5% Cash Back Sign Up Reminder

While many serious mileage collectors frown at “Cash Back” credit cards, I actually think they are pretty useful if you know how to use them!

9/10 times I will take a credit card that offers 1 mile per $1 spent over 1% cash back because of the value proposition.

If you spent $25,000 on your credit card, with a cash back credit card you would only get $250. However with an air miles credit card, you could if needed redeem those 25,000 miles for a flight that costs significantly more than $250.

Basically the value of 25,000 miles > $250.

However, in recent years credit card issuers like Chase, Discover, and Citibank have added rotating quarterly 5% cash back categories to their cash back credit cards.

Depending on what Quarter it is, these 5% cash back categories can significantly change the game.

If you spent $25,000 on a pure mileage credit card like the United MileagePlus Explorer, you would earn 25,000 miles. If you “hypothetically” spent $25,000 in the respective 5% categories of any of the cards below, you would get $1,250 in cash back. I say that “hypothetically” because all of the cards below have limits on how much 5% cash back you can earn. Obviously $1,250 in cash back is far more valuable than 25,000 miles because there aren’t that many domestic flights that cost more than $1,250. With that $1,250 you got in cash back, you could actually buy 3 domestic tickets!

Now while I have personally have both the Chase Freedom and Discover More credit cards, I have had them both for over 5 years and signed up for them years before I knew anything about earning miles from credit cards.

Therefore I would not recommend signing up out of the blue for any of the cards below unless you are a student that doesn’t have any credit history.

Instead, as I have stated before (especially for the Chase Freedom), I would recommend trying to downgrade to the any of the cards below. If your Chase Sapphire Preferred’s annual fee is coming due and you don’t really want to pay it, simply ask Chase if they will downgrade you to the Freedom. It is a win-win for both sides because you get the Chase Freedom and don’t have to close your credit card (which would slightly hurt your credit score), and Chase doesn’t have to lose a Customer or provide you with another sign up bonus for getting the Chase Freedom.

I used a similar strategy with my Capital One Venture card where I asked to downgrade to their CapitalOne VentureONE card that did not have an annual fee instead of closing my account!

Chase Freedom

Chase Freedom is offering 5% cash back on purchases at any Grocery Stores and Movie Theaters between April 2012 – June 2012.

Typically I put almost all my grocery and movie theater purchases on my Chase Sapphire Preferred. However because I have a Sapphire Preferred card, Chase Checking account, and Chase Freedom, I qualify for a special program from Chase called Chase Exclusives specifically for purchases on my Chase Freedom. I can opt for cash back or UR points.

So instead of 1 point per $1 spent on my Sapphire Preferred, using my Chase Freedom this quarter, I can earn 5 points per $1 spent at Grocery Stores and Movie Theaters. Additionally because of the Chase Exclusives bonus, I also get 10 UR per a transaction plus 10% bonus on transactions made on my Chase Freedom.

So for a $50 purchase at Whole Foods this quarter. With my Chase Sapphire Preferred, I would earn a lowly 50 UR points. If I put the same $50 purchase on my Chase Freedom, I would net 310 UR points.

$50 purchase X 5% cash back (or 5x UR points) + 10 UR points per a transaction + 50 UR Points (10% Bonus) = 250 + 10 + 50 = 310 UR points!

From this example, you can see that just by switching your spending from one Chase card to another, you can increase the amount of points earn by almost 6x!

If you have a Chase Freedom, to maximize this deal starting April 1, 2012, my advice would be to go to your grocery store and make a regular purchase. Once you are home, check your statement to see how it is coded (FYI places like Wal-Mart Super Centers and other big box grocers like Target, do not typically categorize as grocery stores). If your purchase is in fact coded as groceries, then next time you go to that grocery store, buy gift cards up to $1,500 (which is the limit for 5% cash back for this promotion). You will earn almost 7,500 UR points and can use your gift cards through out the rest of the year!

I plan on doing this exact strategy on April 1, 2012 at Trader Joe’s and Whole Foods.

Link To Activate 5% Cash Back

Discover

To my knowledge, Discover was actually the pioneer of the rotating 5% categories. While I have been generally happy with my Discover More card and their rotating 5% cash back categories, there is one thing that REALLY annoys me about Discover!

It is the fact that they are extremely deceptive in their marketing practices for their cash back program!

I have had my Discover More card for over 5 years now and take pride in my extremely nerdy in-depth knowledge of credit cards. HOWEVER, it was not until a few months ago that I realized that I was NOT in fact earning 1% cash back on my purchase for the last 5 years!  Instead, Discover operates on a tiered spending structure which they aren’t really forthcoming about! I say this because in their commercials and advertisements, they promote the 1% cash back in huge numbers and then put “Up To” in front of it, however they never specify what “Up To” means. It is up to you, the Consumer, to go investigate. Of course Discover makes it really to investigate by conveniently not mentioning this tiered structure anywhere on their site until you look at the super fine print.

Oh what a great deal 1% cash back……………..but wait, you have to read the fine print!

It’s actually .25% up to $3,000, then 1%!

So for your first $3,000 you spend on your Discover Card, you get a WHOPPING total of $7.50 cash back!

Don’t spend it all in one place!

I think if most Discover Cardholders knew about this shady practice, they would stop using their Discover Card and switch to something else like the Chase Freedom which offers a full 1% on all purchases!

Imagine if Chase came out with a credit card that said “EARN up to 25 UNITED MILES PER $1 SPENT”.

Most of us would be salivating, only to find out after signing up, that you only earn 25 United miles per $1 spent after you have surpassed $1 million in spending for the year. For spending below $1 million, you only earn .25 miles per $1 spent!

That is more or less what Discover is currently doing, just on a smaller scale!

Even though Discover really annoys me with that specific provision of their cash back program, I have had the card for 5 years, there is no annual fee, and their customer services is pretty good, so the card just sits in my drawer.

Back to the point of this post, Discover does have 5% cash back on Restaurants and Movies between April – June.

Although again, it is diff
icult to know if this is really 5% cash back or if it is “up to 1% cash back” + 4% bonus.

Link To Activate 5% Cash Back

Citibank

Citibank or as a certain HBO Real Time host likes to call them, Shitibank, also offers rotating 5% cash back categories on their Citi Dividend Card.

For Quarter 2, Citibank Dividend Card is offering 5% cash back at Home Depot between April – June.

I personally don’t have any Citibank accounts or cards, so I can’t give any personal opinions on my experiences with their program or card, however in looking over the 5% bonus for this quarter, something did catch my eye.

While this may sound like a good deal if you are planning on doing some Spring remodeling or buying some appliances, my 6th sense for credit card malfeasance went off when I saw “Home Furnishing” and “Home & Garden” purchases.

Now I personally do not know what Citibank considers “Home Furnishing” or “Home & Garden”, but the fact that they specifically mentioned those 2 categories makes me feel suspicious that they might consider an expensive refrigerator purchase more an “Appliance Purchase” instead of a “Home Purchase”.

If you are planning on taking advantage of this promotion by purchasing any large items, my advice would be to call up Citibank first to get some clarification before making your purchase!

Link To Activate 5% Cash Back

 

3 Comments

  • Ali says:

    Hi Parag, if I have a chase sapphire, chase freedom, and chase checking…is the extra 10% bonus and 10 points per transaction automatic?

  • Parag says:

    It should be automatic and you should see the points added into your monthly Freedom credit card statement. If you aren’t sure, you can call Chase and ask them and they will verify it for you.

  • […] and how versatile a card it is due to the rotating 5% quarterly categories and maximization of Chase Exclusives for having a Chase Checking Account, Chase Freedom & Chase Sapphire […]

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