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Credit Card Tips and Strategies, Issue #005 -- How to earn maximum cash rebates?
Credit Card Tips and Strategies Newsletter 005
Date : 15th November 2005
Table of Contents
1. How to maximize cash rebates from cash back credit cards?
2. New "City" Cards from American Express
3. The American DreamCard Mastercard
4. Chase Borders and Waldenbooks Visa
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How to maximize cash rebates from cash back credit cards?
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I frequently get asked this question : Which is better, the Citi Dividend Platinum Select
Card or the Blue Cash from American Express? These questions come from those who
are not sure which cash rebate card is best. For those who spend a lot on their credit cards,
the best way to earn cash rebates is actually to combine cash back credit cards. But how?
And which credit cards to combine?
Before we get into that, you have to understand how credit card companies segment the
cash rebate market based on what you purchase.
"Everyday Purchase" - These are purchases made at standalone supermarkets,
gasoline stations and drugstores. Many cash rebate credit cards pay 5% on these types
of purchases.
"Other Purchases" - These refer to non-everyday-purchases. Almost all credit
cards pay 1% rebates - except for some, which we will explore later.
Let us now look at the type of credit cards available.
Basic no-frills cash back credit card
These credit cards pay the standard 1% cash rebates on all purchases. To
maximize your cash rebates, you do not really want to be using these cards
because there are other types of cash rebate credit cards that pay better
rebates.
"Everyday Purchase" cash back credit card
For those looking for a cash rebate cards, I suggest you get one of these cards.
"Everyday Purchase" cash back credit cards pay you 5% rebates if you make
purchases from standalone supermarkets, gas stations and drugstores. They
pay you 1% rebates on "other purchases". For a long while, this category was
dominated by only one card, the Citi Dividend Platinum Select Card. Earlier this year
in July, Chase introduced the Chase Cash Plus Rewards Card with basically
identical reward formula. Either of these cards are a must-have for those looking
for a cash rebate card.
Tiered rebate credit cards
These used to be quite a few tiered rebate credit cards in the market, but there are
only a couple of these type of cards today as "everyday purchase" cash back credit
cards have become more popular. The best example is the Blue Cash
from American Express. Their cash rebate formula is a typical example of how
these cards work. For spending up to a certain amount ($6,500 in the Blue Cash's
case), you earn a certain percentage in rebates (using blue cash as an example,
1% for everyday purchase and 0.5% for other purchase). After spending beyond the
threshold, you earn (again using the blue cash as an example) 5% rebates on everyday
purchase and 1.5% on other purchases.
Combine a tiered rebate card with an "everyday purchase" cash back card to
earn even more rebates
The most common strategy for most people with cash back credit cards is either to
have one or two "everyday purchase" credit card, or just getting a tiered rebate
credit card. This is fine and you are probably better off with these cards than a
typical reward credit card.
But why not combine both types of cards are earn even better rebates?
The rationale for combining one "everyday purchase" cash back credit card and one
"tiered rebate" credit card is that it allows to earn 5% rebates on everyday purchase
items and also earn 1.5% (more than the standard 1%) rebates on "other purchases".
This is how to use these cards together, Charge all "everyday purchase" items to
the "everyday purchase" cash back credit card, and charge all "other purchases" to the
tiered rebate credit card. You will earn less than 1% initially on the tiered rebate
credit card until you spend beyond the threshold. But once you cross the threshold, you
earn 1.5% rebates. The reason this strategy makes sense is because only tiered rebate
credit cards pay you 1.5% (more than 1%) on "other purchases". We suggest combining
either the Citi Dividend Platinum Select Card, or the Chase Cash Plus Rewards
together with the Blue Cash from American Express.
Bear in mind that this strategy only works if you spend a lot on your credit card (would say
at least above $30,000). It also works if you spend a lot on "everyday purchases". If you
do not spend that much on your credit card, then getting an "everyday purchase" credit
card will do just fine.
Find out more about the following cash rebate cards.
Blue Cash from American Express®
Update 8/2006 : - Both the Chase Cash Plus Rewards and Citi Dividend Platinum Select Card has been discontinued and are no longer offered by Chase and Citibank.
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New "City" Cards from American Express
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American Express has followed up their recent launch of the New York City Card with
two additional cards, the IN:LA Card and the IN:Chicago Card. These cards are catered
to a younger audience, those in their mid 20s and based on the INSIDE
rewards program. American Express did extensive surveys and studies
and figured out the hip and trendy places that their target audience hang out. They then
partnered with these merchants for the INSIDE reward program. With these cards, you earn
one point for every dollar you spend on these cards. The points do not expire and you
can earn unlimited points. For the rewards, you exchange points for certificates which
can be used and redeemed at these partner merchants. Their partner merchants include
trendy restaurants, bars and theatres. Your reward points can be exchanged for any
reward items in any of these three cities. These cards will appeal to residents of LA or
Chicago and who hang out at these "trendy" places that are now partners of the INSIDE
reward program.
Read our review of these cards here :
Review of IN:LA Card
Review of IN:Chicago Card
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American DreamCard Mastercard
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We are now offering the American DreamCard Mastercard our our website. This card
is issued by Direct Merchants Credit Card Bank. It is essentially a basic no annual fee
mastercard. There are different levels of apr and you could get a very low apr if you have
good credit. What is interesting about this card is that from now until September 2006,
can participate in a monthly sweepstake and stand a chance to win a cash prize. It
has a nice card design too.
You can read our review of the American DreamCard Mastercard here:
Review of the American DreamCard Mastercard
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Chase Borders and Waldenbooks Visa Card
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We are now offering the Chase Borders and Waldenbooks Visa card.
You can earn reward points which can be redeemed as store
certificates, and hence save on your purchases at these places. Other plus points include
no annual fee, and a 0% apr for 12 billing cycles. If you make frequent purchases at
Borders, Borders Outlet, Waldenbooks, or Brentano's, you may find this card appealing.
Read our review here :
Review of Borders and Waldenbook Visa
Nick Lian
Ask Mr Credit Card
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