Friction in using CC points

[googily]

I went whole hog on sign up bonuses over the summer. Got the Capital One Savor 4% dining, $300 bonus, Chase Sapphire Reserve for 3% points on travel and dining and a 50k points bonus. Got the Amex Blue Preferred for 6% groceries and streaming, and got $150 back. Got the Chase Freedom for 5% back on certain categories, and a 15k point bonus. Got the Amex Hilton Surpass, giving points for Hilton stays plus a 130k point bonus and Gold status. And then the Chase Freedom Unlimited for 1.5% on everything. And have had the Amazon Prime 5% card for a year or so.

(I had a big yard project that made it easy to quickly hit the minimum spends.)

The handy thing about the Chase points is that I can move the points from the Freedom cards to the Reserve card and then they are worth 1.5 points when redeemed for travel, which makes the Freedom Unlimited the equivalent of 3 points per dollar.

My cards had all been Citi for a long time, but I was not happy when they ditched the travel protections.

I also opened Chase checking and savings accounts for the $600 bonus.

I use Google Pay whenever I can, so using the "right" card isn't all that hard.

 

[athena53]

Low stress redemption is what I'm after, but I'll delve into the thick of it if they make it lucrative.

I agree. I just non-renewed my AA card after getting the sign-on bonus the first year. Was very annoyed when they got rid of the 10% "rebate" when you redeemed miles since I'm planning a Business Class flight in 2020. So now I'm down to a straightforward Fidelity Visa and have a Costco card in the mail which will pay 3% on travel. I did see a small "gotcha"- the Costco rebate is an annual one. I can live with that.

 

[sengsational]

Watered-Down American Express Points

Keep it simple! Go for the cash every time. I generally wait until I have about $100 sitting in points, then request a statement credit. Using Visa and Amex cards.

That's my approach too, but American Express has me steamed. Now, it's my fault for not understanding the rules of the reward program. I'll quote myself then tell people how I ran into the 'gotcha', and how when I get "X%" points on my Amex Every Day Card, it's really only 0.6 * X%.

Another trick that I fell for (well, almost fell for), is to use points in an inefficient way. I guess I was spoiled by how easy it is to use Discover points on Amazon purchases...any amount is legit, so no chunk size minimum, and full point value. So I saw I could use American Express card points on Amazon and didn't see the fine print...they deducted 43% more points than expected! I thought it was an error, but realized it's buried a few levels in their agreement. I switched the payment on my Amazon order to another card, so I'm on the way to not getting what I consider a raw deal, but my points have yet to be restored, and I'll probably end up having to call.

American Express didn't reverse the Amazon transaction as promised on the chat a few days earlier, so I did have to call. While on the phone, they did restore the points.


Then I went in to "cover your charges" (you select specific transactions to apply points to). I discovered, they only give you 60% of your point value! This is the first card that I've had that, even if you jump through all the hoops, they water-down the point value. On Amazon, it's better...70%, but still that works out to a 43% "fee" (spend $100 worth of points, get $70 value, so $30/$70 = 43%). If you use it to "cover your charges, you spend $100 worth of points and only get $60 value, so a 67% fee! Yes, I know, there might be people who want to pick at my definition of "$100 worth of points", because the value is variable (obviously), but I'm going from the experience I have were the cards I have that don't water-down points.


Anyway, I think if someone says "I get X% on American Express purchases", I'm calling BS unless they also say "AND, I get to apply the points at $0.01 per point" (as opposed to $0.006 per point or something like that). Say they get "6% on groceries". Sounds out of this world until you multiply it by .6 and end up with 3.6%, which is good, but not great. And if they say they get "3% on (some category)" and you multiply it by .6, it comes out to a measly 1.8%...might as well throw it out and use your Fidelity 2% on everything, super simple point redemption card.



I'm totally done with American Express once I figure out how to best utilize the signup bonus points. I'm going to be doing work on my deck, need lumber, and it looks like I can get 100% point value on Home Depot gift cards, so I'll probably go there with it ($25 chunks). Thus, I'm using the crappy Amex membership rewards program to make lemon aid since the deck project has been getting put-off too much...I really need to get it going on it.

 

[sengsational]

Say they get "6% on groceries". Sounds out of this world until you multiply it by .6 and end up with 3.6%, which is good, but not great.

I just checked DW's American Express Blue Preferred that has "6% groceries and 3% gasoline". The card has a $95 annual fee. She is getting full points value.


But when I try to look-up her card (without logging-in), it's not in the list, so it must be a grandfathered-card (see image).


I looked up another "preferred" card, and it's getting watered-down points (see image).


