A credit card with 2.5% cash back on every single purchase – not specific categories

[Anonymous]

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@wasCB14 wrote:

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@Anonymous wrote:

Mountain Voltage, I actually spend about $10k - $12k per year (or about $1,000) per month on one specific credit card. I got this USAA card, not at the beginning of the year but part of the way through it and have made about $100 to $200 so far. I mistakenly calculated from that.

I suppose, starting next year from day 1 (Jan 1st), I will probably again spend around $1K per month again this year on that credit card. Given this rate of expenditure, I would make about $300.

$12K per year/$1,000 per month X 2.5% = $300

$12K per year/$1,000 per month X 2.0% = $240

$12K per year/$1,000 per month X 1.5% = $180

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To put 2.5% of $1k a month in context....

2.5% of $1k is $25. After 4 years and 8 months (56 months total) that's $1,400 ($25 * 56).

Imagine someone with the same spend gets a Venture for a year, uses up the rewards (some travel redemption), and PCs to a QS in time to avoid the AF.

That's a $500 travel bonus, $240 (2% of $1k for 12 months) in other travel redemptions, and $660 in cash back (1.5% of $1k for 44 months). 56 months on the account less 12 months as a Venture equals 44 months as a QS.

$500+$240+$660=$1400

I get that the customer service with USAA is great...but people who ooh and ahh over the 2.5% rewards should run the numbers to see if it really is so much better than alternatives. In your case, it takes this card nearly five years to out-earn the popular and easy game of getting a Venture and PCing it after a year.

Admittedly, some of the Cap1 redemptions must be for travel.

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Or be smarter about it and imagine someone with the same spend gets a Venture for a year, uses up the rewards (some travel redemption), and PCs to a QS in time to avoid the AF. Then, instead of charging 44 months at a garbage 1.5% rate, they put the next 44 months on their Limitless while the QS gets parked in the SD.

That's a $500 travel bonus, $240 (2% of $1k for 12 months) in other travel redemptions, and $1100 in cash back (2.5% of $1k for 44 months). That's $440 more simply from making better decisions.

$500+$240+$1100=$1840

That's an additional free $440.

[wasCB14]

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@Anonymous wrote:
Or be smarter about it and imagine someone with the same spend gets a Venture for a year, uses up the rewards (some travel redemption), and PCs to a QS in time to avoid the AF. Then, instead of charging 44 months at a garbage 1.5% rate, they put the next 44 months on their Limitless while the QS gets parked in the SD.

That's a $500 travel bonus, $240 (2% of $1k for 12 months) in other travel redemptions, and $1100 in cash back (2.5% of $1k for 44 months). That's $440 more simply from making better decisions.

$500+$240+$1100=$1840

That's an additional free $440.

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That does earn more, but involves using two accounts vs. my one-account calculations. Not quite apples to apples. If there's no limit on the number of cards, then constant bonus hunting is the winning approach.

My point was that a "tortoise card" (low/no bonus, good earn rate) can need significant spend to catch up to a "hare card" (good bonus, lower earn rate). Tortoises are good if you use them regularly for years and years, but many people on here don't give them the necessary spend. Or the tortoises just get nerfed.

[Anonymous]

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@wasCB14 wrote:

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@Anonymous wrote:
Or be smarter about it and imagine someone with the same spend gets a Venture for a year, uses up the rewards (some travel redemption), and PCs to a QS in time to avoid the AF. Then, instead of charging 44 months at a garbage 1.5% rate, they put the next 44 months on their Limitless while the QS gets parked in the SD.

That's a $500 travel bonus, $240 (2% of $1k for 12 months) in other travel redemptions, and $1100 in cash back (2.5% of $1k for 44 months). That's $440 more simply from making better decisions.

$500+$240+$1100=$1840

That's an additional free $440.

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That does earn more, but involves using two accounts vs. my one-account calculations. Not quite apples to apples. If there's no limit on the number of cards, then constant bonus hunting is the winning approach.

My point was that a "tortoise card" (low/no bonus, good earn rate) can need significant spend to catch up to a "hare card" (good bonus, lower earn rate). Tortoises are good if you use them regularly for years and years, but many people on here don't give them the necessary spend. Or the tortoises just get nerfed.

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Someone that can qualify for the Venture or Limitless can qualify for a second card though, lol. I don't know why we limit ourselves to a single card, especially on this site, while trying to simultaneously talk about fiscally sound decisions. Bonuses always bump a card in it's overall earn rate, that should be a given, and anyone can be a churner.

