We use the chase environment with the sapphire reserve as the hub card giving us effectively 1.5 cents per point and sometimes as high as 4 cents per point when traveling 1st class overseas. Probably on average we are looking at 2 cents per point. Anyways here is an estimate for us. These re not our exact figures. I have never done this exercise before to see exactly what I am getting out of this so I'm very curious what the results will be.

We spend about $10k/yr on groceries using gift cards at 5 points per dollar = 50k points
Gas is about $1500/yr with gift cards at 5 points per dollar = 7500 points
Internet at $840/yr at 5 points per dollar = 4200
Cell phone $1140/yr at 5 points per dollar = 5700
restaurants maybe another $3k/yr at 3 points per dollar = 9k points
Outside of the free travel we get with our card we usually spend an extra $15k/yr on travel expenses at 3 points per dollar = 45k points
Maybe another $10k/yr on random stuff at 1.5 points per dollar = 15k points.

Total = 136400 points
at 1.5 cents per point is worth $2046 in travel expenses. As I said above, we usually get better value per point, but for this exercise I will use the minimum.

If I did a flat 2% cash back strategy I would have spent $41,480 at 2% cash back would give me $829.60 or a difference of $1216.40. The question now remains, is the hassle worth the cash? I guess it is because I find the whole thing kind of like a fun game. The only real effort is acquiring the $10k in grocery gift cards and 1500 in gas gift cards at 5 points per dollar which probably takes maybe 2-3 hours of total time over the course of a year when I get them as needed.

All this excludes the 2-3 credit cards we get per year. This year we got:
80k chase points worth $1,200
40k united miles worth $600
$1k bonus cash back credit card
for total of $3,600 worth of value. Which all together probably took me 1 hour of my time to get will take another 10 minutes each to cancel at the end of each year and likely another 2 hours of keeping my ears open over the year to decide which card to get.

After doing the above analysis, honestly, I think it is worth my time.

dboeger1
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Re: Are complicated credit card cash back strategies worth it?

Post by dboeger1 » Wed Nov 13, 2019 3:08 pm

I'm of the opinion that they are not worth it. I understand all the arguments in favor (it doesn't cost you anything, the time investment is small, you should control your spending, etc.), but here are my reasons:

1) Saving is a skill, and there are different degrees of savings proficiency. In my experience, the people who think they're good at saving because they got an extra 1% cash back and damage insurance on the latest iPhone and a new DSLR aren't saving anywhere near as much as the people who stick to a budget phone and take low-quality pictures. If you're already spending enough to justify the bonuses, then sure, whatever, but don't pretend it's the same thing as aggressively cutting expenses.

2) If you're going to go through the trouble of maximizing credit card rewards and benefits, you may as well focus on strategies with much higher returns, such as travel hacking, churning bonuses, etc. We're talking like an extra 20%-70% return depending on specific circumstances, vs. a measly 1% extra for a slightly better cash back card in a given category. It's not even close.

3) There are actually "advanced" cash back setups which are more efficient than a standard 2% cash back card. An example would be taking advantage of Bank of America's bonus tiers based on your balances with them. You could invest $100k in Merril-Lynch, thereby unlocking higher cash back rates on BoA cards across all categories, more or less negating any potential benefits of trying to eek out every last penny of each individual category.

4) If you're not using coupons, cash back portals, or sales regularly yet, your priorities are backwards. Sure, an extra 1% on all purchases is nice, but you can often get well above 10% off if you're careful and look for good opportunities. Many cash back portals have sign-up and referral bonuses as well, which can also raise those returns even higher.

I've used this analogy before, and I think it works. Getting an extra 1% back on a category with a new card is a bit like learning how to dribble a basketball for the first time. It's nice, but it doesn't make you LeBron James. There are so much better ways of spending efficiently that if it really feels like trouble to you, then you should be focusing on those other methods for higher returns.

