Credit cards- change my mind

[retire-early]

Quote:

Originally Posted by tb001 Using their card with PayPal is one of the 5% cash back quarterly rewards for the card itself. I didn’t realize you could stack in that manner. I’ve been doing the gift cards at Walmart for 5% cash back, which is another quarterly reward, but usually do store cards.

Yes, you can stack.
https://creditcards.chase.com/freedo...-cards/flexfaq

I used the Chase Freedom Flex to buy a $500 VISA gift card which has a $4.94 fee at Walmart.
After the fee, I am getting 4%.

Had I received Chase's email earlier, I would have bought the $500 VISA gift card at CVS using Paypal.
After the fee, I am getting 7.9%.
I lost out on $19 in cashback.

In Q3 while I still was in my first year with Freedom Flex with the 5% on groceries, the category was grocery stores.
The cashback stacked then too.
9% on grocery stores.

[Bongleur]

I can see that buying debit or gift cards for a 4-5% discount would be worthwhile, except I don't know how much spending I have that could be paid for with such cards.

Can a gift card be input into Amazon or Paypal?
Can you tell them to pay for an invoice with two cards, if one runs out of money?

In general, how do you extract the last couple of bucks from a gift debit card? All the profit on these will come "on the margin" - the last 4-5% spent is the profitable part.

[Aerides]

Quote:

Originally Posted by Bongleur In general, how do you extract the last couple of bucks from a gift debit card? All the profit on these will come "on the margin" - the last 4-5% spent is the profitable part.

Easy. Say you're at the grocery store, you have a tab of $98 to checkout. First you run the card with a few bucks remaining - it processes that amount, then you use another card for the balance.

Works the same with most store cards. I have a lowes gift card I'm whittling down. When it gets to $2.25 and I have a $30 purchase, I'll hand them the gift card and then pay the rest however I like.

There is no "profit" in the unspent funds for the issuer, those dollars are accounted for as expense balance, and usually can't expire.

[Chuckanut]

Quote:

Originally Posted by Aerides Easy. Say you're at the grocery store, you have a tab of $98 to checkout. First you run the card with a few bucks remaining - it processes that amount, then you use another card for the balance. Works the same with most store cards. I have a lowes gift card I'm whittling down. When it gets to $2.25 and I have a $30 purchase, I'll hand them the gift card and then pay the rest however I like. There is no "profit" in the unspent funds for the issuer, those dollars are accounted for as expense balance, and usually can't expire.

The profit comes from the zero interest loan the gift card buyer has made to the seller. Not a bad deal if you can get it.

[SecondCor521]

Quote:

Originally Posted by Chuckanut The profit comes from the zero interest loan the gift card buyer has made to the seller. Not a bad deal if you can get it.

As well as from the presumably lots of gift cards that get lost and never get used. The companies may have to carry the unused balances on their financial books, but they probably have a very good idea of how much those balances decay / shrink.

[Bongleur]

Following a reference led me to the Manufactured Spending sub-sub forum here:
https://www.flyertalk.com/forum/manu...-spending-719/

In a thread on CC cards getting shut down for misuse, one person said he is having problems with his bank charging for depositing more than 200 money orders per month. Another said he does 80-90 a month. Sound's like MS is a full time job.

Someone said placing bets both ways (on 2 different gambling sites) is a way to turn gift cards into depositable cash but only costs 1-2%.

I'd like to find a way to get a worthwhile rebate on my normal spending, maybe "rounding up" with a gift card. Holiday season spending normally goes up, it could be the right time to establish a "new normal" spending pattern at a grocery store.

[Bongleur]

The people who are able to game the system for significant money are high earners who have a lot of legitimate travel expenses -- but they also carry a zero balance. The credit card company makes no interest on them, but make a lot on the volume of fees charged to the merchants.

I'd love to see the comparison of the aggregate net profit from "high transaction zero balance" credit cards vs "low transaction high balance" cards (which are the vast majority of cards).

[ychuck46]

I have 4-5 cards that I use. Four pay me from 3-6% on specific purchases (restaurants, gas, food, online orders), some pay 5% on revolving creditors per quarter, and if I don't have something that falls into those cards I have a 2% card on everything version. No purpose in collecting only 1% on anything non-Amazon related.

[indiajust]

https://www.fool.com/the-ascent/ Shop for the card that gives you points/cashback/travel... whatever it is you want. 2 is enough cards.

[Dtail]

Quote:

Originally Posted by indiajust https://www.fool.com/the-ascent/ Shop for the card that gives you points/cashback/travel... whatever it is you want. 2 is enough cards.

If one has the Platinum status at BOA, it can be favorable to have more than 2 cards, if one spends enough.

[hotwired]

It really depends on your spending and your "needs". We use the Chase family of cards as follows:

1. around 100K business expenses go on Chase Freedom which gives us rotating 5% categories. So Walmart and Paypal right now.

2. We also have a Freedom Flex (same as freedom except we got 5% back on groceries for first year. Now we get one other bonus that I can't quite remember)

3. So we basically try to fill the 5% bucket with both cards, THEN all points get transferred to our Chase Sapphire Reserve ($550 per year fee). We get $300 travel credit reducing the "real" cost to $250. PLUS points are worth 1.5 cents when used for travel thru their portal (it's the ONLY portal we use) and for "pay yourself back" for dining and home improvement stores.

When covid hit, no one was traveling so they did the 50% bonus for groceries, dining out and home improvement. I had 700K points worth 11,000 dollars. We went a full 9 months with free groceries, 1 year free dining out 1-2x per week. (by free I mean using up our points). Whats' cool is you have 90 days to use them against dining charges, so even though I'm out of points, I accumulate then pay myself back at 50% bonus for those past dining charges (sometimes it results in a credit balance on my card, that's all)

We did use Gold Amex to use with Delta, but Delta has become a D- grade wise in my book so we let that go.

[rayvt]

Quote:

Originally Posted by Dtail Just work out all the math and you will arrive at the conclusion. Do you have any monies at Merrill Lynch? (100k) If so, the credit cards at BOA can work out better than the Fido/Citi 2% deals.

Right. 3.5% on groceries & Sams/Costco.

Get 2 cards, set one to 5.25% on gas, the other to 5.25% on online purchases.

Usually one card or another will have bonus cash-back for Paypal. Set up a paypal-key card (virtual card) and use that when possible.

[retire-early]

Quote:

Originally Posted by Bongleur I can see that buying debit or gift cards for a 4-5% discount would be worthwhile, except I don't know how much spending I have that could be paid for with such cards.

insurance premiums (medical , auto , homeowner's , umbrella )
oil changes
post office box rental ; it is up to $146 a year for me

online donations to charitable organizations

Quote:

Originally Posted by Bongleur In general, how do you extract the last couple of bucks from a gift debit card? All the profit on these will come "on the margin" - the last 4-5% spent is the profitable part.

It generally has to be done in-person.
Just the other day, I made a purchase at Dollar Tree.
I used up the remaining $2.16 on the $500 VISA gift card, then put the rest on my Citi Double Cash.

One way to use up that small balance online is to buy an Amazon eGift card.
They allow any amount over $1.