topic Re: SUB Math in Credit Cards

SUB Math

Anonymous — Wed, 05 Sep 2018 20:23:41 GMT

Perhaps this is well-known, but in case it's a new concept for some . . .

To maximize any SUB, you want to use your WORST cash back/rewards spending categories FIRST.

If I am working on a SUB valued at $600 requiring $3K in spend, then my gross reward is 20%. My NET reward depends on which spend I use. If I get 6% back on groceries and use only grocery spend to meet the SUB, then my NET reward is 14%. If I get 1% back on my car insurance, then only using car insurance spend nets 19%.

Now, net 14% is fine for some or all of the SUB if grocery spend is REQUIRED for you to meet the SUB. But in most cases it is not.

Re: SUB Math

simplynoir — Wed, 05 Sep 2018 18:44:34 GMT

Some people can't afford to put just non-category spending to meet a SUB though. They have to put any/all charges to make sure they reach the spend or otherwise waste a new account/HP. I agree though if you can afford to spread your spend over like that it's most beneficial to put non-category purchases (insurance, taxes, etc.) before putting others on there.

Re: SUB Math

Kree — Wed, 05 Sep 2018 18:54:04 GMT

I don't understand this. why is your net 14% instead of 26%? I thought SUB were independent of other earnings on a card. So shouldn't they be added?

Re: SUB Math

Anonymous — Wed, 05 Sep 2018 19:18:55 GMT

@Kree wrote:
I don't understand this. why is your net 14% instead of 26%? I thought SUB were independent of other earnings on a card. So shouldn't they be added?

Example: I spend

1. $500 on gas & groceries per month where I already earn 5%.

2. $500 on restaurants & bars each month where I already earn 4%.

3. And $1000 in miscellaneous spend where I earn 2%

I get a new card with a SUB valued at $600 if I spend $3K in the next 3 months.

Option 1

I use my SUB card to buy gas, groceries, meals and drinks at $1000 per month. I use my Citi DC to earn 2% on the miscellaneous spend each month.

At the end of 3 months, I have earned $600 + $60 (2% on $1000 * 3 months) in misc bonus = $660.

Option 2

I use my SUB card on misc spend, and buy gas, groceries, meals and drinks on my 4-5% cards.

At the end of 3 months, I have earned $600 + $60 (4% on $500 * 3 months) + $75 (5% on $500 * 3 months) = $735.

Re: SUB Math

Anonymous — Wed, 05 Sep 2018 19:38:00 GMT

To complete the example, had I no SUB card, I would have earned $60 + $60 + $75 or $195 those three months.

735-195 = 540 / 3000 = SUB net 18% bonus in Option 2

660-195 = 465 / 3000 = SUB net 15.5% bonus in Option 1

Re: SUB Math

Anonymous — Wed, 05 Sep 2018 19:49:45 GMT

@Anonymous wrote:
@Kree wrote:
I don't understand this. why is your net 14% instead of 26%? I thought SUB were independent of other earnings on a card. So shouldn't they be added?
Example: I spend

1. $500 on gas & groceries per month where I already earn 5%.
2. $500 on restaurants & bars each month where I already earn 4%.
3. And $1000 in miscellaneous spend where I earn 2%

I get a new card with a SUB valued at $600 if I spend $3K in the next 3 months.

Option 1
I use my SUB card to buy gas, groceries, meals and drinks at $1000 per month. I use my Citi DC to earn 2% on the miscellaneous spend each month.

At the end of 3 months, I have earned $600 + $60 (2% on $1000 * 3 months) in misc bonus = $660.

Option 2
I use my SUB card on misc spend, and buy gas, groceries, meals and drinks on my 4-5% cards.

At the end of 3 months, I have earned $600 + $60 (4% on $500 * 3 months) + $75 (5% on $500 * 3 months) = $735.

You are using faulty logic. To get optimal earnings all spending should be on sign up bonuses. In your scenario you spent 3000 dollars and got 135 dollars back because you used category spending bonuses. That isn't good at all. In your scenario you have 6000 spend in 3 months. Get 2 sign up bonuses that require 3k spend and you will be a head and you won't have to remember what card to use with which spend.

Say you get two 600 dollar signup bonuses on your spend. Plus you get at least 60 dollars of value for your spend on your 2 cards you would have at a minimum of $1260. That beats your plan any way you slice it. I think you are just over thinking this stuff.

Re: SUB Math

Anonymous — Wed, 05 Sep 2018 19:54:13 GMT

@Anonymous wrote:
@Anonymous
You are using faulty logic. To get optimal earnings all spending should be on sign up bonuses. In your scenario you spent 3000 dollars and got 135 dollars back because you used category spending bonuses. That isn't good at all. In your scenario you have 6000 spend in 3 months. Get 2 sign up bonuses that require 3k spend and you will be a head and you won't have to remember what card to use with which spend.

I said in the OP it's OK to use high reward spend on SUBs if it you must do so to meet the SUB.