Just to give an example, I recently bought a cooler online after our old one broke. The cooler was already on sale, so that was technically some savings right off the bat (though if I'm being honest, the going rate on discount web sites was usually that price anywhere, so I won't count it as part of the percentage). The particular site was also offering a 20% off coupon for any one item, so I used that. I had also signed up for a number of cash back portals, and one in particular was having a 1-day 12% off flash sale, as opposed to the usual 1% back they offered for that particular retailer. It was also my first purchase through that portal, and was enough to get me a $10 welcome bonus. And if that wasn't enough, I was using a new credit card with a limited-time elevated signup bonus that equated to more or less a 30% return on spend (admittedly on hotel points, but still a respectable bonus). Oh, and you better believe I signed up for that retailer's rewards program so I got points to use on a future purchase.

So tell me, having read that, are you still planning to run out and get that extra 1% cash back?

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Re: Are complicated credit card cash back strategies worth it?

Post by sunny_socal » Wed Nov 13, 2019 3:10 pm

remomnyc wrote:
Wed Nov 13, 2019 2:37 pm
sunny_socal wrote:
Wed Nov 13, 2019 2:20 pm
rivercrosser wrote:
Wed Nov 13, 2019 12:43 pm
I try to keep it simple. Chase Amazon, 5% back on most purchases. I had the prime account anyway. Also have a Visa Cash+ through US Bank. Currently getting back 5% on electric, and phone bill which includes my home phone, internet, cell phones. And 2% back on gas.
Rather misleading IMO. It's really like this:
- 3% on amazon and whole foods (BTW WF is a rather expen$ive store to begin with...)
- 2% on gas, restaurants, drug stores
- 1% everything else

On average it's not much different than a straight 2% card like Fidelity. Pretty easy to beat.
Amazon rewards is 3%. Amazon Prime is 5%.
That's better, could make a decent companion card to go along with a 2% cash-back card. The restaurant & gas rewards don't stand out and the 1% kills it for "everything else."

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LilyFleur
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Re: Are complicated credit card cash back strategies worth it?

Post by LilyFleur » Wed Nov 13, 2019 3:17 pm

three cards currently: Costco VISA for gas, restaurants, and travel; Amazon VISA for 5% on Amazon and I may take a look at the deals at Whole Foods (we are getting a new one quite close to where I live); Citi DoubleCash for everything else, including medical co-pays and my hefty medical insurance premiums.
My Chase VISA has been sitting not used for a couple of months and they are now charging me a $10 a month fee. I have had this card for decades, and I would like to cancel it but am unsure if it would drop my credit rating.
One of our Bogleheads consolidated all of his bills for the same day each month, and I think that would help me considerably.
And, of course, as a good Boglehead, I only buy what I need (I never ever buy too much food that goes bad at Costco), and I pay off my cards each month.
Last edited by LilyFleur on Wed Nov 13, 2019 3:20 pm, edited 3 times in total.

BigMoneyNoWhammies
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Re: Are complicated credit card cash back strategies worth it?

Post by BigMoneyNoWhammies » Wed Nov 13, 2019 3:17 pm

hungrywave wrote:
Wed Nov 13, 2019 2:52 am
Dear Bogleheads,

Barclaycard Uber gives 4% cash back at restaurants
Chase Amazon Rewards gives 3% cash back at Amazon and Whole Foods
etc
etc

Elan Fidelity Rewards gives 2% cash back all the time and the money can be automatically sent to your Fidelity brokerage account.

Travel rewards hacking aside, does it make sense to try to maximize cash back by utilizing certain cards for certain situations, including when cards rotated cash back rewards? Or am I just tricking myself into spending more money by having a card for every occasion?

Part of my likes to think that I'm being smart by increasing my cash back rewards 50-100% over Fidelity's standard 2%. But another thinks that my psychology may negate any advantage and then some (eg oooh! I have a card for Whole Foods so let's go there!).

