Friction in using CC points

[gwraigty]

Quote:

Originally Posted by PatrickA5 I also don't encourage my kids to use CC's while they are just starting out in life. I remember when I was in my 20's, young and stupid, I was using cash advances on one card to pay the minimum on other maxed out cards. Took us years to finally get out of that hole. I think using "CC's for everything" should be used by people that have "extra" money - making it easy to pay off monthly. Others should stick to cash and debit. Most on this forum have no problems paying off their CC debt monthly. Others, not so much.

I'm encouraging my young adult kids to use cash back credit cards starting out. They've proven themselves in how they handled their money already when they were minors. They understand CC's are a tool to be used to their advantage, not to buy what you can't afford. A stable job and enough of a cushion in the bank are prerequisites before applying for one. We also made them authorized users on one of our cards to help them build a credit score. We gave them the cards and they were more than responsible, always asking permission before they used it, and paying us for the purchase (less the cash back) when the bill came in.

I, too, wasn't so great with money in my 20's, but I had extenuating circumstances at the time unrelated to self-discipline issues. It wouldn't be a valid benchmark to use on my kids.

[PatrickA5]

Quote:

Originally Posted by gwraigty I'm encouraging my young adult kids to use cash back credit cards starting out. They've proven themselves in how they handled their money already when they were minors. They understand CC's are a tool to be used to their advantage, not to buy what you can't afford. A stable job and enough of a cushion in the bank are prerequisites before applying for one. We also made them authorized users on one of our cards to help them build a credit score. We gave them the cards and they were more than responsible, always asking permission before they used it, and paying us for the purchase (less the cash back) when the bill came in. I, too, wasn't so great with money in my 20's, but I had extenuating circumstances at the time unrelated to self-discipline issues. It wouldn't be a valid benchmark to use on my kids.

We put our kids as authorized users on several of our credit cards. It really helped my middle daughter's score and came in handy when it came time for her to get her first mortgage. She has a CC, but as far as I know doesn't use it.

Oldest child has a CC, but she's better off not using it. I remember several years ago she decided that she "just wasn't going to worry about paying on her card anymore". That didn't work out well.

[Red Badger]

Quote:

Originally Posted by 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?

Thanks to Target, Experian, the Fed OPM (among others over the years), my answer is not anymore.

[capjak]

Used cash reserve bonus for $2300 worth of plane tickets roundtrip to Athens non stop on American Airlines.

Hard to complain about free....but I am sure I can find something.....Like when I complain about free food through a gift card....

[SecondCor521]

Quote:

Originally Posted by Perryinva You only pay VAT/fuel charges per ticket, about $2k/total for two tickets that would cost from $8k to $14k AFTER TAX, if purchased. [...] It barely makes sense to pass up $600 in cash back for a free premium economy, except that none of the ticket values are taxed like cash back is.

You might be able to lower your costs even further. If you're flying into LHR, consider flying into LGW or Ireland instead. I think some of those charges may be strictly LHR related.

Cash back (and other rebates and discounts, like free airline tickets, or miles) on personal credit cards is generally not taxed. It's considered a rebate on the previous purchases. (Bonuses on bank checking accounts are usually treated as interest paid, and are taxable, but I think most of the talk on this thread has been about credit card rebates.)

[Perryinva]

True dat.

Yes, the fees are Heathrow (and Gatwick I believe) related, and only for entering internationally. BA knows that, and precious few destinations can be reached that one can use the BOGO ticket on without going through LHR. The tickets have to be for a ticketed trip, so two one ways is a waste to avoid the fee, when both legs of the RT are covered under the same bonus. I have 2 more banked and will earn another next year, and then will be out of points for a while.

[HMMY]

Amex Blue Cash Preferred ($95 fee) for groceries gives me 6% back on up to $6k/yr so I net $265/yr in statement credit. Chase Sapphire Reserve ($450 fee less $300 travel credit) for travel and dining gives me 3 pts per dollar spent and an extra 1.5 pts if I redeem for travel thru their rewards portal. I accrue about 75k/yr and redeem for domestic flights and hotel stays with an approximate cash value of $1k. Citi Double Cash Rewards (no fee) gives me 2% cashback on everything. I just added the Prime Visa (no fee for Prime members) for 5% back at Amazon and Whole Foods. I haven't encountered any friction using my points.

