Help with choosing a card

All about maximizing your rewards!
Members share tips and tricks for getting the most miles, & points.
Nixon
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Location: Great Southwest

Postby Nixon » Mon Nov 10, 2014 11:20 pm

Xorand wrote:If I walk into a grocery store and buy a $50 Starbucks gift card (like I did just the other day), it shows on my AmEx bill as a $50 grocery purchase. There is no additional fee to activate that gift card, I just spend it like normal at Starbucks. On my next AmEx statement, I'll realize an additional $3.00 on my AmEx cash back balance for that purchase.

Now if you want to get fun, here's a scenario we use around Thanksgiving:

  • I buy gift cards at Krogers for Christmas presents. Let's say I buy $500 worth. I'll eventually get $30 cash back.
  • Starting November 19th, Krogers give you 4X fuel points for gift card purchases. I will then have a 2000 fuel point balance.
  • I can use 1000 fuel points to get $1.00 a gallon off of fuel for a maximum of 35 gallons. I own a diesel dually pickup truck with a 38 gallon fuel tank, so lets say I put in 35 gallons of fuel. I just saved $35. I can do that twice (I had 2000 points), so really I can save $70.
  • To top all that off, AmEx gives me 3% cash back on fuel purchases (which works at the Krogers fuel station I use). The current diesel price is $3.50 a gallon, or $2.50 with my fuel savings. So my $175 worth of fuel gives me another $5.25 in cash back.


Smart shopping!
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freyj6
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Postby freyj6 » Tue Nov 11, 2014 6:28 am

@ NuHere -

Blue Cash Preferred = 6000 x 0.06 = 360 -75 for annual fee = 285.

Sallie Mae + BCE = (3000 x 0.05) + (3000 x 0.03) = 240.

Pretty close but BCP comes out ahead.

Another option would be to just grab the Arrival, put your groceries on that and get the $454 signup bonus, which is a lot more than any of the above, and you'd still get 2.2% back on groceries.

However, you're right that opening and cancelling cards isn't that great for your credit. You get docked when you apply for cards, and you lose existing credit history when you cancel them. So if you don't want to get mixed up with opening and cancelling cards, the best long term strategy in your case would probably be:

Blue Cash Preferred + Citi Double Cash.

Then if you want to get more complicated later you could churn cards, do manufactured spending like Xorand was talking about, or pick up Discover IT and Freedom.

As far as my strategy, I just haven't updated that in a few months. Arrival used to offer 6.6% off gift cards, which you could just use on everything. They stopped doing that. Right now I use Arrival normally for uncategorized spending (going to drop it next year) and use Freedom and BCP for pretty much everything else. I just got Sapphire Preferred too, and I'll be picking up Discover IT soon as well.
Current Strategy

Chase Freedom + Discover IT + Churning

NuHere
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Location: New York, NY

Postby NuHere » Tue Nov 11, 2014 9:56 am

freyj6, thanks so much for helping out!

I don't know what I did wrong when I calculated the BCE discount. I got $360 just like you, but then instead of subtracting $75 I came up with this elaborate formula to calculate how many dollars I would have to spend to pay for the annual fee, hahaha. Obviously, it was way too elaborate and wrong.

I'm still considering taking advantage of the sign up bonus with Venture and combining with my existing Signature miles. Can you tell me how you got $454 with Arrival? At 2.2%, wouldn't it be $440?

I actually do have Freedom, but I almost never shop at any of the 5% category stores. I got it snouts year ago to take advantage of their 15 month no interest on transfers offer. I have just paid the balance off and thought I'd close it. The one card I've been using for a long time is CO Signature. Maybe 10 years. It only got me 2 or 3 tickets so far at 1.25 mile per dollar. Even if I stop using it, I'm not gonna close it for the reason you mentioned (credit history).

Would closing Freedom (only had it for a year) and opening Venture for a while hurt my credit much? I agree that eventually, BCP and Citi Double is the best bet at my level of spending.

If you don't mind me asking (you break things down in real simile terms), how do you use all your cards? Freedom, BPE and Sapphire... and what will Discover provide that those 3 don't?

NuHere
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Postby NuHere » Tue Nov 11, 2014 9:59 am

Also, in addition to BCP and Citi Double, what benefit would Discover or Freedom give me?

Cre
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Postby Cre » Tue Nov 11, 2014 12:31 pm

Nixon wrote:Smart shopping!


Is it smart?

I still can't help but notice that a bank's name is usually on top of the tallest buildings in the city.

And as for smart, these same banks scour the top Ivy League level business schools and universities every year, recruiting the crème de la crème of the very brightest statisticians, mathematicians, economists, business majors, and information technology wizards to fill up the floors of their tall buildings with.

And they have a fierce profit motive, with share holders watching their profits and losses like a teenager watches her Facespace feed.

So what is the bank, or credit card issuer, getting in return for giving you 6%, especially if the "discount" rate (what banks charge the merchant for cc processing fees) is only 3%?

And then if the merchant, like a grocery story, is giving you $1.00 off a gallon, on top of the 3% fee the store pays the bank, along with the 6% the bank is kicking back to you... something isn't adding up. We, as consumers, are being highly incentivized (tricked) into doing something the banks and the stores want, that must go beyond simply shopping there.

What are we giving up for this $500 a year in "manufactured" savings?

Are we helping banks build an ever more comprehensive and precise profile about ourselves?

Is that what these very smart, highly educated, and forward thinking bankers are after?

How might that immense compendium of information about us effect our future?