What do you think?
Assuming you're spending within your means, you obtain cards with rewards towards items you already spend $ on, and you're paying the balance off monthly, it can certainly be worth it. Why not go for a CC bonus strategy under those circumstances? For example, if I can get one card with 1.5% cash back, one with 3% off groceries and 2% off gas, and one with 3% off restaurant and entertainment, I'm effectively getting a discount of the value of those percentages when I'm paying my balance off monthly. I'll take that every time.

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Re: Are complicated credit card cash back strategies worth it?

Post by MichCPA » Wed Nov 13, 2019 3:36 pm

When you say 'worth it' the question is how much hassle is involved. In my mind potential hassles are:

1. Needing to change cards linked to accounts if categories rotate
2. remembering what card gets a bonus on what spending area
3. Carrying many cards
4. Redemption hassle (minimums, redemption windows, etc.)

In my mind here are the bonus categories for cards I need to carry with me: Dining, groceries, gas, general spend. Everything else can be saved online and isn't a huge deal.

An Amex BCP could fill the grocery and gas options potentially, Cap 1 Savor or any 3% card for dining, and Citi DC or Alliant for gen spend. So you can have a really good setup with as few as 3 cards, maybe 4 if you really don't want the Amex BCP fee. At that level and type of cards, my listed hassle points are minimized for most users. Its highly YMMV though.

randomguy
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Re: Are complicated credit card cash back strategies worth it?

Post by randomguy » Wed Nov 13, 2019 3:39 pm

BigMoneyNoWhammies wrote:
Wed Nov 13, 2019 3:17 pm

Assuming you're spending within your means, you obtain cards with rewards towards items you already spend $ on, and you're paying the balance off monthly, it can certainly be worth it. Why not go for a CC bonus strategy under those circumstances? For example, if I can get one card with 1.5% cash back, one with 3% off groceries and 2% off gas, and one with 3% off restaurant and entertainment, I'm effectively getting a discount of the value of those percentages when I'm paying my balance off monthly. I'll take that every time.
The question is the complexity worth the added savings? As a baseline you can get a card that pays 2% everywhere. Is it worth an extra 10 dollars/thousand spend to have a card that you just use for eating out? Is an extra chipotle buritto or two a year worth having to carry around a piece of plastic you only use at restaurants? Now there is obviously a crossover point. If you buy 100k/year from amazon for your business, you should really get the card that gives 5% cash back. Where that line is depends on how much you value simplicity versus optimizations.

DemySD
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Re: Are complicated credit card cash back strategies worth it?

Post by DemySD » Wed Nov 13, 2019 4:02 pm

If your normal daily spending can ultimately get bonus multipliers for a transfer to a flight you always wanted to take then its worth it. Nickle and diming the 2% vs. the 3% cash back is just a way to fill time in the day.

Shallowpockets
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Re: Are complicated credit card cash back strategies worth it?

Post by Shallowpockets » Wed Nov 13, 2019 4:37 pm

Some people could save a whole lot more money if they did not spend 10k a year on groceries as their major expense to accumulate cash back/points.
Even on the, pop up too often groceries spending threads here. rarely is anyone spending $833 a month.
So, OP, don't fool yourself on getting something for nothing.

JackoC
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Re: Are complicated credit card cash back strategies worth it?

Post by JackoC » Wed Nov 13, 2019 4:39 pm

RickBoglehead wrote:
Wed Nov 13, 2019 4:15 am
Depends on how much one spends. If you cannot stop spending money somewhere just because you get a discount (cash back), you have problems we cannot help with.

We rotate 3 cards for normal spending. Chase for quarterly, but only for categories we normally use ( not using PayPal just to get 3% more), Costco for gas, restaurants/travel, Costco, and Citi DoubleCash for the main card.
I agree as a general rule people who have more to spend generate larger $ cash backs, can even generate larger % cash back*, and *tend* to have less to worry about in terms of excessive spending (with exceptions obviously).