[Janet from FIRE Planet]

We stick to Fidelity cash back (2%) and Costco for dining (3%).

We recently fell for an AMEX that gave 3% for groceries BUT the points can be used only as a statement credit....thereby making it less of a percent back than Fidelity....

[The Cosmic Avenger]

Quote:

Originally Posted by Janet from FIRE Planet We stick to Fidelity cash back (2%) and Costco for dining (3%). We recently fell for an AMEX that gave 3% for groceries BUT the points can be used only as a statement credit....thereby making it less of a percent back than Fidelity....

Wait, why would it matter if the cash back is a statement credit? I always take my cash back as a statement credit. If I charge $1000 and get $20 cash back, then charge another $1000 next month but after the statement credit I only have to pay $980, I still get another $20 cash back, not $19.60, because I charged $1000, not $980.

Or am I overthinking it, and you just prefer to have cash in another account? But with a statement credit I'd be paying $20 less from my checking account, and so I have $20 more in there either way, right?

[Chuckanut]

Quote:

Originally Posted by The Cosmic Avenger Wait, why would it matter if the cash back is a statement credit? I always take my cash back as a statement credit.

IIRC, there are cards that value a 'point' at less than 1¢ when taken as a statement credit.

[Janet from FIRE Planet]

Quote:

Originally Posted by The Cosmic Avenger Wait, why would it matter if the cash back is a statement credit? I always take my cash back as a statement credit. If I charge $1000 and get $20 cash back, then charge another $1000 next month but after the statement credit I only have to pay $980, I still get another $20 cash back, not $19.60, because I charged $1000, not $980. Or am I overthinking it, and you just prefer to have cash in another account? But with a statement credit I'd be paying $20 less from my checking account, and so I have $20 more in there either way, right?

----------------------------

To me, cash is king. Two things I can think of:

1. If I choose to NOT USE the statement credit card again, they get to keep my statement credits that remain.

2. If I use the statement credit card infrequently or every other month, say, my cash points will earn interest or I can put the cash toward another purchase with a different credit card.

[catii]

Simple strategy: Use American Express Platinum card for ALL personal & business (we're retired, but still own the company), which adds about 210,000 points each year. If we're too busy to take a trip, I just use them on Amazon.

[gwraigty]

Quote:

Originally Posted by The Cosmic Avenger Wait, why would it matter if the cash back is a statement credit? I always take my cash back as a statement credit. If I charge $1000 and get $20 cash back, then charge another $1000 next month but after the statement credit I only have to pay $980, I still get another $20 cash back, not $19.60, because I charged $1000, not $980. Or am I overthinking it, and you just prefer to have cash in another account? But with a statement credit I'd be paying $20 less from my checking account, and so I have $20 more in there either way, right?

+1

The only card that I'm aware of that does ding you if you take a statement credit is the Citi Double Cash card. In your example above, they'd give 1% on the $1000 purchase and 1% back on the $980 statement balance, if paid in full. It isn't as good as a 2% card that doesn't split the cash back percentage that way.

Though if it's a card that's seldom used, a statement credit isn't the most ideal.

[The Cosmic Avenger]

Thanks gwraighty and Chuckanut, I had no idea that some cards played games like that (although I'm not at all surprised). I use my cards for everything possible to maximize cash back, so it didn't even occur to me how infrequent card use would affect the statement credits.

Well, everything possible except for small purchases at local mom-and-pop shops, where I try to use cash to save them the fees. Not like I really NEED that 40 cents on my $20 takeout order! And while it's not a huge help to them either, I want to do whatever I can to encourage and support small businesses.

[Sittinginthesun]

Just blew 789,000 points on four long haul flights for a coming family vacation. Pods with lay flat seats. Value was about $16k if I had chosen to pay cash. Over the last 20 years we’ve taken a lot of flights paid for with points.

