Poll

What type of rewards card do you have?

Rewards card
5 (16.1%)
Cash back
19 (61.3%)
Hybrid, I have both type of cards
7 (22.6%)
I don't believe in credit cards
0 (0%)
In debt up to my eyeballs and it really doesn't matter
0 (0%)

Total Members Voted: 30

Author Topic: Cashback or Rewards card?  (Read 5936 times)

Mister Fancypants

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Cashback or Rewards card?
« on: March 19, 2014, 08:05:46 AM »
Hey forum... which do you prefer cash back credit cards or reward cards and why?

I am a cash back cards type of guy myself. This topic came up in another thread
http://www.mrmoneymustache.com/forum/ask-a-mustachian/does-anyone-use-amex-bluebird/msg247030/#msg247030 and I thought it made sense to ask the question in its own thread.

I dislike rewards cards for a few reasons, first they lock you into specific brands and that might not be the best deal at any given time. They also prevent you from buying package deals which don't always allow you to use rewards and packages sometimes offer much greater savings. Lastly you need to spend a god awful amount of money even with 5x earnings to get the really nice accomodations or international flights for a family of 4, when in reality the cost to pay for those items is much less and you can maximize your returns by get less back up front in cash and appying that cash towards your trips etc.

A few years back my father in law who is retired and travels extensively found he could eanr a lot more cash back than the benefit he was getting in his mileage cards. At that point we all switch to cash back cards, since then I have become very adept at maximizing which cards I use for what.

Here  is my current card lineup:

  • AmEx Fidelity 2% cash back for everything, this is my go to card and I default to it unless the product has a perk rate in a card below
  • PNC CashBuilder Visa 1.75% cash back everything, my rate is higher as I have a HELOC with PNC it might be as low as 1.25% depending on relationship, I use this card as adefault when AmEx is not accepted
  • Capital One Quicksilver 1.5% cash back i use this internationally to avoid FTF
  • PenFed Platinum Cash Rewards Card 5% cash back gas paid for at the pump
  • AmEx Blue Cash Preffered 6% cash back at supermarkets, 3% cash back at department stores
  • Chase Freedom 5% cash back rotating categories w/ 10% bonus as I bank with Chase
  • Discover It 5% cash back totating categories
  • Costco AmEx I no longer really use this card as others have beaten its rewards, sometimes I buy gas at Costco with it 3% cash back, $26k limit

-Mister FancyPants

daverobev

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Re: Cashback or Rewards card?
« Reply #1 on: March 19, 2014, 08:36:39 AM »
Thing is, there are brand-locked rewards, and valid-against-any-travel rewards.

Of course, if you don't already use brand X and get rewards for that brand, you are in danger of overspend. But if you go for a card that is just x% against any travel (and x is greater than the y% you'd get cashback, and you travel at least enough anyway...).

I 'prefer' cashback, but I have other cards too. Currently debating one with a bundle of other stuff - emergency travel medical, trip cancellation insurance, etc.

Saverocity

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Re: Cashback or Rewards card?
« Reply #2 on: March 19, 2014, 08:45:08 AM »
My Strategy:

Gas, Grocery, Drugstores 5% Cash Via that old Amex Blue Cash
Fid Amex 2% for everything else

I also have an unknown amount of other cards.

The key - unlimited free travel from signup bonuses, cash back from regular spend.

PS
Quote
Currently debating one with a bundle of other stuff - emergency travel medical, trip cancellation insurance, etc.

That's not the card, that is the 'type of card' most easily seen when you look at Visa or MasterCard, they have tiers of card types.  For example Mastercard has:

MasterCard
MasterCard World
MasterCard World Elite

Each of them has a varying degree of benefits (though Elite generally offers only 'service' options like Concierge etc over World) they are something like a 'benefits package' you would find with a job, and come with a fee, that this then passed along to the issuer, so they bundle that up in the annual fee/profit margin of the card on offer.

NinetyFour

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Re: Cashback or Rewards card?
« Reply #3 on: March 19, 2014, 08:49:39 AM »
I have not yet jumped into the credit card churning thing because I'm afraid I will lose track of things and end up paying penalties or interest or something.  But I just wanted to chime in and thank Saverocity for sharing all of her/his knowledge with us.  One of these days, I will really try to digest all the information s/he has provided and see how it can benefit me.

Saverocity

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Re: Cashback or Rewards card?
« Reply #4 on: March 19, 2014, 09:00:57 AM »
I have not yet jumped into the credit card churning thing because I'm afraid I will lose track of things and end up paying penalties or interest or something.  But I just wanted to chime in and thank Saverocity for sharing all of her/his knowledge with us.  One of these days, I will really try to digest all the information s/he has provided and see how it can benefit me.

Why you call me a he/she my name is Matt and I was born this way!

seattlecyclone

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Re: Cashback or Rewards card?
« Reply #5 on: March 19, 2014, 09:09:54 AM »
I tend to prefer cash back. The rewards on most other cards tend to come from an overly consumerist angle for my taste. Discover, for example, allows you to get 5-10% off on gift cards to chain restaurants or stores instead of cash back. I might opt for the discounted Lowe's gift card if I know I have a project coming up and will be shopping there anyway, but in general I value the cash more than the slightly discounted trip to a store or restaurant that I wouldn't have visited but for the gift card. There are some credit cards (Chase Freedom, for one) that offer non-discounted gift cards in lieu of cash. The choice there is obvious.