Our current line up is 4 highly active cards, all BOA, to get the 75% cash back bonus. Three 'Cash Rewards' cards with the 5.25% category set at restaurants, online shopping and gas, respectively. We don't buy a lot of gas so 'gas' card is also used for 3.5% on groceries. All three are limited to $2,500 each in spend per qtr for the combined 5.25/3.5% categories. The online shopping one maxes out fairly often (I buy Costco Cash Cards online for our Costco shopping), the other two seldom. Almost everything else is put on BOA Premium Rewards card at 3.5% for travel and 2.625% otherwise, $95 annual fee (other three zero) which can be offset with credit on airline incidentals up to $100. But even paying the whole $95 it handily beats our former mainstay, Citi Double 2% back no annual fee, at our spending level.

We use Chase Freedom sometimes, 5% rotating categories up to $1,500/qtr, and Hilton Amex 7 points per $ booking at Hilton ~4% cash equivalent. But I'm spending down a sign up bonus of 100,000 points and not sure that card will remain fully active after that. Several other cards are kept on life support, used for a small purchase very 3 months or so each. If somebody says this is too complicated, I would not argue with them. I find it worthwhile but with less time or inclination, maybe not.

As other posts have mentioned and many threads covered, sign up bonuses can be much bigger money than optimizing cash back, but it wasn't the question. And besides the AMEX(H) card I've found points systems (where the points aren't a fixed number of $0.01's in cash) to be too complicated to pursue. I think there's also an issue there not of spending 'too much', but spending points on particular things where the points can be used (an airline seat upgrade say) you would not pay for in cash...thus can't say those things are worth to you the nominal points/cash conversion rate. That's also my doubt about using the AMEX(H) card in the long run. It steers me to Hilton brand hotels, but how about when the deal is better at a non-Hilton enough to offset 'only' 3.5% on my BOA Premium Rewards card v 4% on the AMEX(H), assuming the points are worth $0.0057 (which one guy's study said was the average)...that kind of trade off makes my head hurt, and like I said when the sign up points bonus is gone I may ditch it.

*like BOA Preferred Rewards, 75% cash back bonus with $100k+ balance in accounts at Merrill/BOA. $100k in non-home equity, non 401k net worth a household can just shift to Merrill to get that bonus is a big number US nationally. Not as much on this forum but still doesn't include everybody.
Last edited by JackoC on Wed Nov 13, 2019 4:50 pm, edited 1 time in total.

rivercrosser
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Re: Are complicated credit card cash back strategies worth it?

Post by rivercrosser » Wed Nov 13, 2019 4:48 pm

remomnyc wrote:
Wed Nov 13, 2019 2:37 pm
sunny_socal wrote:
Wed Nov 13, 2019 2:20 pm
rivercrosser wrote:
Wed Nov 13, 2019 12:43 pm
I try to keep it simple. Chase Amazon, 5% back on most purchases. I had the prime account anyway. Also have a Visa Cash+ through US Bank. Currently getting back 5% on electric, and phone bill which includes my home phone, internet, cell phones. And 2% back on gas.
Rather misleading IMO. It's really like this:
- 3% on amazon and whole foods (BTW WF is a rather expen$ive store to begin with...)
- 2% on gas, restaurants, drug stores
- 1% everything else

On average it's not much different than a straight 2% card like Fidelity. Pretty easy to beat.
Amazon rewards is 3%. Amazon Prime is 5%.
My 5% back @ Amazon pretty much pays for my prime subscription. I use the photo storage and video service quite a bit also.

rich126
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Re: Are complicated credit card cash back strategies worth it?

Post by rich126 » Wed Nov 13, 2019 6:13 pm

michaeljc70 wrote:
Wed Nov 13, 2019 10:24 am
rich126 wrote:
Wed Nov 13, 2019 10:17 am
I think it depends on your needs and how much you are really saving.

For example my grocery bill is pretty low, maybe $3,000 a year. So 3% is $90 and 4% is $120. How important is it to me to save an extra $30? Ditto for gas, I currently fill up once every 2 weeks so we are talking maybe $900 in gas. Even 6% is only $54.

