topic Re: Card Use strategy in Credit Cards

Card Use strategy

dynamicvb — Sat, 12 Oct 2019 19:21:48 GMT

There may be such a thread, but I haven't found it or if I did it was really old, but what are others' opinions on the best way you can use your cashback to get the most benefit?

I was wary of cards when I first found this forum. They where a contributing factor to me having to do a rebuild, but back then cards ( unless they were the elite cards) did not give you money back for using them or anything for that matter. Anyway, once I got one and saw what the credit mix factor was, then I've gotten several, but I'm still not using these to get the maximum benefit of Cashback to help the most important credit number in your life. Your Net Worth.

So I have 3 cards that could all be considered prime.

Amex Cash Magnet with 1.5% CB on anything

CapOne SavorOne 3% restaurants 2% Groceries 1% everything else that matters

Discover IT 2% restaurants/fuel, pretty much 1% on everything else

Two of these cards the Discover and Amex are getting closed to the end of their promo periods.

I've been using the Amex for the recurring type expenses. Netflix, Daily Driver, etc.. I still have some other recurring bills that could go on this card.

Groceries and Out to eat go on the CapOne.

The Discover I have pretty much not used much since I put up a decent balance on it for a family emergency and put it on the cards, but hey I got Discover to give me double cashback on my mother's funeral. She would have liked that.

I don't really care about temporary swings in my scores. I may be one of the few people in this forum who could care less about 10-15 point swings between months depending on the number of revolvers reporting and their balance. I've got plenty of limits so utilization would not be an issue even if I figured out a way to run all 4K of my monthly expenses through a card that would in some way give me some benefit.

How do others manage their card benefit strategy?

Thought is

Re: Card Use strategy

Anonymous — Sat, 12 Oct 2019 19:36:30 GMT

First off... don't close them when you're done with them. Find a use occasionally to keep things moving upwards or at least stable. If you have other cards you didn't list besides these 3 then it's an option to kill them off if you still desire.

I use specific cards for specific things.....

BCP = 6% @ grocery stores .... they also have a streaming perk which would fall into your use case

USB Cash+ = all utilities @ 5%

Uber = knocked out the $250AF for Amex Gold and retained the higher earn rates for dining @ 4%

BOA CR = 3% @ warehouse / wal-mart type places

Chase Amazon = 5% on Amazon

Sam's MC = 5% gas

Disco = dying a slow death between nerfed benefits and losing higher % earns

Handful of 1.5-2% cards

2 x DC

1 x CM

1 x CFU

Some regionals for SUB's and not much else

BBVA

BBT

Regions

Then some foundational CU cards w/ low APR's

UFCU = Got it down to a 6.9% FIXED APR over the years and now they start off at 8.x%

JFCU - 11.9% (used to be 9.9% for many years until they raised the floor APR)

Consumers - nothing special for rates

ITCU - 9.x%

Re: Card Use strategy

kdm31091 — Sat, 12 Oct 2019 19:41:12 GMT

If I follow correctly, I think you're trying to say that you'd rather use one card for all of the spending and earn cash back in one place. I think that's fine and makes sense. Obviously you do lose optimization and you won't be getting the highest % on everything, but some people value simplicity and that's fine.

If you close the cards and are down to only one account total, you will see a score effect from that, but it's not like there are not people in the world with only one CC and a good credit score. It will prevent you from achieving the highest possible score. I would probably just SD one of the cards so you have a backup card at least, but the choice is yours.

As far as using the cash back for the best purpose, I think it's largely preference and really isn't going to impact your life in any meaningful way. It's a nice bonus, but not life changing. The biggest thing I would say I see people do that (IMO) is a bad idea, is to hoard the cash rewards. Especially with no redemption minimum, I think you may as well redeem them every month. Even if it's only $2 or something paltry, better in your pocket than the issuer's pocket. The whole point of rewards cards is to get rewards, so leaving them sit forever is self defeating.

Re: Card Use strategy

dynamicvb — Sat, 12 Oct 2019 20:07:57 GMT

USB Cash + will definitely be a card I put in my wallet. If they will give me one. Since they let you choose to 5%, and that is more than the penalty my Electric company would access if I paid with a card. Going to need to look into that one.