But most people are going to have some spend left over when trying to meet a SUB or SUBs. It's not "overthinking" it to suggest that leftover spend needs to be in your high rewards category, not your low rewards spend.

Re: SUB Math

Anonymous — Wed, 05 Sep 2018 20:18:52 GMT

@Anonymous wrote:
@Kree wrote:
I don't understand this. why is your net 14% instead of 26%? I thought SUB were independent of other earnings on a card. So shouldn't they be added?
Example: I spend

1. $500 on gas & groceries per month where I already earn 5%.
2. $500 on restaurants & bars each month where I already earn 4%.
3. And $1000 in miscellaneous spend where I earn 2%

I get a new card with a SUB valued at $600 if I spend $3K in the next 3 months.

Option 1
I use my SUB card to buy gas, groceries, meals and drinks at $1000 per month. I use my Citi DC to earn 2% on the miscellaneous spend each month.

At the end of 3 months, I have earned $600 + $60 (2% on $1000 * 3 months) in misc bonus = $660.

Option 2
I use my SUB card on misc spend, and buy gas, groceries, meals and drinks on my 4-5% cards.

At the end of 3 months, I have earned $600 + $60 (4% on $500 * 3 months) + $75 (5% on $500 * 3 months) = $735.

While your point is correct (and also as you say, should be obvious!) your calculation is a little wrong in that you assume you are not earning ANY spending rewards on the SUB card. In reality, you would probably be earning at least 1% on the $3K spend, reducing the difference a little

Re: SUB Math

UpperNwGuy — Wed, 05 Sep 2018 20:26:29 GMT

But if the card with the 5% category spending is the same card for which you are seeking the signup bonus, then your logic falls apart.

Re: SUB Math

fittiger — Wed, 05 Sep 2018 20:44:42 GMT

@Anonymous wrote:
Perhaps this is well-known, but in case it's a new concept for some . . .

To maximize any SUB, you want to use your WORST cash back/rewards spending categories FIRST.

If I am working on a SUB valued at $600 requiring $3K in spend, then my gross reward is 20%. My NET reward depends on which spend I use. If I get 6% back on groceries and use only grocery spend to meet the SUB, then my NET reward is 14%. If I get 1% back on my car insurance, then only using car insurance spend nets 19%.

This makes no sense. If you put earn your SUB by placing spend on 6% categories rather than 1% categories, you will earn the SUB just the same, but you will earn 6x on reward category spend more than 1x category spend.

You should always place spend on highest/BEST categories, unless additional spend requirements are needed to obtain the SUB.

Re: SUB Math

Anonymous — Wed, 05 Sep 2018 21:07:45 GMT

@UpperNwGuy wrote:
But if the card with the 5% category spending is the same card for which you are seeking the signup bonus, then your logic falls apart.

As you and fittinger argue, if say you are getting a new SUB card with its own high reward category, it obviously makes sense to use the new SUB card on that category.

Excellent point.

For all other categories outside your SUB's high reward category, my point remains. Use the SUB spend on categories where you would otherwise earn low rewards.

Re: SUB Math

Anonymous — Wed, 05 Sep 2018 21:51:16 GMT

In my scenario what would you suggest?

Im currently meeting SUB for Citi TY Premiere where I get 3x points on all travel, 2x on dining and entertainment, and 1x on all other. I also have the Savor that earns 4% back on Dining and Entertainment which is worth more than 2 TY points based on how I plan to redeem. Discover is also currently 5% on restaurants this quarter. Although I do have 0% on purchases for a year, I do also have a BT on the card and I don’t like combining.

Now Im currently at the point where I could meet the SUB with just non category spend or 1x point spend (monthly bills and Insurance) on the premier. Would you still put dining and entertainment on the TY premiere or would you put it on the Savor or Discover?

Re: SUB Math

Anonymous — Wed, 05 Sep 2018 22:14:37 GMT

@Anonymous wrote:
In my scenario what would you suggest?

Im currently meeting SUB for Citi TY Premiere where I get 3x points on all travel, 2x on dining and entertainment, and 1x on all other. I also have the Savor that earns 4% back on Dining and Entertainment which is worth more than 2 TY points based on how I plan to redeem. Discover is also currently 5% on restaurants this quarter. Although I do have 0% on purchases for a year, I do also have a BT on the card and I don’t like combining.

Now Im currently at the point where I could meet the SUB with just non category spend or 1x point spend (monthly bills and Insurance) on the premier. Would you still put dining and entertainment on the TY premiere or would you put it on the Savor or Discover?

Under those conditions, put dining and entertainment on Discover/Savor.

UNLESS you get ANOTHER new card with a SUB worth more than 4-5% where you can't meet the Premier SUB and new SUB without using one of them on dining/entertainment.

Re: SUB Math

Anonymous — Wed, 05 Sep 2018 22:24:43 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous
You are using faulty logic. To get optimal earnings all spending should be on sign up bonuses. In your scenario you spent 3000 dollars and got 135 dollars back because you used category spending bonuses. That isn't good at all. In your scenario you have 6000 spend in 3 months. Get 2 sign up bonuses that require 3k spend and you will be a head and you won't have to remember what card to use with which spend.

