Cash Back Credit Cards?

[mountainsoft]

We have a simple Visa credit card through our local US Bank. No bonuses, no cash back, but we've had it for most of our adult life. We always pay our balance off every month (usually every week or two).

I recently started looking at cash back credit cards. They sound like free money, earning some cash back for things we're buying anyway. But when things sound too good to be true I start to get nervous.

Most of the cards I've seen sound too complicated, with annual fees, or having to pick categories (or have them chosen automatically), or caps on earnings. That sounds like too much work for my liking.

I'm currently looking at the Citi Double Cash credit card. Supposedly 2% on all purchases (1% when buying, 1% when paying off), no caps, no annual fees. Sounds good, but again, that makes me nervous.

One of the things that concerns me is the logistics of managing the card. My current Visa card is at the same bank I have my checking account, so it's easy to log on and transfer money to pay off the card. I'm not sure how I would handle this with a credit card at a different bank than I use for my checking account (I want to keep my current checking account so we have access to the safe deposit box at my local branch).

My local US Bank does offer a cash back card, but it has all of those categories and caps and stuff that I would rather avoid.

Anyway, I'm curious who uses these cash back credit cards and how they work for you. Any down sides the reviews and promotional information fail to mention?

 

[Sunset]

You have been missing out on FREE money, even the no fee CC are great.

I can pay bills from my bank, so I just add a new credit card as the payee to my list of things I pay. Most are Credit cards when I think about it.
I add it to my bank list as soon as I get the paper statement from the credit card (it has a payment slip on the statement). Then I immediately pay $1 to test.
I create the online account for the new credit card.
I sign in a few days later to see if the $1 is received, once I see they got the $1, I pay off the statement early, from my regular bank.

I have about 8 credit cards, all give me reward points which I can change into gift cards, or credit on the credit card statement, or use to stay at a hotel for free.

All my long term cards are no annual fee.

I do each year sign up for an annual free (but free the first year) card, use it for 11 months, get the $500->$600 bonus, then cancel the card. On rare occasions I will keep the card and pay the fee if it's a really great card for travel.
The most I've paid a fee is for 2 years, meaning I kept that card for a total of 3 years (it is cancelled now).

 

[easysurfer]

I always pay off the balance each month so don't pay attention to the outstanding balance fees.

I have a few cash back credit cards. Mostly I use my cash back Discover Card for everyday purchases not on Amazon. For Amazon, I have an Amazon Prime CC (from Chase).

The biggest drawback I've found (more a personal one by me, the the card itself) is I tend to hoard the cash back bonuses and don't spend them unless for something I really, really want .

 

[JP.mpls]

MountainSoft,
I've used a Capital One cash back Visa for years now. It pays 1.5% cash back on all purchases.
Some comments:
- I've been very happy with this card.
- If you don't pay it off in full each month, the interest and fees are very high.
- I don't like cards that pay back points of some type. I think it is a way to hide a lower payback percentage.
- You can set up auto pay from your checking to pay if off in full on time each month.
- I will have to take a look at the Citi Double Cash card you mentioned.


Good luck, JP

 

[Rosie]

I have been very pleased with the Citi Double Cash Mastercard. 2% cash back on everything, and no annual fee. I pay the full balance every month so interest rates are not an issue for me.

And it has an excellent alert function. Since I've had cards hacked in the past (not this one, knock wood), I now have purchase alerts on all my credit cards. Usage alerts on my Citi DC card show up almost instantaneously.


The Capital One Cash Back Visa is quite good too. At 1.5% cash back and no annual fee, that's my backup card. And it's what I use at Costco since they don't take Mastercard there.

 

[Sunset]

I always pay off the balance each month so don't pay attention to the outstanding balance fees.
....

+1
This is the most important point. I also always pay off the balance each month.

If a person regularly runs with a balance and pays interest, they would be better off without a card.

 

[workburnout]

The best one I've found is Bank of America Preferred, which gives 2.65% cashback on everything. You must have $100,000 in a Merrill Edge (any type account - retirement or non-retirement is ok) to get that much cash back. Otherwise you still get some cashback with that card - but it is less depending on whether you have an investment account with them.

There are other cards which give 3% or more in one or more "categories". However, I found that keeping up with everything is not worth it to me to use the other cards. For example some cards give 3% or more cashback in gas or groceries.

A quick search on credit card bonuses will bring up a list of current offers.