[Tiger8693]

I have Sam's Master Card for gas (5% cash back on gas, 3% cash back on restaurants), and a Chase Hyatt Visa for Hyatt points. I have found Hyatt to have the best "value for points redemption" with some as low as 5k/night, higher end or larger city up to 15k-20k per night, but still much lower than IHG or others. I recently went for the Chase Sapphire for a 60k bonus which can be used for travel at 1.5 value of points, or I can transfer to the Hyatt points at 1:1. Besides the Sam's card which I use for all gas and dining, everything else is on 1 card up to this point the Hyatt Visa, not the Chase Sapphire to get the bonus. Probably have $2k-$3k per month in spend.

Haven't paid for a Hyatt hotel in the past couple of years. There are some locations I have been though where they are not present.

[googily]

Just as an FYI, the Chase Freedom (not the unlimited one) has "PayPal" as a 5% category this quarter. This basically means large swaths of online purchases are available to be included.

Also, I've started being good about reminding myself to check the Shop With Chase portal before buying from bigger stores, and often that's another 2%, and sometimes more.

Then I transfer those points to my Chase Sapphire account, to be used for travel redemptions at 1.5 points per dollar.

So, that's the equivalent of 7.5%. The only downside is that I'm going to run through that 5% ceiling pretty quickly. [emoji2957]

[Janet from FIRE Planet]

Quote:

Originally Posted by The Cosmic Avenger Wait, why would it matter if the cash back is a statement credit? I always take my cash back as a statement credit. If I charge $1000 and get $20 cash back, then charge another $1000 next month but after the statement credit I only have to pay $980, I still get another $20 cash back, not $19.60, because I charged $1000, not $980. Or am I overthinking it, and you just prefer to have cash in another account? But with a statement credit I'd be paying $20 less from my checking account, and so I have $20 more in there either way, right?

Here are more reasons for you:

3. Chuckanut thought of reason #3 "IIRC, there are cards that value a 'point' at less than 1¢ when taken as a statement credit."

4. Reason # 4 is, I do not have to remember rules to receive my cash. The statement credit makes me follow certain rules to redeem the points.

5. Reason #5 is I can use my Fidelity cash payment for the minimum amount due (if I am strapped for cash) whereas the statement credits cannot be used this way. BTW, I've never been a cash-strapped kind of gal.

[pc95]

Divide out expenditure categories on certain Cards:

Here are my current ones ->

Penfed Visa 5% on gas No annual fee - cash back -- (no longer available now)

Sapphire Reserve: 3x points on Travel and 3x Restaurants $450 Annual fee $300 travel credit. Travel booked on their site receives a 50% bonus rate - ie 100,000 points gives $1500 of purchase power.

Amex Blue 3% on Groceries No annual fee

Costco Citi Visa Card: Buy Electronics for 4 yrs of total warranty (2 years extra warranty) No annual fee.

Freedom Card: 5% rolling categories No annual fee -- points can be moved into Sapphire points for 50% bonus.

Amex Platinum: for travel (luxury card more or less) lounges - 3 additional friends/family for $180/month --> (give as gifts); $550 steep annual fee; $200 Uber Credit, $200 Airline credit makes up for it. Also Hilton Gold Status. Only apply if you travel a good amount. Otherwise not a good card.

Southwest Priority card: for domestic travel $149 annual fee -- 7500 annual points allotted (worth close to the annual fee)...4 (four) $30 upgrades paid for upgraded seating positions ($120 nominal value). Lets you board early 4x essentially throughout the year. Have used this twice when missing T-24 hr mark for Southwest earlier check-in. Its a nice backstop feature. I use Southwest about 12 times a year - so they are my primary domestic airline.

[PatrickA5]

Quote:

Originally Posted by pc95 Southwest Priority card: for domestic travel $149 annual fee -- 7500 annual points allotted (worth close to the annual fee)...4 (four) $30 upgrades paid for upgraded seating positions ($120 nominal value). Lets you board early 4x essentially throughout the year. Have used this twice when missing T-24 hr mark for Southwest earlier check-in. Its a nice backstop feature. I use Southwest about 12 times a year - so they are my primary domestic airline.

Have you ever tried this and been denied an early boarding? I usually buy "Earlybird" feature so I don't have to worry about the 24 hour check in. I've always gotten an "A" boarding pass with Earlybird, but this would save the fee - if it actually works.