I said in the OP it's OK to use high reward spend on SUBs if it you must do so to meet the SUB.

But most people are going to have some spend left over when trying to meet a SUB or SUBs. It's not "overthinking" it to suggest that leftover spend needs to be in your high rewards category, not your low rewards spend.

I understand the point you are trying to make, but I also agree that your logic is faulty. You used two separate scenarios. One scenario spent 3k and the other spent 6k. You are comparing apples to oranges. The 3k scenario netted $660, while the 6k scenario netted $735. To get a truer picture, look at the cash back percents and not the actual dollars.

$660 / $3000 spend = %22 cash back

$735 / $6000 spend = %12.5 % cash back.

As frogman said, if you're going to assume that everyone spends $6000 every month, the ideal scenario is to churn two SUBS.

Re: SUB Math

Anonymous — Wed, 05 Sep 2018 22:27:32 GMT

@Anonymous wrote:
@Anonymous wrote:
In my scenario what would you suggest?

Im currently meeting SUB for Citi TY Premiere where I get 3x points on all travel, 2x on dining and entertainment, and 1x on all other. I also have the Savor that earns 4% back on Dining and Entertainment which is worth more than 2 TY points based on how I plan to redeem. Discover is also currently 5% on restaurants this quarter. Although I do have 0% on purchases for a year, I do also have a BT on the card and I don’t like combining.

Now Im currently at the point where I could meet the SUB with just non category spend or 1x point spend (monthly bills and Insurance) on the premier. Would you still put dining and entertainment on the TY premiere or would you put it on the Savor or Discover?
Under those conditions, put dining and entertainment on Discover/Savor.

UNLESS you get ANOTHER new card with a SUB worth more than 4-5% where you can't meet the Premier SUB and new SUB without using one of them on dining/entertainment.

Thanks! I’ll just put it on the Savor for now on. I don’t plan on getting any new cards for at least a year. I have had my fair share of cards this year alone lol.

So going forward I’ll just put bills on the premiere until SUB has been met obviously. Any other non category spend will be put on the Citi DC or Fidelity (leaning towards DC due to price protection and lower min redemption). Obviously, any other category spend will be put on the card that yields the best return.

sounds good? Or should all non category spend go on the premiere until SUB has been met?

Re: SUB Math

Anonymous — Wed, 05 Sep 2018 22:58:15 GMT

This discussion seems to have become overly complex, whereas I thought the point was very simple. But I guess it's hard to cover all the cases.

My attempt would be: Except in cases where you need all the spending to be on the SUB card, meet the minimum using transactions with the highest-net value over using your normal cards. (and of course make sure you DO meet the minimum)

So if your normal non-category card is a general 2%, and non-categories on the SUB card earn 1%, the net value of putting those transactions on the SUB card is -1%. If groceries are non-category on the SUB card, but 6% elsewhere, moving those would be -5%. If the SUB card earns 6% on groceries as well, the net value would be 0%. If the SUB card earns 3% on some category whereas these are non-category on your other cards (and thus earn a max of 2%), putting them on the SUB would net 1%

As I said, seems pretty obvious!

Re: SUB Math

Anonymous — Thu, 06 Sep 2018 00:07:58 GMT

@Anonymous wrote:
@Anonymous
sounds good?

Sounds good. But also make sure you use the Premier for any travel if that's your highest travel earning card.

Re: SUB Math

Anonymous — Thu, 06 Sep 2018 00:16:10 GMT

@Anonymous wrote:
This discussion seems to have become overly complex, whereas I thought the point was very simple. But I guess it's hard to cover all the cases.

Thanks.

What got me thinking about this: I have an IHG card coming in. Sure, it gets great rewards on IHG hotel spend, but I am not sure I will be able to use it for that purpose in the next 90 days.

I got the card for the SUB and the annual free night (for the price of the AF).

So I was thinking: what's the most effective way to meet the SUB, given that I already get 4-5% back on restaurants, 5-6% back on groceries, 5% on Amazon, gas, sporting goods, home utilities & department stores, and 3% back on travel.

The answer was, as you say, obvious. If I don't stay at an IHG hotel, meet the SUB with miscellaneous spend that would otherwise earn 2%.

Because it's a Mastercard, I will be able to meet the sub quickly with a mortgage payment, a car payment and a couple of bills. Then I will apply for my next SUB card or two.

Re: SUB Math

Anonymous — Thu, 06 Sep 2018 00:23:49 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous
sounds good?
Sounds good. But also make sure you use the Premier for any travel if that's your highest travel earning card.

Yea will certainly do that just forgot to mention it. I will use it for Gas and all travel of course.

Re: SUB Math

Anonymous — Thu, 06 Sep 2018 00:44:28 GMT

I apply for a new card a month before I will finish sign up bonus spend so I am never without a card to spend on.

I think your problem is you are mixing two methods people use. People tend to be either churners or people caring about cash back for categories. Churners are always working on bonuses.