[wasCB14]

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@Anonymous wrote:

Someone that can qualify for the Venture or Limitless can qualify for a second card though, lol. I don't know why we limit ourselves to a single card, especially on this site, while trying to simultaneously talk about fiscally sound decisions. Bonuses always bump a card in it's overall earn rate, that should be a given, and anyone can be a churner.

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All I did was compare two options and show that humdrum Cap1 can be more rewarding for many people than the scarce, exciting USAA card.

I didn't say people should only use one card. As you can see in my signature, I certainly don't. I just like to make my new accounts worthwhile (and as of 2015, they have been).

[Anonymous]

I am with you on this one WasCB.

Perpetual chasers, will usually get a better deal as long as they keep chasing. This holds true with Credit cards, with savings and checking accounts and with multiple other things. I personally do not want to be a perpetual chaser every year looking for a new card to burn just for that sign on/first year incentive and then have the card turn to substandard (or standard rewards) after that year/period. To constantly deal with opening and closing cards and accounts every year just to chase deals is not my cup of tea.

I started a thread over on another section of this forum regarding the best APR high interest savings acount rates and there too, some recommended chasing from bank to bank every single year for bank "X's" particular yearly incentive. If one does this they really can make substantially more. I am not willing to do this. High interest savings rates is an area I would like USAA to improve as they are not competitive. Nor is Captial One (I use both banks). But again, I am not willing to chase accounts for those yearly deals either.

It looks as though the USAA 2.5% cash back on every purchase is the highest in the industry over the long term (more then one year) if one uses just one card for every purchase, if one does not have $100,000 and if one does not want to perpetually chase the next yearly best deal. If one does have 100,000 then the rate is 2.65% if I remember correctly. So not even that much higher then 2.5%. If one does want to perpetually chase yearly deals and constantly open and close cards and/or if one does want to use just one card for gas and another for grocery and another for catagory "X", they too can make substantially more. Is this a fairly accurate overview of the comments so far?

[Anonymous]

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@Anonymous wrote:

I am with you on this one WasCB.

Perpetual chasers, will usually get a better deal as long as they keep chasing. This holds true with Credit cards, with savings and checking accounts and with multiple other things. I personally do not want to be a perpetual chaser every year looking for a new card to burn just for that sign on/first year incentive and then have the card turn to substandard (or standard rewards) after that year/period. To constantly deal with opening and closing cards and accounts every year just to chase deals is not my cup of tea.

I started a thread over on another section of this forum regarding the best APR high interest savings acount rates and there too, some recommended chasing from bank to bank every single year for bank "X's" particular yearly incentive. If one does this they really can make substantially more. I am not willing to do this. High interest savings rates is an area I would like USAA to improve as they are not competitive. Nor is Captial One (I use both banks). But again, I am not willing to chase accounts for those yearly deals either.

It looks as though the USAA 2.5% cash back on every purchase is the highest in the industry over the long term (more then one year) if one uses just one card for every purchase, if one does not have $100,000 and if one does not want to perpetually chase the next yearly best deal. If one does have 100,000 then the rate is 2.65% if I remember correctly. So not even that much higher then 2.5%. If one does want to perpetually chase yearly deals and constantly open and close cards and/or if one does want to use just one card for gas and another for grocery and another for catagory "X", they too can make substantially more. Is this a fairly accurate overview of the comments so far?

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Only once you realize that WasCB is in favor of the Venture/QS bonus-chasing combo as opposed to the singular choice of the Limitless due to the short-term value.

[Anonymous]

This conversation has gone a lot of places. Its hard to keep track. For someone who does not want to perpetually chase bonuses or have multiple cards for individual catagories, nor do they have $100,000, is 2.5% cash back on every single purchase the best rate?

[simplynoir]

Yes.

[Anonymous]

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If it's any consolation though, I agree that USAA has pretty garbage rates outside of the Limitless. All of my Limitless and Cashback rewards go into a savings account that I transfer to Ally for a significantly better interest rate. USAA isn't really a 'great' bank in any area, they simply do a lot of things for servicemembers and try to be a jack-of-all-trades.

[Anonymous]

Thanks Dyna, without derailing this thread further (I already asked the question about what is the best bank to use for highest interest savings acount APY without chasing) in the "personal finance" section of this thread:

1. Is Ally a good bank

2. Do they have leading high interest savings APY's (doesnt have to be the highest/leader) but are they among the highest for a reasonable number of years (again, do not want to chase yearly incentives from bank to bank for banks who want to do a bait and switch).

You can answer in that other thread if you prefer. Thanks you everyone for your help so far.