The CC Cash Back Biz Model

[CribDuchess]

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@ztnjpv wrote:

CribDuchess,

I took Bill Pay and Restaurants (non-fast food) as my 5% categories. And Bill Pay was 100% of the reason I got the card. I was very thorough in peppering the CSR's with questions before being sufficiently satisfied to apply.

Restaurants was a no-brainer for me on my other category. We eat out at least twice per month. 

As for Bill Pay, as long as the transaction is coded as an accetable category for Bill Pay, it works. For example, today I paid a portion of my commercial electric bill with the Cash+. I called US Bank and literally had the CSR wait on the phone while I paid a portion of the bill through my electric utility company's third part payment processor for credit cards. When the transaction went through (with a $4.95 fee), I had the CSR tell me how it was coded. She said it came through as "electric utility" and that it was acceptable as a 5% bonus category. I was very happy. That $4.95 fee was more than offset by the $30 I got on my $600 payment. Now whether I get 5% of the fee as well remains to be seen. Anyway, I did this 3 times and paid $1800. At least $90 cash back....$75.15 net after the fees. I also paid my home owners insurance on my new rental property in full for $431. That's another $21.55. Next month, I'll be adding my Gas Bill. Whether you pay over the phone or online makes no difference. It works. 

Keep in mind that some of these, like Electric and Gas, will likely have fees associated with the transaction. But at 5%, the fee is always more than offset. Also keep in mind that sites like ChargeSmart are expensive and not always the best way. My electric utility was eligible to pay through them and it would have cost double. Luckily I was aware of Bill Matrix as another payment processor for my electric. They, as it turns out, are also the processor for my gas utility. The fee is a flat $4.95 per $600. So, it can happen that I get screwed if my bill is $650 because I pay $4.95 twice. But I can always pay small balances seperately through my checking. 

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Hi ztnjpv - thank you so much for taking the time to explain this!  Most of my utilities allow me to pay with a credit card with no fee.  Only exception is my natural gas, which is a flat $4.95 fee.  My gas bill runs around $140/month in the winter, so I will net a little something after the fee is accounted for.  Was wondering myself about whether the 5% cash back would apply to the fee as well.  Can't wait to find out!

I have State Farm insurance and I pay monthly via their website.  I have always paid via my checking account, but I have noticed the ability to pay with a credit card.  Will definitely have to explore that option for the cash back.

The bill pay category should net me about $30.00 in cash back each month.  For my first quarter (July - Sept), I'm choosing department stores for my other 5% category, even though we eat out twice a week in restaurants on average.  With back to school shopping upon us, I should be able to rack up a nice amount of cash back.  Then I'll probably switch to restaurants for the Oct-Dec quarter.

The card showed up in my US Online Banking this morning, but I don't have it in my hands yet......gonna be stalking the mailman for awhile.  LOL

Thanks again for sharing your experience/tips!

[compassion101]

Lots of people pay interest on CCs, as well as anual fees, late fees, over-the-limit fees, foreign transaction fees, cash advance fees, etc.

I remember reading visa and MC terms, they take very little I believe of the swipe actually. The rest is between the CCC and a small something for the processor. The CCC still make money on most even after rewards, plus alot of cards don't have rewards. On a few items that they don't, like you said it's a cost they don't mind eating.

Bottom line is I think we vastly underestimate how much money is spent on interest by customers. It's more than enough to keep people who PIF happy to get their rewards and floats.

[Revelate]

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@compassion101 wrote:

Lots of people pay interest on CCs, as well as anual fees, late fees, over-the-limit fees, foreign transaction fees, cash advance fees, etc.

I remember reading visa and MC terms, they take very little I believe of the swipe actually. The rest is between the CCC and a small something for the processor. The CCC still make money on most even after rewards, plus alot of cards don't have rewards. On a few items that they don't, like you said it's a cost they don't mind eating.

Bottom line is I think we vastly underestimate how much money is spent on interest by customers. It's more than enough to keep people who PIF happy to get their rewards and floats.

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Pretty much this.  Nearly everyone wastes tons of money over their lifetimes (not that this is necessarily a bad thing), but as an example I'm pretty literate about such things, and even I wound up scratching my head at a $3 dollar fee that I saw on my credit card and realized: oh hey, this is a Forex fee for ordering shirts from a London-based clothier.  I'd made similar purchases previously (for RTW shirts, they fit me very well) and never noticed the foreign currency exchange fee previously.

Whoops!