I think American Express is trying to pull a fast one...Grabbing market share by giving big cash back percentages, then quietly reducing the value of the points. Slimeball tactics, IMO. Seems like the bloggers would be all over this shady business. Not that I've searched to hard, but didn't see is highlighted in doctorofcredit when I decided to get the Amex Everyday. It was only 25,000 point signup bonus (which I thought was worth $250). If I'd know it was only worth $150, I probably would not have bothered. It is allowing me to carry a balance until October 2020, and the first 90 days were free balance transfers, so that's a benefit, but I wasn't going for zero APR, I was going for cash back.

 

[cathy63]

... I did see a small "gotcha"- the Costco rebate is an annual one. I can live with that.

I don't know if it's entirely clear in the Ts & Cs, but the Costco rebate comes as a certificate in your February statement (or via email if you're paperless), and you have to take it to a Costco in order to redeem it.

You can either use the certificate to pay for purchases at a regular cashier or you can take it to customer service and they'll get a manager to give it to you in cash. I always get the cash to maximize the next year's rebate, and since we try to put everything on the card, I find the rebate is enough that I usually don't need to hit an ATM until December.

 

[cathy63]

... Seems like the bloggers would be all over this shady business. Not that I've searched to hard, but didn't see is highlighted in doctorofcredit when I decided to get the Amex Everyday. It was only 25,000 point signup bonus (which I thought was worth $250). If I'd know it was only worth $150, I probably would not have bothered...

I wonder if they know. If they reviewed an earlier version of the card and they were/are getting the full value of the points, they may not be aware of the different conditions that apply to your card. You might use their Contact Us link and suggest they update their information based on what you pointed out above to see what happens.

 

[JPatrick]

I just use the 2% Fido. I get $200 or so a month in cash into my account. I long ago gave up on using/getting air miles. They always move the carrot.

FIDO is easy money.

 

[Cobra9777]

We have a grandfathered version of the AMEX Blue Cash with no annual fee. I am very clearly getting the full 5% cash back on groceries, gas, and drug stores. Have been since 2008.

But as I've posted before, the "catch" with this older version of the card is that you only get 1% on the first $6,500 each reward year, 5% thereafter. Our workaround has been to use this card for some large purchase, like booking international travel, right at the beginning of each reward year. After that, we use it only for groceries, gas, and drug stores, and get the full 5% cash back.

I guess one could characterize this as "watering down" the 5%. I don't see it that way. It was very clear in the terms and conditions at the time we got the card. It was also widely discussed on CC websites at the time and was part of our decision to get the card. I see it as a small "fee", in lieu of a more traditional annual fee. For us it's only $65 (1% of $6,500), which is the difference compared to the 2% reward we would have otherwise earned using the Fidelity CC to book travel. After that, it's a full 5% as advertised on groceries, gas, and drug stores.

Yes, there is a friction/hassle factor involved. No question about that. But like the Amazon 5% card, it adds up over time to a meaningful difference compared to using only the Fidelity 2% card. It will be a sad day when AMEX cuts us off from using this old card.

 

[Floridatennisplayer]

Our only CC is Southwest for flight points. Two direct flights daily to Fort Myers, and many other options. I wonder if it would actually be more cost effective if I just went with Fidelity instead??

 

[Montecfo]

i have a bunch of points with most airlines that i transferred from Amex. But United and American are not partners so I have British and Air Canada which work for some AA/UA flights.

I do the credit card shuffle to get more American (my preferred as I am Gold) and United. i just go for the big 50-60k bonus points.

But everything not needed for bonus points goes on Costco Visa for cash.

Seems to work well. I do not complicate things by using certain cards for certain types of purchases.

I did find with United I could use "spare" points for gift cards before I would lose them by cancelling credit card.

 

[Red Badger]

I hack about 1 card/year for the sign on bonus (Hilton recently offered a 100K point bonus). Se we did that one after retiring the Marriott card this year. Our go to card for everything is CSR. When travel slows down(hopefully not soon), most likely will go to Fido cash back.

 

[LarryMelman]

I have used the Chase Freedom card for a lot of my spending in the last several years. They give 5% in cash back points on rotating categories each quarter up to $1500 spending. This year there are two "gas station" quarters and one "grocery store" quarter. I would buy Kroger store gift cards to meet the $1500 quarterly spend. Buy them at the fuel station during the gas quarters, and in the store during the store quarters. Then use them for all my groceries and gas and all the gift cards they sell in the store.

That all changed this week. Kroger no longer sells gift cards at the fuel stations. Corporate wide. No one seems to know the reason for the change.

So I may be back in the market for a more useful card.

 

[tulak]

I don’t worry about fully maximizing my cards. The Fidelity card is great, especially in the US. I travel a lot, so I pay the premium for the Chase Sapphire card. It gives me 3% and discount for travel redemptions. Plus no international fee and primary insurance for car rentals. And now that I do more solo travel, it’s a lot easier to use the points.

