The Credit score Card Rewards Recreation: How This Author and These Monetary Professionals Play to Win

How do I get stacked rewards price over 13% from a single bank card plus 1000’s extra from others (regardless of Dave Ramsey’s rants)? And is it simply me? Or do monetary professionals play the bank card rewards recreation, too?

When you comply with Dave Ramsey, you recognize he hates debt (he makes a grudging exception for 15-year fastened mortgages).

He particularly despises bank cards.

Right here’s a quote from one of many “Ramsey Options” weblog posts: 

“What’s one of the best form of bank card? I’ll be trustworthy with you: One of the best bank card is not any bank card. It’s referred to as Capital None, and it’s superb. However significantly, there isn’t one.”

However how about rewards playing cards?

“Positive, there are many shiny bank card rewards on the market. However you normally have to make use of your bank card lots and spend lots to earn them. And excessive rewards playing cards are inclined to have increased rates of interest and better annual charges. So, by the point you get that free flight to New York, you’ve already handed over greater than the price of a aircraft ticket to the bank card firm. Yeah, these freebies aren’t actually free whenever you do the mathematics.”

Now, let’s distinction hyperbolic rants with actuality…

I Use Credit score Playing cards. All. The. Time.

I exploit bank cards just about for something I can.

I infrequently use money or debit playing cards. That’s for comfort, security, safety, and naturally the rewards. And I by no means pay a dime in curiosity or charges. 

How? 

I solely carry playing cards with no annual charges and all the time pay our balances in full every month.

I’ve 9 playing cards, however I solely use three usually:

• Citi Double Money Mastercard is my default card, with limitless 2% money rewards on every little thing.
• Amazon Prime is the cardboard I exploit for Amazon purchases, with limitless 5% rewards on Amazon.
• Store Your Method (SYW) Mastercard is what I pull out at grocery shops, gasoline stations, and eating places, with over 13% rewards (see under).

I exploit three different playing cards semi-regularly, one for worldwide transactions (it doesn’t cost the standard 3% price), one for particular person slightly than joint bills, and one for Costco (this one pays 4% on gasoline and EV charging, 3% on eating places, 2% at Costco, and 1% elsewhere).

If the SYW Mastercard didn’t pay increased rewards, I’d use my Costco card at gasoline stations and eating places. On the flip aspect, if Costco accepted Mastercard slightly than simply Visa, I’d use my Double Money card there as a substitute.

However how do I rating over 13% with the SYW card? Right here’s how…

How I Get Over 13% Rewards from a Single No-Payment Credit score Card

It’s easy, actually.

This SYW issuer needs to “prepare me” to drag out their card as a lot as attainable. 

Regardless that they in all probability cost retailers 3%, they spend a minimum of 10% above that to entice me to make use of their card. They in all probability hope I’ll neglect to make a fee or get in over my head.

Yeah, good luck with that. Within the 30+ years I’ve been within the US, I’ve missed precisely zero funds. Right here’s a reward provide they despatched me…

And right here’s one other provide…

Each gives are time-limited, however they get renewed every time they expire.

Right here’s the way it works…

Say I spend $1,200 a month at grocery shops, gasoline stations, and eating places. I’m certain you’re not shocked to listen to that we spend greater than $75 per week on groceries, so every month we get $60 from the primary provide.

Then, we get 10%, or $120, from the second provide, stacked on prime of the $60.

Lastly, assuming $100 a month is for gasoline, we get 500 factors for that plus one other 3300 factors for the remaining for a complete of 3800 factors. These factors are solely price $0.001 every, in order that’s $3.80 extra.

Altogether, that’s $183.80 on $1,200 in costs or greater than 15%!

Clearly, I hold utilizing the cardboard for these purchases past $1,200, normally near the $2,000 most of the ten% provide. So, if I cost $100 for gasoline and $1,900 for eating places and groceries, the mathematics adjustments to $60 + $200 + $6.20 in factors = $266.20 or 13.3% in rewards.

Am I Loopy, or Do Monetary Professionals Do the Identical?

I requested monetary professionals in the event that they use bank cards to get rewards too, or in the event that they keep away from bank cards. 