I open new cards for the bonuses now and then, easily earning over $1000 a year bonuses for basically doing little to no work. Reading the fine print is key - as not to be charged fees if they outweigh the bonuses.
Obviously some people would not pay in full every month which is what the card companies are betting on.
It's only usually worth doing if you buy things you would buy anyway and pay in full. Certain situations it's not good - depends on your personality and other factors. For my situation, it works out great as a little extra income.

 

[MrsHaloFIRE]

It's no problem to setup auto pay of full balance on any credit card website using your routing and account numbers. Prob equally as easy to do it in reverse from your banks website. Definitely recommend cashback credit cards. 2pct is good

 

[gerntz]

Mountainsoft, don’t think you can go wrong on the Citi Double Cash MC. We’ve had it for around three years and works great. Easy. No tricks. Anything with better percents has requirements of some kind that I’ve seen.

 

[sengsational]

We got an Amex Blue for DW since it has 6% back on grocery stores (not Walmart, though). But our grocery store budget made it a no-brainer the first year. Then it came time to pay the annual fee of $75 and we realized break-even (with a typical 1% card as the alternative) was $30/week grocery store bill. That's way less than we spend, so we decided to keep the card.


I've got a 2.2% back on travel and restaurants Barclay Arrival MC, and fiddle around with the 5% category on my Discover card.



But I think if you search on Clark Howard, he mentions a site where you put in what you typically spend, by category, and it will give you the best card for your purposes.


I find it annoying to play this game, but if you don't, you're walking away from real money. And it's not that hard to play the game. I'd even go for more signup bonuses except it's a pain since my credit is frozen.

 

[GalaxyBoy]

Nerdwallet is a good starting point to compare cards.

I use the CapitalOne card that gives 1.5% back on everything as it doesn't require me to think about what categories I'm buying. The exception is groceries where I use my Amex Blue card. I pay the $75 annual fee for the Amex that pays 6% back on groceries, 3% on gas or certain department store purchases. Sometimes we buy gift cards for other stores at Kroger so we get the 6% back on something other than groceries, plus 4x Kroger fuel points.

Actually, since I buy my gas at Kroger using fuel points, it doesn't give me the 3% on gas so I use the Visa. We easily buy enough groceries in a year to more than make up for the Amex annual fee, even vs. the no-fee version of the card that pays 3% on groceries.

We take all rewards as statement credits. One nice thing about the CapitalOne card is that this is automatic; Amex makes you log in periodically and manually request the reward.

 

[mountainsoft]

Yep, we pay off the balance each month so the interest rates don't concern me. I couldn't even tell you what the interest rate is on our current cards as we have never paid any interest. For that matter, I couldn't tell you what the credit limits are as our balance rarely gets above 1000 dollars.

On the cash back cards, do you find that you use the card to pay for things like groceries or bills you may have previously paid directly from your checking account (to increase the cash back amounts)?

You have been missing out on FREE money

We've always been the set it and forget it type. The old cards worked so I never bothered to look at anything else. Now that we're planning for retirement, I'm looking for any potential source of income or savings.

 

[sengsational]

There are a few things that used to be paid using my bank's "bill-pay" feature that allow payment by credit card. Some have a fee to use a credit card, so those stayed in bill-pay, but getting a 1% or 2% discount on a season of heating bills is worth logging into the gas company's web site and entering my credit card number. I realize all it gets me is enough cash for a fast-food meal for two, but it adds-up when you use the cards "for everything".

 

[gwraigty]

On the cash back cards, do you find that you use the card to pay for things like groceries or bills you may have previously paid directly from your checking account (to increase the cash back amounts)?

Just about everything goes on one of our cash back credit cards. It's really simple and adds up over time. Just in normal spending, we easily clear over $600 in cash back each year.

Start out simple if you want, but don't discount the possibilities with cards that make you sign up for the quarterly bonuses.

The Fidelity VISA @ 2% cash back and Schwab Amex at 1.5% cash back are good if you really want low maintenance. Cash back is automatically deposited into your eligible accounts.

A little rarer are cards that give you a discount at the register, like Target and Lowe's.

 

[kgtest]

Yepp, free money! Been getting it since 2013, so 8 years now. Key is to pay the balance in full each month, know and prepare for which 5% category falls in what quarter.



For me I will use Discover for Gas in Q1 and Q3, and Freedom for Groceries in Q2/3 and another quarter for gas for Freedom.



