topic Re: Do you forget about CB% when chasing a new sub? in Credit Cards

Do you forget about CB% when chasing a new sub?

Anonymous — Sun, 09 Sep 2018 15:25:52 GMT

I have an Uber card with 4 and 3% CB on food and travel. Two of my biggest expenses. It was quite easy to hit that sub when it was my only card.

I just got Citi DC. I've still been putting food on the Uber, but other everyday stuff on the DC. The SUB may happen organically because I've got some birthday(s) and maybe early holiday(woo price rewind!) shopping to do. BUT do you put one card aside and spend everything on another just to meet the sub?

I guess this might have to be the case with those premium travel cards requiring 2k+ spend

Re: Do you forget about CB% when chasing a new sub?

Brian_Earl_Spilner — Sun, 09 Sep 2018 15:52:00 GMT

I don't have many bills and don't spend very much in general so I have to put everything on a SUB card or I won't hit goal.

Re: Do you forget about CB% when chasing a new sub?

Anonymous — Sun, 09 Sep 2018 15:39:32 GMT

I try to only put spend on sign up bonus. In July I messed up and didn't have a card for spend for 3 weeks. So I put all my spend on my SPG card for 3 weeks as at that time SPG points were worth around 3 cents each.

I don't have the patience to worry about categories.

Re: Do you forget about CB% when chasing a new sub?

SBR249 — Sun, 09 Sep 2018 15:47:01 GMT

I don't think of SUB and %CB as different things. For instance, if I just got a card that gives me $100 back for $500 spend, I treat that as 20% CB for the next $500. In that case, my policy of always using the card with the highest %CB dictates that I put spending on the new card until $500 has been reached and the regular rewards scheme kicks in and I go back to my regular usage pattern.

Practically speaking, since SUB spends almost always give higher %CB than any regular rewards schemes, that means I always put almost all my spending toward an SUB when I get a new card.

The only exception to this rule that I have is if a card has ancillary non-monetary benefits for the spending. For instance, the Uber Visa offers cell phone insurance if you pay your mobile phone bill on it. In that case, I would still pay my mobile bill using Uber. Same thing if a card gives primary rental insurance and I need to rent a car.

Re: Do you forget about CB% when chasing a new sub?

NRB525 — Sun, 09 Sep 2018 16:26:24 GMT

To a certain level, certainly you have to focus spend to get the SUB. Once you know upcoming items within the required time period will get you there, then it is time to consider other, non-critical-path spend for category cards outside the SUB.

Like a lot of things credit card related, it takes a spreadsheet to keep track of.

Re: Do you forget about CB% when chasing a new sub?

UpperNwGuy — Sun, 09 Sep 2018 16:32:45 GMT

When I got the Chase Sapphire Reserve two years ago, I put all my spending on it until I reached the minimum spending target for the 100,000 points signup bonus.

When I got the PenFed Power Cash Rewards a year ago, I continued to use the CSR for travel and dining because I knew I would have enough non-category spending to hit the minimum spending target for the PenFed card.

No new cards in the last year, so no fussing with signup bonuses.

Re: Do you forget about CB% when chasing a new sub?

imaximous — Sun, 09 Sep 2018 16:45:19 GMT

I time my applications so I don't have to find where to spend. In other words, I don't apply just for the sake of getting a new card, so it's easy for me to meet the SUB without having to resort to charging everything on it, and continue to use every other card as usual.
Even during the SUB period, I only spend on the bonus categories of the new card. I'm always trying to max out each program, so I apply for matching cards right before those expenses are coming up.

Re: Do you forget about CB% when chasing a new sub?

Kforce — Sun, 09 Sep 2018 17:41:31 GMT

@SBR249 wrote:
I don't think of SUB and %CB as different things.
They are different things !