Right here’s what a few them stated…

Jacob T. Rothman, CPA, CFA, CFP®, Portfolio Supervisor, Rothman Funding Administration says, “I really like utilizing bank cards for rewards. Listed below are some examples. I as soon as had a card that paid 5% money again for the primary 90 days, with no restrict. It was close to year-end, so I used the cardboard for my journey residence to see household, Christmas procuring, some purchases I’d been ready to make, after which my year-end charitable giving. The one drawback was that the cardboard had a $2000 restrict, so I merely went on-line and paid it off each week, typically twice per week. I earned about $1000 on that card. The World of Hyatt card is a superb card for journey factors as a result of, whereas most lodge factors are solely price about $0.007, Hyatt factors can simply be price over $.03. For instance, a 60,000 level sign-up bonus with a modest minimal spending requirement might cowl two nights on the Grand Hyatt Kauai (money worth $981/evening). Plus, you’ll be able to switch Chase Final Rewards factors to Hyatt, making your bank card rewards go even additional.

“I as soon as took my spouse to Hawaii for 10 days with bank card rewards factors, principally accrued with sign-up bonuses. Our factors coated our flights, lodges (together with 5 nights on the Waikiki Ritz Carlton!), rental automobiles, and even a few excursions.”

Cobin Soelberg, MD, JD, Founder and Principal Advisor, Greeley Wealth Administration relates, “Such as you, I really like taking part in the bank card rewards recreation. I simply want I knew about it years earlier than! I bought severe across the time the Chase Sapphire Reserve first got here out with their 100K-mile bonus. That began the sport for me. Now we supply 10-12 playing cards at any given time. Some we use to get us to Hawaii – thanks Alaska Airways card. Most of our spend is on Chase and AmEx because of their transferable forex. I grew up snowboarding in Utah and it’s been a dream for years to ski in Japan. Pre-COVID, I used to be in a position to fly my spouse and me to Japan and again in enterprise class for 55K miles (once more, because of our Alaska miles). Japan Air enterprise class is ridiculous! They’ve a bidet with a heated seat on the aircraft AND some nice ramen. 

“I’m most enthusiastic about an upcoming reward redemption to Australia. I noticed 9(!!!) business-class award seats open up in United Polaris from the West Coast to Australia for 80K miles every. I used to be on name on the Labor and Supply ground that night. I hurriedly referred to as my spouse to substantiate the dates. Then got here the demanding half – transferring 320K Chase factors to United and praying the seats would nonetheless be accessible. I used to be about to e book and remembered my mother-in-law can be flying from Philadelphia, not Redmond, like the remainder of us. I rapidly modified the reserving and grabbed our three seats from Redmond. Then, I booked the opposite ticket from Philadelphia to Sydney. The Polaris seats have been nonetheless there…. I managed to snag 4 business-class seats to Australia for 320K factors whole!”

The Backside Line

Dave Ramsey’s rants however, the SYW Mastercard sends me over $1,500 a yr in rewards with out my paying any charges or curiosity, whereas our different playing cards ship us 1000’s extra of their rewards. 

And since we don’t spend any extra with bank cards than we’d have anyway, that is free cash that may cowl, e.g., a pleasant annual trip!

Now, does that sound like a foul deal to you?

Disclaimer: This text is meant for informational functions solely and shouldn’t be thought-about monetary recommendation. It’s best to seek the advice of a monetary skilled earlier than making any main monetary selections.

Concerning the Creator

Opher Ganel

My profession has had many unpredictable twists and turns. An MSc in theoretical physics, a PhD in experimental high-energy physics, a postdoc in particle detector R&D, a analysis place in experimental cosmic-ray physics (together with a few visits to Antarctica), a quick stint at a small engineering providers firm supporting NASA, adopted by beginning my very own small consulting follow supporting NASA initiatives and packages. Alongside the best way, I began a number of different micro companies and helped my spouse begin and develop her personal Marriage and Household Remedy follow. I draw on these numerous experiences to put in writing about private and small-business finance to assist folks obtain their private and enterprise finance targets.

Observe me on Medium (opher-ganel.medium.com).