I do only have the 3 cards right now. I did have a starter Capone that I closed. I would prefer to keep the management down so that I do not consume all my energy trying to keep up. I'm also not opposed to opening up some others that will help the cause.

I'm mainly looking for ideas on how you can get CB back in some decent amount of your monthly expenses to live. Since my Amex pays me 1.5% CB on everything, then all of the ones that would pay 1% get put on the better category. 1.5% is a 50% gain on 1%

5% is a 500% gain on 1 %. So definitely need another card too.

Re: Card Use strategy

dynamicvb — Sat, 12 Oct 2019 20:25:44 GMT

@kdm31091 wrote:

As far as using the cash back for the best purpose, I think it's largely preference and really isn't going to impact your life in any meaningful way. It's a nice bonus, but not life changing. The biggest thing I would say I see people do that (IMO) is a bad idea, is to hoard the cash rewards. Especially with no redemption minimum, I think you may as well redeem them every month. Even if it's only $2 or something paltry, better in your pocket than the issuer's pocket. The whole point of rewards cards is to get rewards, so leaving them sit forever is self defeating.

This is part of it too. I just use it to cut down on the card balance and as a result, its actually saving me on recurring expenses each month, which is better for long term financial health. More money to save as a result. Right now this makes the best sense as there are longer-term purchases on the CapOne. I actually like the idea of being directly deposited into a bank account. Could put it in one to speculate on penny stocks if you so desired.

Re: Card Use strategy

eastsea — Sat, 12 Oct 2019 20:37:50 GMT

Which catetories do you put your largest expenses? Focus on those first. Then get a catch all card that will cover everything else.

For example, if you enjoy dining out and traveling, use Uber for dining at 4% and travel at 3% and Citi Double Cash for all other expenses at 2%.

Re: Card Use strategy

Aim_High — Sat, 12 Oct 2019 21:12:11 GMT

@dynamicvb wrote:
... I'm still not using these to get the maximum benefit of Cashback to help the most important credit number in your life. Your Net Worth ... which is better for long term financial health ... More money to save as a result ... I actually like the idea of being directly deposited into a bank account. Could put it in one to speculate on penny stocks if you so desired.

I keep seeing a theme of savings which I think others have missed. Not only maximizing cashback but also consolidating it in one place and using that to add to one's Net Worth.

That said, there are some cards that are specifically designed to do that. Or you could choose one flat 2% card and have the money deposited into an account if you are disciplined enough to do that. Segregating it separate from your other funds is probably best.

The Fidelity Visa (Elan Financial Services) pays 2% back on all purchases when deposited into a Fidelity investment account. ($50 minimum redemption.) Also, the Charles Schwab AMEX Investor's card (basically their brand-labeled version of Cash Magnet) has $200 SUB right now and pays 1.5% when deposited into a Schwab investment account with no AF.

Re: Card Use strategy

Anonymous — Sun, 13 Oct 2019 00:43:50 GMT

How do you calculate networth?

Anyway, credit card optimization is done mostly for fun. It will not make you rich. Even super churners and msers only get some free trips and that's it. yes there were WF millionaires but that was never meant to be at a large scale and they got shut down in a hurry.

Re: Card Use strategy

Anonymous — Sun, 13 Oct 2019 01:00:03 GMT

@eastsea wrote:
Which catetories do you put your largest expenses? Focus on those first. Then get a catch all card that will cover everything else.

For example, if you enjoy dining out and traveling, use Uber for dining at 4% and travel at 3% and Citi Double Cash for all other expenses at 2%.

This exactly. Without knowing what you use the card for, all we can say is you need a DC to replace your amex 1.5% card.

Re: Card Use strategy

JNA1 — Sun, 13 Oct 2019 01:24:29 GMT

I’m less than a year into really utilizing cash back, and I only currently have 1 CB card, so my experience is limited. However, we are on pace to earn $1300+ for the year, but this due in part to Discover’s Cash Back Match program for the first year.