If I just got a card that gives me $100 back for $500 spend. I treat that as 20% CB for the next $500.
I put spending on the new card until $500 has been reached.
It is always less than the (Sub/Spend) because you are taking rewards money from somewhere else to meet the spend requirement

If you divert spend from a credit card that would be giving you a cashback reward of 5%.
(US-Bank Cash+ - Utilities), Discover, Etc.
@Anonymous card $ = (500 spend @ utilities rate on new card of 1% + SUB of 100) = $105
Diversion of money from 5% card cashback earnings of (500*0.05) = 25
Value = ((500*0.01)+100 ) - (500*0.05)= 105 - 25 = $80 (16% Gain)

Same but using a 1.5% Capital one cards spend
@Anonymous card $ = (500 spend @ general spend rate on new card of 1% + SUB of 100) = $105
Diversion of money from 1.5% card cost cashback earnings of (500*0.015) = 7.50
Value = ((500*0.01)+100 ) - (500*0.05)= 105 - 7.50 = $97.50 (19.5% Gain)

You gain 17.50 on this low spend SUB by diverting from your lowest earning card
The math is (sub cashback on spend + sub reward) - (diverted money * cashback from diverted card)
In this example 19.5% as compared to 16%

While diverting funds to meet a SUB, you should get the extra needed money from spend that is earning the lowest cashback or point value and work your way up as necessary. Not always but usually the general spend category is the least profitable and where I would divert spend from. (YMMV depending on cards and spend)

Re: Do you forget about CB% when chasing a new sub?

Anonymous — Sun, 09 Sep 2018 18:19:19 GMT

I use only non-categorized general spending on my 2% card to meet SUBs unless the new card offers better rewards than category spending, this way I only lose 1% rewards overall.

I also have about $15k business spending per month with a handful of net30/net45 vendors for inventory that charges 2% fee for using CCs, I can easily pay one of the invoices to meet SUB then reimburse myself, with this option I can easily meet multiple SUBs at the same time if I ever want to get into churning.

Re: Do you forget about CB% when chasing a new sub?

Brian_Earl_Spilner — Sun, 09 Sep 2018 18:49:39 GMT

@Anonymous wrote:
I use only non-categorized general spending on my 2% card to meet SUBs unless the new card offers better rewards than category spending, this way I only lose 1% rewards overall.

I also have about $15k business spending per month with a handful of net30/net45 vendors for inventory that charges 2% fee for using CCs, I can easily pay one of the invoices to meet SUB then reimburse myself, with this option I can easily meet multiple SUBs at the same time if I ever want to get into churning.

Yeah, but how do you offset the turbo tax?

Re: Do you forget about CB% when chasing a new sub?

Anonymous — Sun, 09 Sep 2018 18:53:18 GMT

@Brian_Earl_Spilner wrote:
@Anonymous wrote:
I use only non-categorized general spending on my 2% card to meet SUBs unless the new card offers better rewards than category spending, this way I only lose 1% rewards overall.

I also have about $15k business spending per month with a handful of net30/net45 vendors for inventory that charges 2% fee for using CCs, I can easily pay one of the invoices to meet SUB then reimburse myself, with this option I can easily meet multiple SUBs at the same time if I ever want to get into churning.
Yeah, but how do you offset the turbo tax?

With PenFed's 20% off deal of course.

Re: Do you forget about CB% when chasing a new sub?

Anonymous — Sun, 09 Sep 2018 19:31:35 GMT

@Kforce wrote:
@SBR249 wrote:

If I just got a card that gives me $100 back for $500 spend. I treat that as 20% CB for the next $500.
I put spending on the new card until $500 has been reached.
It is always less than the (Sub/Spend) because you are taking rewards money from somewhere else to meet the spend requirement

I think this is more semantics than something significant (in this context!) I have a choice. I can either put this spend towards meeting the SUB thus eventually get a 20% gain, or use (say) a 5% card and get 5%. To me this is fine, as otherwise, when I use a 5% card, I should take into account that I am giving up using a 2% card so the gain is really... etc

Re: Do you forget about CB% when chasing a new sub?

Anonymous — Sun, 09 Sep 2018 20:06:35 GMT

For SUBs, if the SUB card offers a reward category of its own (like say Savor 4% on food/entertainment), then it's always best to use the SUB card on categories where you can stack a second reward.

After that, assuming you have spending over the SUB period (typically 3-4 months) that is in excess of the SUB requirement (typically $2-4K), then you want to maximize SUB card spend on all miscellaneous categories that typically only earn 1-2% with another card. Conversely, you want to minimize SUB card use on categories where you can earn 4-6% with another card.

If you have significant spend in excess of the current SUB card requirement, then it's probably best to get ANOTHER SUB card assuming you can meet it.