My current lineup:
  • Chase Freedom: 1.1% + 10 per purchase (5.1% + 10 on rotating categories), grandfathered in under an old deal they had available for Chase checking customers. This tends to be my default unless one of the others has a higher rate for that category.
  • Sallie Mae Mastercard: 5% back on gas, groceries, and bookstores (Amazon counts as a bookstore) I think this one is less well-known than it should be. It isn't advertised much. Perhaps they don't give websites a good referral bonus for it?
  • Amazon Visa: 2% back on restaurants and drug stores
  • Barclaycard Rewards MasterCard: 2% back on utilities
  • Discover: 5% back on rotating categories

I also play the sign-up bonus game from time to time. My wife and I both opened Delta cards last year to get enough miles to go to South America (we had to use some miles we already had in addition to the sign-up bonus). It isn't something we tend to do more than once a year though.

Saverocity

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Re: Cashback or Rewards card?
« Reply #6 on: March 19, 2014, 09:18:24 AM »
I tend to prefer cash back. The rewards on most other cards tend to come from an overly consumerist angle for my taste. Discover, for example, allows you to get 5-10% off on gift cards to chain restaurants or stores instead of cash back. I might opt for the discounted Lowe's gift card if I know I have a project coming up and will be shopping there anyway, but in general I value the cash more than the slightly discounted trip to a store or restaurant that I wouldn't have visited but for the gift card. There are some credit cards (Chase Freedom, for one) that offer non-discounted gift cards in lieu of cash. The choice there is obvious.

My current lineup:
  • Chase Freedom: 1.1% + 10 per purchase (5.1% + 10 on rotating categories), grandfathered in under an old deal they had available for Chase checking customers. This tends to be my default unless one of the others has a higher rate for that category.
  • Sallie Mae Mastercard: 5% back on gas, groceries, and bookstores (Amazon counts as a bookstore) I think this one is less well-known than it should be. It isn't advertised much. Perhaps they don't give websites a good referral bonus for it?
  • Amazon Visa: 2% back on restaurants and drug stores
  • Barclaycard Rewards MasterCard: 2% back on utilities
  • Discover: 5% back on rotating categories

I also play the sign-up bonus game from time to time. My wife and I both opened Delta cards last year to get enough miles to go to South America (we had to use some miles we already had in addition to the sign-up bonus). It isn't something we tend to do more than once a year though.

Yes, the Sallie Mae is good for normal people, it doesn't offer a referral bonus so isn't pimped as much, but it has low earn caps that make it not worthwhile for people who spend as much as I do.  Great card for the average spender though.

And I forgot, I use the Ink Bold too, that gives 5x on Phone/Internet as well as Office Supplies.  Good card (but it is a business card not personal).

For domestic flights and for South America the best card is the British Airways visa (wait for 100K signup offers) as you can use that to fly AA or LAN for very reasonable rates, providing you live near an airport that offers such flights.

Prairie Stash

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Re: Cashback or Rewards card?
« Reply #7 on: March 19, 2014, 09:48:08 AM »
Hybrid card - cash or travel; RBC Avion.  If I fly the reward is a free flight, on any airline. If I get too many points I cash them out, at a crappy cash back of 0.8%.  Recently life changed and I'm not planning on travel for the next few years.  I'm glad I can convert the rewards into cash.

soccerluvof4

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Re: Cashback or Rewards card?
« Reply #8 on: March 19, 2014, 10:14:26 AM »
So gotta get better at this!

NinetyFour

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Re: Cashback or Rewards card?
« Reply #9 on: March 19, 2014, 10:54:13 AM »
I have not yet jumped into the credit card churning thing because I'm afraid I will lose track of things and end up paying penalties or interest or something.  But I just wanted to chime in and thank Saverocity for sharing all of her/his knowledge with us.  One of these days, I will really try to digest all the information s/he has provided and see how it can benefit me.

Why you call me a he/she my name is Matt and I was born this way!

Hmm...not sure how I was supposed to know your name and gender.  I was just trying to thank you.

Saverocity

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Re: Cashback or Rewards card?
« Reply #10 on: March 19, 2014, 11:01:00 AM »
I have not yet jumped into the credit card churning thing because I'm afraid I will lose track of things and end up paying penalties or interest or something.  But I just wanted to chime in and thank Saverocity for sharing all of her/his knowledge with us.  One of these days, I will really try to digest all the information s/he has provided and see how it can benefit me.

Why you call me a he/she my name is Matt and I was born this way!

Hmm...not sure how I was supposed to know your name and gender.  I was just trying to thank you.

Appreciated! I'm a Brit so have a quirky sense of humor.

Fireman

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Re: Cashback or Rewards card?
« Reply #11 on: March 19, 2014, 11:09:30 AM »
I prefer Cashback cards for the same reasons as the OP.  I like being able to choose where I spend my rewards whether it's a statement credit or a direct deposit to my bank account. 

My lineup includes:

Discover IT
Chase Freedom
CapitalOne Quicksilver

I'm going to have to check out the PenFed Platinum.  Is it always 5% on gas, year round?  That would be easier than buying gas station giftcards to use on the off months.

Also, for those of you interested in using cards for rewards or miles, check out the churning thread.

Mister Fancypants

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Re: Cashback or Rewards card?
« Reply #12 on: March 19, 2014, 11:13:28 AM »
I prefer Cashback cards for the same reasons as the OP.  I like being able to choose where I spend my rewards whether it's a statement credit or a direct deposit to my bank account. 

My lineup includes:

Discover IT
Chase Freedom
CapitalOne Quicksilver

I'm going to have to check out the PenFed Platinum.  Is it always 5% on gas, year round?  That would be easier than buying gas station giftcards to use on the off months.

Also, for those of you interested in using cards for rewards or miles, check out the churning thread.

The PenFed card is 5% cash back year round for gas paid for at the pump.

PenFed membership is easy to obtain it can obtained by simply making a small contribution to an organization $20 or less if I recall... It's been quite a few years so I don't remember the details.