We basically funneled all of our spending that we could through the Discover card. The only thing we use our debit card for is to pay car payments, mortgage, and to get cash out of our checking account. We use the card for all day to day expenses, and pay all utilities, insurance, online shopping, gas etc.

As time goes by, I plan to get more cards with higher % categories for certain things to maximize my earnings, but I doubt I’ll ever utilize more than 3 or 4 cards for the sake of simplicity. Even not doing it at pro level, it’s hard to fault earning over $100 per month for money I have to spend anyway.

Re: Card Use strategy

Anonymous — Sun, 13 Oct 2019 02:20:32 GMT

Savor - dining and entertainment, golf at 1% cash back

BoA Cash rewards - online and Walmart, Bank Amerideals, a 1% cash back purchase

Amex - groceries, Amex deals, a 1% cash back purchase

Chase Freedom - rotating categories, Chase deals, online rebates that exceed 2%, a round of golf at 1%

Disco - rotating categories, a 1% cash back purchase

Propel - tolls, parking, cell phone bill, travel (hotels, airfare, car rental), Amex deals, WF Earn More Mall, a 1% cash back purchase

PNC Bank - gasoline (4%), PNC deals, vending machine purchases lol (at 3%), fast food purchases (at 3%), two 1% cash back purchases

Double Cash - cable, insurance (homeowners, car), car maintenance/repairs, golf, major purchases, everything else.

Re: Card Use strategy

Gollum — Sun, 13 Oct 2019 08:59:28 GMT

@dynamicvb wrote:
There may be such a thread, but I haven't found it or if I did it was really old, but what are others' opinions on the best way you can use your cashback to get the most benefit?

I was wary of cards when I first found this forum. They where a contributing factor to me having to do a rebuild, but back then cards ( unless they were the elite cards) did not give you money back for using them or anything for that matter. Anyway, once I got one and saw what the credit mix factor was, then I've gotten several, but I'm still not using these to get the maximum benefit of Cashback to help the most important credit number in your life. Your Net Worth.

So I have 3 cards that could all be considered prime.

Amex Cash Magnet with 1.5% CB on anything
CapOne SavorOne 3% restaurants 2% Groceries 1% everything else that matters
Discover IT 2% restaurants/fuel, pretty much 1% on everything else

dynamicvb,

It looks to me as though you are getting close enough to the maximum benefit to your net worth via credit card cash back that you can call it good. Nobody builds wealth via credit card cash rewards.

Re: Card Use strategy

Aim_High — Sun, 13 Oct 2019 16:35:06 GMT

@Anonymous wrote:
How do you calculate networth?

Net Worth is your total assets minus your total debts, in a nutshell.

Put another way, if you were to liquidate everything you own except the clothes on your back, how much money would you be worth (OR) how much money would you owe?

The easiest way to do it is to add up all your cash, bank accounts, investments, market value of larger assets like houses, cars, or even other holdings of value like boats, airplanes, significant collectibles or antiques to get your asset total. (You can add the value a home or car, for example, even if it's not yet paid off. The amount you owe will be reflected in the other calculation for debt.)

Then, add up everything you owe including credit card debt, student loans, medical debts, and the outstanding balance on home mortages, car loans, etc. You may need to use online tools to estimate current market value of real estate, cars, or other assets, particularly if you've held them a long time and they may have depreciated or appreciated significantly from the price you originally paid.

Assets minus debts equals net worth.

Most people don't literally calculate it down to selling all their various possessions, as that is too complex and more inconsequential, but you could take it that far if you wanted. But it's good to have a rough idea what you're worth and to try to improve it over time.

Re: Card Use strategy

Aim_High — Sun, 13 Oct 2019 17:54:04 GMT

@Anonymous wrote:
credit card optimization is done mostly for fun. It will not make you rich.

@Gollum wrote:

Nobody builds wealth via credit card cash rewards.

I concur that cash rewards on credit cards will never turn anyone into a billionaire.

On the other hand, the attitude that it is just for fun and can't turn into significant money is a matter of perspective. It ignores the value of saving even smaller amounts of money over time and the enormous value of compounding interest or investment appreciation. Small amounts can turn into big money, especially given enough time. Saying a little cash savings is insignificant seems to me a defeatist attitude that dismisses the value of small steps in reaching financial goals. More millionaires in this country started out appreciating the value of a penny than there are millionaires born into wealthy families.