Re: Do you forget about CB% when chasing a new sub?

SBR249 — Sun, 09 Sep 2018 21:25:09 GMT

@Kforce wrote:
@SBR249 wrote:
I don't think of SUB and %CB as different things.
They are different things !

If I just got a card that gives me $100 back for $500 spend. I treat that as 20% CB for the next $500.
I put spending on the new card until $500 has been reached.
It is always less than the (Sub/Spend) because you are taking rewards money from somewhere else to meet the spend requirement

If you divert spend from a credit card that would be giving you a cashback reward of 5%.
(US-Bank Cash+ - Utilities), Discover, Etc.
@Anonymous card $ = (500 spend @ utilities rate on new card of 1% + SUB of 100) = $105
Diversion of money from 5% card cashback earnings of (500*0.05) = 25
Value = ((500*0.01)+100 ) - (500*0.05)= 105 - 25 = $80 (16% Gain)

Same but using a 1.5% Capital one cards spend
@Anonymous card $ = (500 spend @ general spend rate on new card of 1% + SUB of 100) = $105
Diversion of money from 1.5% card cost cashback earnings of (500*0.015) = 7.50
Value = ((500*0.01)+100 ) - (500*0.05)= 105 - 7.50 = $97.50 (19.5% Gain)

You gain 17.50 on this low spend SUB by diverting from your lowest earning card
The math is (sub cashback on spend + sub reward) - (diverted money * cashback from diverted card)
In this example 19.5% as compared to 16%

While diverting funds to meet a SUB, you should get the extra needed money from spend that is earning the lowest cashback or point value and work your way up as necessary. Not always but usually the general spend category is the least profitable and where I would divert spend from. (YMMV depending on cards and spend)

I see where you are coming from here. However, for me personally it doesn't always apply because often I don't have enough non-category spend to meet a SUB if I don't pull from other areas. While you can use marginal %CB as your metric for deciding which spending to put through a new card, I find that non-category spending for me is one of the least predictable areas of spending. This means that not meeting a spend threshold is a legitimate worry if I don't focus my spend on a new card. Perhaps this is not applicable to many people, but to me, the risk of not meeting a SUB threshold and thus losing out on 15% CB vs. losing out on 3%CB because I didn't use marginal %CB in my calculation makes the latter not really worth the extra effort to execute.

Edit: I realize that the strategy also involves moving up from non-cat to category spend as needed to fill the spend threshold. But I find that while I'm very good at keeping track of my spending, this kind of micromanagement is really feasible only in hindsight personally speaking. So rather than expending a lot of effort to precisely allocate spending ahead of time, I just focus spending. It's not a longsighted strategy, but it's what I use.

That's just me of course. I find that keeping things simple is better for my sanity than spending 10mins at the cash register trying to figure out which card to use.

Re: Do you forget about CB% when chasing a new sub?

Anonymous — Sun, 09 Sep 2018 21:44:06 GMT

I will usually shift most spending to the card with the SUB depending on what it is and how valuable it is. Right now I am working on the SUB for my PRG but still putting gas on my PP Xtras card and online purchases on my QS unless there is a promotion through Amex for what I am purchasing.

Re: Do you forget about CB% when chasing a new sub?

Kforce — Mon, 10 Sep 2018 00:06:24 GMT

@Anonymous
I think this is more semantics than something significant (in this context!)
It is math and real % numbers not semantics.

I have a choice. I can either put this spend towards meeting the SUB thus eventually get a 20% gain, or use (say) a 5% card and get 5%.
If that is the only choice for diverting funds (5% cards spend), however my point is one should divert funds if possible from the lowest cashback or point value cards first and then move up to spend from other higher earning cards. It saves money, and with larger spend requirements the savings is not pocket change

Should I take into account that I am giving up using a 2% card so the gain is really... etc
Yes : If you have a 2% cashback general spend card and use a 4% cashback card your real gain is only 2% of the spend on the 4% card.
Gain by using a 5% becomes 3%, 4% becomes 2%, and a 3% becomes a 1%.