The numbers change if you are a big spender in a category or can churn money because you are running some kind of business. It also changes if you are running a very tight budget where every penny matters.

Certain cards will give you 3-5X on travel and if you do some traveling, that can add up. I find the initial sign up bonuses to be the big draw and then some of the perks with the cards (access to lounges, free bags, etc.). I signed up for one card recently and it came with a nice cash back bonus and larger 3/6% categories but when I thought about it, I'd end up making a profit after the annual fee, but I doubt it is worth keeping for more than a year.

I agree that you get to a point financially where you look at the numbers and go "It isn't worth my time". Others will always max out offers since they enjoy it. I've thought about opening various bank accounts to get a sign up bonus, especially since interest rates are so low but I've yet to do so. I will probably do it for one bonus but it just seems like a big hassle.
Even if you are a big spender, don't many of those quarterly categories max out at $1500 of spending?
Not really. I think $1,500 you are referring to is the limit of the quarterly categories something like Chase Freedom has. Other cards have higher or no limits. For example the American Express Blue Preferred card gives you 6% cash back on groceries up to $6,000 of spending.

The American Express gold card gives you 4X points on up to $25,000 of groceries. Depending on how you value AMEX points, 4X is likely worth more than 6% cash back IMO.

I've been lucky with cards and points, and while I'm not out there doing stuff like "manufacturing spending" to obtain more points, I've managed to pay for about a dozen round trips to Europe in business or first class in the last decade. I don't need tons of points since I'm not sure I could handle more than 1 trip a year or so internationally. Even in business or first class, it seems to wipe me out. Currently I have around a million or so points on various cards/FF programs despite not traveling much.

And I would rarely turn down a card if it offers in the 75K to 100K point bonus range for a reasonable spend.

michaeljc70
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Re: Are complicated credit card cash back strategies worth it?

Post by michaeljc70 » Wed Nov 13, 2019 7:17 pm

rich126 wrote:
Wed Nov 13, 2019 6:13 pm
michaeljc70 wrote:
Wed Nov 13, 2019 10:24 am
rich126 wrote:
Wed Nov 13, 2019 10:17 am
I think it depends on your needs and how much you are really saving.

For example my grocery bill is pretty low, maybe $3,000 a year. So 3% is $90 and 4% is $120. How important is it to me to save an extra $30? Ditto for gas, I currently fill up once every 2 weeks so we are talking maybe $900 in gas. Even 6% is only $54.

The numbers change if you are a big spender in a category or can churn money because you are running some kind of business. It also changes if you are running a very tight budget where every penny matters.

Certain cards will give you 3-5X on travel and if you do some traveling, that can add up. I find the initial sign up bonuses to be the big draw and then some of the perks with the cards (access to lounges, free bags, etc.). I signed up for one card recently and it came with a nice cash back bonus and larger 3/6% categories but when I thought about it, I'd end up making a profit after the annual fee, but I doubt it is worth keeping for more than a year.

I agree that you get to a point financially where you look at the numbers and go "It isn't worth my time". Others will always max out offers since they enjoy it. I've thought about opening various bank accounts to get a sign up bonus, especially since interest rates are so low but I've yet to do so. I will probably do it for one bonus but it just seems like a big hassle.
Even if you are a big spender, don't many of those quarterly categories max out at $1500 of spending?
Not really. I think $1,500 you are referring to is the limit of the quarterly categories something like Chase Freedom has. Other cards have higher or no limits. For example the American Express Blue Preferred card gives you 6% cash back on groceries up to $6,000 of spending.

The American Express gold card gives you 4X points on up to $25,000 of groceries. Depending on how you value AMEX points, 4X is likely worth more than 6% cash back IMO.

I've been lucky with cards and points, and while I'm not out there doing stuff like "manufacturing spending" to obtain more points, I've managed to pay for about a dozen round trips to Europe in business or first class in the last decade. I don't need tons of points since I'm not sure I could handle more than 1 trip a year or so internationally. Even in business or first class, it seems to wipe me out. Currently I have around a million or so points on various cards/FF programs despite not traveling much.