Some people prefer to just use their cash rewards to ease their day-to-day budget constraints. Nothing wrong with that, but as has been said many times here, a few dollars here and there probably won't be life-changing. And some people just need that little boost to their effective income. The only problem with that is it taints our perspective of how valuable that cash back could be over time because it so quickly disappears as soon as it appears. It literally slips through our fingers.

On the other hand, some choose to save their rewards up for major purchases or travel rewards, via either cash or points. That is also an easy way to relieve our day-to-day budget and add value to our lives, but it probably isnt' life-changing.

For a person who is saving and especially if they have a longer time-line, cashback rewards could really add up over time. If I were to chose to bank all my various cashback rewards instead of using them to pay down my bills, I could easily be banking several hundred if not even more than a thousand dollars a year (especially if counting SUBs). In other words, you could be recognizing and setting aside those small cash rewards like "found money" that you get in addition to what you would be spending anyway.

And then what happens? Here's one example. (You can do the same calculations of your own if you look for online "compound interest calculators.")

Let's say I were able to set aside $1,000 per year in cash back and SUBs from various cards. That is not an unrealistic goal, depending on spend level and credit cards. I think I'm a pretty average consumer and I get over $150 back annually from my CITI Costco card alone, and that is only one of my many rewards programs. And many cards right now are offering SUBs worth at least several hundred dollars for spending I would be doing anyway. So year 1, I deposit $1000 into an investment earning a conservative rate of return of only 5%. (The average rate of return of the S&P 500 stocks since 1957 is 8%.) Each year, I deposit another $1K and compound that interest monthly. After 20 years, that $1K annual investment would be worth $37,108. (If I averaged the full 8%, I would have $54,339.)

For most average Americans, that's not insignicant money. Would you take an extra $54K? I would! Considering how abysmal retirement savings are for the average American, that money could help contribute to a somewhat more comfortable retirement, for example. But it requires the discipline to practice delayed gratification to allow financial markets to work their magic also.

And I applaud people like @dynamicvb who want to use their cash back rewards in a longer-term investment strategy. That is why I suggested the Fidelity and Charles Schwab cards, because they are specifically designed to make it easier for people who want to invest their cashback savings.

Re: Card Use strategy

dynamicvb — Sun, 13 Oct 2019 20:39:10 GMT

Thanks, Aim_high, this is the type of thing I was thinking of. Up to this point, I've done like most with this little bit of cashback and just applied it to my current balances. This still has the same effect as I then have to pull out less money from my income, which improves, my overall financial health.

With your example of 100 bucks per month, most people could reduce their mortgage 7-10 years by just applying that amount to their payment as an extra payment each month. This is what I'm leaning towards doing with this little extra as that has the potential to save me the most over time in terms of interest payments I won't need to fork over.

The 2 dollars here and there can add up to a lot if you give it enough time and apply it to the correct part of your finances.

Re: Card Use strategy

Anonymous — Mon, 04 Nov 2019 16:18:28 GMT

Reviving this instead of starting a new one.

What's is my wallet (all my current CCs)?
-Chase Sapphire Reserve (CSR)
-Chase Marriott Bonvoy
-Amex Blue Cash Preferred (BCP)
-Amex Everyday (EDC)

My decision making strategy:

1. Use Amex and Chase offers if more beneficial (for the offers that align with my spending habit, the offers outweigh the category spending)

2. Category spending
-Dining and travel on CSR
-Gas, groceries and streaming on BCP
-Groceries after 6k on EDC
-Marriott spending on Bonvoy

3. All else on Bonvoy
8 out of 10 times when I have control over hotel selection I choose Marriott brands

I also have a Target debit card (5% off) that I use for all things Target.

For future CCs:
-Propel and Chase Freedom Unlimited although not sure how I would integrate them since there is overlap and Bonvoy use works for me in the everything else category
-Hilton Aspire. If not at a Marriott I'm usually at a Hilton property
-Marvel or SavorOne for entertainment.