This is why I sometime cringe when I see some one with a 2% cashback card work hard and sweat over getting a 3% gas card for 200 spend a month on gas. It really becomes 1%*200 or 2 dollars/month or they have an unlimited 3% food and want the Blue Cash Preferred with a real 4.4% & a cap and AF (Gain of 1.4%) There is nothing wrong with getting cards to make a little extra cashback but I believe many just use the advertising, and have no clue as to the real value of that next card. I spend 1000 on restaurants and get 4%, therefor I make $40 (Not so) or the Blue Cash Preferred (500/mo * 0.06)=30/mo (Even further from the truth).

So "YES" you should be aware of the real value of a card because it is easy to be fooled into believing your gain is what is advertised.
A 20% Sub can easily only be about 16% and a 5% card only get you 3%.

Re: Do you forget about CB% when chasing a new sub?

pinkandgrey — Mon, 10 Sep 2018 00:10:34 GMT

I tend to divert all spending (or at least the majority) to the card with the SUB.

Re: Do you forget about CB% when chasing a new sub?

Anonymous — Mon, 10 Sep 2018 00:17:38 GMT

@Kforce wrote:

So "YES" you should be aware of the real value of a card because it is easy to be fooled into believing your gain is what is advertised.
A 20% Sub can easily only be about 16% and a 5% card only get you 3%.

I've agreed in another thread much of what you said (transactions for sub spending should be those that have the highest (usually least negative) net value so you are not wasting 5% transactions)

But I disagree with the above. My only point was that money spent towards a SUB REALLY will earn 20% (in the made up example) and using a 5% card REALLY will earn 5% (assuming no AF etc), and so the decision of what to spend can be made that way. You can then compare the gain against alternatives. IMO, otherwise things get arbitrarliy complex: I could not buy this and use the money to invest in say high yield bonds, so using a 2% card is actually a -3% loss, or I could buy this cheaper at a place that only takes cash (and have to buy a few more than I was planning) etc

I agree though that comparing is important, as in your moving from a 2% to 3% example.

Re: Do you forget about CB% when chasing a new sub?

Anonymous — Tue, 11 Sep 2018 00:44:32 GMT

@Anonymous wrote:
@Kforce wrote:

So "YES" you should be aware of the real value of a card because it is easy to be fooled into believing your gain is what is advertised.
A 20% Sub can easily only be about 16% and a 5% card only get you 3%.

But I disagree with the above. My only point was that money spent towards a SUB REALLY will earn 20% (in the made up example) and using a 5% card REALLY will earn 5% (assuming no AF etc), and so the decision of what to spend can be made that way. You can then compare the gain against alternatives.

Yes, the decision of what to spend can be made be made either way. But I think before one applies for a card, one should compute the real value of the SUB. The real value of the SUB of one card might be higher than the one of another card, even though the advertised sub is lower. Also suppose a $500 SUB has a real value of only $200, is it still worth applying for the card?

Edit: I did not mean to imply that one should not apply for a card which has with a low real value SUB. Only if the SUB is an integral part of the decision to apply for a card, one should base the decision on the real value of the SUB.

Re: Do you forget about CB% when chasing a new sub?

SBR249 — Mon, 10 Sep 2018 05:50:49 GMT

@Anonymous wrote:
@Anonymous wrote:
@Kforce wrote:

So "YES" you should be aware of the real value of a card because it is easy to be fooled into believing your gain is what is advertised.
A 20% Sub can easily only be about 16% and a 5% card only get you 3%.

But I disagree with the above. My only point was that money spent towards a SUB REALLY will earn 20% (in the made up example) and using a 5% card REALLY will earn 5% (assuming no AF etc), and so the decision of what to spend can be made that way. You can then compare the gain against alternatives.

Yes, the decision of what to spend can be made be made either way. But I think before one applies for a card, one should compute the real value of the sub. The real value of the sub of one card might be higher than the one of another card, even though the advertised sub is lower. Also suppose a $500 sub has a real value of only $200, is it still worth applying for the card?

I'm not sure I completely agree with this. For me, SUB is generally not the factor on which I choose the cards to apply for nor do I judge the value/utility of a card based on its SUB. After all, I usually keep the cards I get and I am careful to only choose ones that fit into my portfolio based on the rewards strategy I'm pursuing. I don't apply for cards that aren't good fits for my usage no matter how lucrative the SUB is. Of course, if two cards are equivalent except for the SUB, I'd consider that, but I don't ever recall a case where I've apped or chosen a card based on the SUB.