And I would rarely turn down a card if it offers in the 75K to 100K point bonus range for a reasonable spend.
The American Express Blue Preferred is $6k on groceries per year which is $1500 per quarter.

The Amex Gold has a $250 annual fee. As you said, it depends how you value points too. I'm not saying it can't be worth it for some people, but it wouldn't be for me. I buy a lot of groceries at Costco/Sam's and that typically doesn't count as groceries.

Discover also has the $1500 limit per category on the rotating quarterly categories as well as Chase Freedom like you mentioned.

ARoseByAnyOtherName
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Re: Are complicated credit card cash back strategies worth it?

Post by ARoseByAnyOtherName » Wed Nov 13, 2019 7:53 pm

hungrywave wrote:
Wed Nov 13, 2019 2:52 am
Travel rewards hacking aside, does it make sense to try to maximize cash back by utilizing certain cards for certain situations, including when cards rotated cash back rewards? Or am I just tricking myself into spending more money by having a card for every occasion?
There's two steps needed to answer this question I think.

Step 1: looking at your monthly spending, how much extra would you earn per month if you tried to maximize cash back vs. a simple single cash back card?

Even if you don't want to calculate this for yourself we can do a very rough calculation. Assuming a spend of $3,000 a month on the credit card, straight 2% cash back will result in $720 a year / $60 a month cash back. Bumping that up to straight 4% cash back on everything (which likely isn't realistic but is a useful upper bound) you get $1,440 a year / $120 a month. You can easily adjust these numbers to fit your personal situation based on looking at your credit card statements and substituting the monthly total for $3,000.

(Step 1a: Do you really need to be spending that much money every month?)

Step 2: based on the numbers above, is an extra $60 a month (from our example) worth it to you? And by worth it, I mean the total time, energy, and cognitive overhead it takes to keep a bunch of credit cards straight.


The answer to Step 2 for me personally is no, it is absolutely not worth the cognitive overhead for me to try eeking out every last penny from credit card rewards. My brain would explode in many tiny pieces. There's many other things I'd rather spend my time on. I literally can't fathom using 9 cards like another poster said. So I use the following cards:

- Chase Amazon Visa - 5% back at Amazon. (We have Prime and do a lot of shopping on Amazon.)
- Fidelity Visa - 2% back everywhere else.

I think for some people it's like a game, where they try to optimize cash back to the Nth degree as a hobby. For others maybe they're in a situation where that extra $60 really is a big deal. But for most people, and certainly for me, I think the optimum point is having two cards at most: a straight 2% card, and then maybe a second card that gives much greater rewards in a specific situation, like the Amazon 5% back.

Now Boarding
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Re: Are complicated credit card cash back strategies worth it?

Post by Now Boarding » Thu Nov 14, 2019 12:07 am

I've been trying to simplify my credit cards. It helps that my spending is low because as a boarding school teacher, I don't pay for housing, utilities, or groceries. I've found the BofA Cash Rewards Card and the flexible category choices (with Platinum Honors) to be a good everyday spending card.

CascadiaSoonish
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Re: Are complicated credit card cash back strategies worth it?

Post by CascadiaSoonish » Thu Nov 14, 2019 1:24 am

Tons of great info on this thread. I'll just make a couple observations:
  • It seems to be a more labor-intensive game to get the best value out of the programs nowadays. A decade ago it was trivial to rack up free flights and status on airlines with a reasonable credit card spend, for example. Not any more. So consider me to be +1 on the comments noting that it's a personal question on how much effort you want to put into it.
  • I had a terrible experience with the Fidelity card with billing issues, payment issues, and fraudulent transactions in a very short period of time. Not Fidelity's fault, it was all Elan's responsibility. Not sure if they're still administering the card but I would stay far, far away if Elan is still handling the card for Fidelity.