Is it worth the trade?
Current Cards:
AmEx Platinum Charge: NPSL, $450 AF
AmEx Reserve Credit: $30K limit, $450 AF
Chase Slate Visa Credit: $32K limit, No AF
Future Strategy:
Near Term: Need a good MasterCard for places that won't accept AmEx or Visa
Long Term: Will downsize out of one or both current AmEx cards to reduce AFs

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Xorand
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Location: TX

Postby Xorand » Tue Nov 11, 2014 2:48 pm

You bring up some pretty interesting and thought-provoking observations, Cre.

I do know that AmEx can give me 6% back on groceries based on the fact that a fair majority of their credit card holders pay them some pretty good amounts of interest on their revolving balances (to make up for the fact that I do not).

The grocery store's incentive for selling me gas well below their wholesale cost simply for buying gift cards that probably don't make them much, if any, profit is an interesting thought. Yes, they have (my wife's) name and phone number as well as her email address, but the emails she gets from the chain typically have even more savings opportunities in them.

Lots of things to think about there.
AmEx - Platinum (NPSL) , Blue Cash Preferred ($19,000), Gold Delta Skymiles ($8,500)
Chase - Sapphire Preferred ($14,000), Disney ($11,500), Amazon.com ($9,000), Freedom ($8,000)
CapOne - QuickSilver ($7,250) / Platinum Rewards ($7,250)

freyj6
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Postby freyj6 » Tue Nov 11, 2014 3:16 pm

NuHere wrote:freyj6, thanks so much for helping out!

I don't know what I did wrong when I calculated the BCE discount. I got $360 just like you, but then instead of subtracting $75 I came up with this elaborate formula to calculate how many dollars I would have to spend to pay for the annual fee, hahaha. Obviously, it was way too elaborate and wrong.

I'm still considering taking advantage of the sign up bonus with Venture and combining with my existing Signature miles. Can you tell me how you got $454 with Arrival? At 2.2%, wouldn't it be $440?


Arrival is more because you get 10% on your 10%. So it's 2.2222 (actually a little more but that's complicated and doesn't really matter).


I actually do have Freedom, but I almost never shop at any of the 5% category stores. I got it snouts year ago to take advantage of their 15 month no interest on transfers offer. I have just paid the balance off and thought I'd close it. The one card I've been using for a long time is CO Signature. Maybe 10 years. It only got me 2 or 3 tickets so far at 1.25 mile per dollar. Even if I stop using it, I'm not gonna close it for the reason you mentioned (credit history).


I just noticed that Venture is now 40,000 sign up bonus. So yeah, just as good of a choice as Arrival.

Would closing Freedom (only had it for a year) and opening Venture for a while hurt my credit much? I agree that eventually, BCP and Citi Double is the best bet at my level of spending.


I wouldn't close Freedom. If you ever have a car in your life 5% on gas like half the year is a big deal (especially since points can be transferred to CSP or Ink, then through other transfer partners so you can essentially get a value of up to 10% back). It's a no fee card... might as well keep it.

If you don't mind me asking (you break things down in real simile terms), how do you use all your cards? Freedom, BPE and Sapphire... and what will Discover provide that those 3 don't?


Arrival and Sapphire were mostly for the sign up bonus, but I also use Arrival for uncategorized spending and will use CSP for restaurants and travel. I'll probably drop them both at the 1 or 2 year mark, but I might keep CSP if I can get enough value out of UR points (I'm also transferring 30,000 points from my Freedom card to CSP). BCP is for groceries and when gas doesn't fall under freedom, and for costco. I'm downgrading to BCE + Sallie Mae though because my spending will be less in the next few years. Freedom I use for gas and restaurants, and I'm hopeful for another good category this year like maybe groceries or something.

Discover I want because it combines well with freedom. Say freedom covers 2 quarters for gas and 1 for restaurants. Discover might cover another quarter for gas and another for restaurants. It's also the only 5% card with no foreign transaction fee, so it's good for dining abroad. And it has free fico scores, which I'll lose when I drop Arrival.
Current Strategy

Chase Freedom + Discover IT + Churning

NuHere
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Postby NuHere » Tue Nov 11, 2014 8:42 pm

Got it!

One last question... how do you decide which Chase card points you transfer to another Chase card points? Does it matter when the total stays the same? For example, does it make a difference if Freedom points get transferred to Sapphire or the other way around?

I've decided to apply for Venture. Combine the bonus miles with existing Signature miles and pay for my spring ticket.

After that, I'll probably cancel it and get Citi Double and BCP or Citi Double and BCE + Sallie Mae for the long haul. Will go over my past statements to see how much I actually spend on groceries. I realized it might be less than $500 a month. Basically, I'd have 2% on everything and either 6% (BCP) or 4% combined (BCE + Sallie Mae) on groceries. If I keep Freedom, I might get an occasional 5% on whatever category is in rotation (this will be really, really minimal based on my past spending patterns.. I don't plan to own a car).

Arrival is 2.2%, which if spending enough to justify the annual fee is better than Citi, but I might be traveling for a month or more at a time in the next few years and that means I wouldn't spend enough a year to make Arrival a better choice.

NuHere
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Postby NuHere » Tue Nov 11, 2014 9:13 pm

Actually, calculating hypothetical spending scenarios now... even if I didn't travel, I wouldn't spend enough annually (by far) for Arrival to be a better choice than Citi Double for me.

freyj6
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Postby freyj6 » Wed Nov 12, 2014 1:26 am

Yeah you have to spend something like 40k for Arrival to be better than Double Cash in the long run.

As far as the Chase points, the only reason to transfer them is to put them on a card like CSP or Ink, which can then be transferred to Chase's transfer partners like BA, United, Southwest, etc. Depending on which routes you fly, you can get 1.5-3 cents out of each point.
Current Strategy

Chase Freedom + Discover IT + Churning



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