Between the two cards plus the initial $500 cash back sign-up bonus is the potential for $830 of 'free' money the first year alone for Freedom and DiscoverIT.


I went from 0 to 500,000 Frequent flier miles and who knows how much free dough since playing the game.


A good example is my DiscoverIT, so for the year it will basically amount to me cashing in a $45 gift card to AMC movie theater, which is a $50 gift card...so I get to go to maybe 5 movies with my wife on that gift card if we hit the matinee. That's better than having to pay for the movies!


A while back BofA paid me $200 to switch my business checking. Was about a 30minute process, and I sure as hell never earned $400/hr working!


The signup bonus is where you get the most ROI, I don't accept anything less than $250 or 50,000 miles when I sign-up. There are limits to how many of each branded card you can have. Chase has a limit of 9.

 

[kgtest]

With the 2% unlimited cash back, if you spend $10,000 that's $200. I spend about $30k annually on cards so yes it all adds up!

 

[Bamaman]

We use the Capital One Venture card getting 2% on all charges applied against travel. Every year, that's one free airline ticket to Europe. I just cashed it in this week to pay for May's trip.

 

[steelyman]

By far, my workhorse card for day-to-day purchases is DiscoverIT. I started out when Discover first came out (a cash back was novel then). As I recall, the company’s roots were Sears but could be mistaken about that.

 

[ERD50]

Fidelity Visa 2% on everything.

Costco Citi Visa 4% on gasoline, 3% on restaurants, 2% at Costco, 1% on everything else (so we use the Fidelity for those).

Auto pay from my Credit Union. I set a default recurring amount higher than the typical bill, then adjust it before it goes through. That way I can't be late. If you go through the CC site, yo might be able to set autopay for the total, but I couldn't do this through my Credit Union. Still easy.

-ERD50

 

[Marita40]

Capital One card here too, with the 1.5% on everything. I appreciate how simple the online site is in applying the cash to your balance. This is the only credit card I use so pretty much everything goes on it, except food (I use the Target redcard for that). I pay it off each month.

 

[easysurfer]

Another benefit on some cards is their cash back bonus amount can be used to pay entirely or partly for Amazon purchases.

 

[Tiger8693]

You have been missing out on FREE money, even the no fee CC are great.

I can pay bills from my bank, so I just add a new credit card as the payee to my list of things I pay. Most are Credit cards when I think about it.
I add it to my bank list as soon as I get the paper statement from the credit card (it has a payment slip on the statement). Then I immediately pay $1 to test.
I create the online account for the new credit card.
I sign in a few days later to see if the $1 is received, once I see they got the $1, I pay off the statement early, from my regular bank.

I have about 8 credit cards, all give me reward points which I can change into gift cards, or credit on the credit card statement, or use to stay at a hotel for free.

All my long term cards are no annual fee.

I do each year sign up for an annual free (but free the first year) card, use it for 11 months, get the $500->$600 bonus, then cancel the card. On rare occasions I will keep the card and pay the fee if it's a really great card for travel.
The most I've paid a fee is for 2 years, meaning I kept that card for a total of 3 years (it is cancelled now).

Sunset- Curious as to what bank allows you to use CC for BillPay payee? I checked my regional bank, no go. I then checked Fidelity to try and setup my Fidelity Visa, but also can’t set it as payee. I’d love to do this and use to pay my mortgage, etc. I already use a Hyatt Visa for all store items (groceries, clothing, restaurants, etc), and use a Sam’s card for all gas purchases (5%).

 

[Chuckanut]

I also have a Capital One card which is 1.5% back on everything. I use it mostly with its ENO system. ENO generates special CC numbers for use at only one company. For example, I pay my $15 Placemat of the Month Club charge with an ENO number. If some crook gets the number it won't be much good unless she wants to pay for my placemats. And I don't have to remember all the auto-payments setup on various cards. I just tell ENO to use a new number.

 

[audreyh1]

We get the most off our Costco VISA with 3% travel hotels and dining with no foreign transaction fee, and our Amazon Store Card with 5% back. After that our 2% Fidelity. It really adds up. This year I expect our Costco VISA Cash Rewards check to exceed $700.

 

[foxfirev5]

We use the Fido VISA 2% card to pay virtually all our bills. Along with the bill pay and brokerage the cash back system runs itself. However, We have cut back on using it in some instances due to repeated theft of the cc number.

We also have Hilton and Delta AMEX cards we use only with the points/miles programs at those vendors.