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Re: Are complicated credit card cash back strategies worth it?

Post by danielc » Thu Nov 14, 2019 4:26 am

hungrywave wrote:
Wed Nov 13, 2019 2:52 am
Dear Bogleheads,

Barclaycard Uber gives 4% cash back at restaurants
Chase Amazon Rewards gives 3% cash back at Amazon and Whole Foods
etc
etc

Elan Fidelity Rewards gives 2% cash back all the time and the money can be automatically sent to your Fidelity brokerage account.

Travel rewards hacking aside, does it make sense to try to maximize cash back by utilizing certain cards for certain situations, including when cards rotated cash back rewards? Or am I just tricking myself into spending more money by having a card for every occasion?
My view is that if a reward card makes you alter your purchasing decisions, it probably tricked you into spending more than you would save from the rewards. It doesn't take much to offset a 3-4% reward. If one time out of 30 you buy a widget or pay for a service that you were not planning to buy, that more than offsets a 3% reward.

I like the Elan Fidelity Rewards card because it is not tied to any purchasing decision. So I feel moderately confident that I can just sort of forget that I have rewards on that card, and just go about my daily life. I cannot guaranteed that I have not spent 2% more than I otherwise would have, but I think I have mostly been able to "forget" that I have a rewards card.

JBTX
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Re: Are complicated credit card cash back strategies worth it?

Post by JBTX » Thu Nov 14, 2019 4:32 am

"Worth it" is obviously a subjective and relative criteria. We spend more than average, and that has nothing to do with credit card bonuses. The last 2+ years have probably made around $4-5k per year in up front credit card and bank account bonuses, and another $2k+ in ongoing cash back rewards. Is $5k+ a year worth it?

It does take some time and attention. It almost becomes a game/hobby and can be fun but occasionally gets burdensome.

As to the on going rewards, once you get a system set up it doesn't take that much more work. Is that worth an additional $1k per year?

I can totally understand how some people don't think the additional mental energy and distraction is worth it. But some seem to want to further rationalize not doing by saying it makes you spend more and making it out to be more complicated than it is.

When not chasing up front bonuses

- 5% amazon prime card
- 5% walmart cap one card for online groceries
- cap one savor 4% for dining (I got one before it became annual fee card)
- approx 3.5% gas boa cash rewards
- 5% target card (rarely use)
- 6% blue cash preferred grocery (may downgrade it because most groceries are at walmart)
- 2% fidelity for everything else.

Maybe one day I'll move some investments to merrill edge to get the 5.25% tiers but I'd have to rearrange some investments to do that and that seems like the tail wagging the dog.

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danielc
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Location: Iowa, USA
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Re: Are complicated credit card cash back strategies worth it?

Post by danielc » Thu Nov 14, 2019 4:35 am

z3r0c00l wrote:
Wed Nov 13, 2019 6:49 am
It is worth opening a few cards with bonuses, and then strategically using a few cards for their high % items. An extra 1% back on food, a big budget item for me which I will spend no matter what, amounts to $70 per year. Is it worth holding an extra few grams of plastic in my wallet for $70 per year? I'd say so.
Is $70/year worth possibly altering your purchasing choices? $70 is nothing compared to your yearly expenses. It is very easy to make two $35 purchases a year that you otherwise would not have made. Also, a year from now I'm not going to notice if I have an extra $70 in the bank.

I use the Fidelity 2% cashback card. I don't think about the rewards, I just use it for all my day-to-day purchases. I checked the other day and I seem to be making $1,200/year in the form of cashback. That's still little enough that I don't think I'll notice it, but I feel fairly confident that having this reward that I generally don't think about has not caused me to spend an extra $1,200 this year.

theplayer11
Posts: 1183
Joined: Tue Jul 22, 2014 8:55 pm

Re: Are complicated credit card cash back strategies worth it?

Post by theplayer11 » Thu Nov 14, 2019 8:06 am

I'm big into sign up bonuses, the everyday spend categories..not so much

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