 

[Ginny]

I also gave up the points game. We use the Navy Fed CU card and get 1.5% cash back and the Costco cash back card.

 

[athena53]

I don't know if it's entirely clear in the Ts & Cs, but the Costco rebate comes as a certificate in your February statement (or via email if you're paperless), and you have to take it to a Costco in order to redeem it.

You can either use the certificate to pay for purchases at a regular cashier or you can take it to customer service and they'll get a manager to give it to you in cash. I always get the cash to maximize the next year's rebate, and since we try to put everything on the card, I find the rebate is enough that I usually don't need to hit an ATM until December.

My tactic is a middle ground: use it for a smaller purchase and they give you change in cash! Of course, a small order at Costco is a rarity.

After I dropped the AA MC and started looking around for a new card to supplement the Fidelity Visa, I looked at many of the cards that rewarded you with generic "points" including the Chase Sapphire Reserve. One unhappy finding was that the points can be used for air travel but you don't get all the flight options available on Expedia even though the platform is the same as Expedia. I like to redeem points/miles for transatlantic Business Class, which is probably what everyone else wants, too, so I'm not sure how plentiful the options would be. I'm happy with the choice of Costco Visa.

 

[H2ODude]

There are apps out there to help you maximize if you're interested. Good friend's son was involved in something called Wallaby that he sold out on and I think got absorbed by something else. Quite FI from the effort.

One of my bedrock comforts in finance is that all credit is locked down. Have little interest in opening it up to catch new deals, not tracking cards to see what might be compromised. I may be missing some opportunity but the hassle/exposure just doesn't make it worth it. I can see how the chase can be fun, but it's just not for me. Fido gives me an average of 200-300 a month except when doing vacations. Yes there's a 1% foreign fee but that just isn't a big deal to me. We use mainly cash, as long as I tell Fidelity before we go ATMs spit out all we need for most of our expense that we haven't prepaid. There was that one time in Portugal we forgot to tell them and I could not believe the hoops they had me go through to unlock it from there. But, that's just fine with me. When we first started doing overseas ATMs if blew me away that once on an early Sunday morning we drove through a little tiny town in South Africa, there was a bank. We stopped, swiped the card, and 4 digits later, voila! Couple a hundred Rand. Just seemed kinda surreal.

 

[Perryinva]

What am I missing here, when y’all (multiple posters) are saying Fido 2% cash back cards are giving you $200-300/month? Doesn’t that mean you are charging $10,-15,000 a month on a credit card?? So a credit card burn rate of $120,000 to $180,000 a year??) I feel I must be missing something.

 

[tulak]

^ Yep. Some big spenders here.

 

[jazz4cash]

Yep big spenders. I’m nowhere near that but my Fido charges include insurance and utility payments. Sometimes it includes a service charge of ~0.5% or less and I’ll pay since I’m still getting ~1.5% Cashback. For the true big spenders that travel and/or have multiple homes 10k or more seems within range.

 

[Cobra9777]

Last year our actual CC cash-back was $2,100 (avg $175/mo). But that's on a mix of 2% and 5% cards that yields 2.6% on average. So that's an annual CC spend of around $80K, which includes all recurring bills, etc... basically everything except federal income tax, property tax, and health insurance premiums.

 

[Dtail]

Will probably end up somewhere around 4.0k on 120k of spending. However this spending includes spending on my brother and to some extent my parents.
I keep the points for taking care of everything. lol

 

[Red Badger]

What am I missing here, when y’all (multiple posters) are saying Fido 2% cash back cards are giving you $200-300/month? Doesn’t that mean you are charging $10,-15,000 a month on a credit card?? So a credit card burn rate of $120,000 to $180,000 a year??) I feel I must be missing something.

I'm not one of the high rollers here, but jut about everything but the mortgage goes on the card. For us, that about $5K every month. We never carry a balance, just reap the rewards.

Also lots of travel and one-offs where we use tha card. New HVAC in 2017 - on the card. New flooring in 2018 - on the card. New car (and water heater) in 2019 - a significant chunk of the car on the card. YMMV!

 

[RxMan]

For anyone who signs up for multiple cards for the promotional points or rewards do you worry about giving your personal information to so many companies?

 

[PatrickA5]

For anyone who signs up for multiple cards for the promotional points or rewards do you worry about giving your personal information to so many companies?

According to my spreadsheet, since 2008, DW and I have had 122 credit cards. So, I guess my answer would be NO.

 

[Chuckanut]

For anyone who signs up for multiple cards for the promotional points or rewards do you worry about giving your personal information to so many companies?

Not anymore. Thanks to Equifax and a previous insurance company, most of my important personal information has been out in the wild for several years.