Help with choosing a card

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NuHere
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Help with choosing a card

Postby NuHere » Sat Nov 08, 2014 6:28 pm

Hello,

I've been looking at different options, but I'm so new to the rewards game.

First I was considering CO Venture and Barclaycard Arrival, since I fly to Europe once a year.

Both Venture (2% on travel) and Arrival(2.2% on travel) have annual fees. If spending more than $1.250 a month, Arrival is a better option, according to one article I have read.

Then I thought the best thing would be combining Citi Double Cash with another card that would give me 5% cash back on groceries (I spend around $500 a month). But there is either a spending limit, rotating categories, annual fees... and I'm just not sure anymore.

Citi Double Cash has no annual fee which makes it better than Venture (if miles are redeemed on travel.

Is there a card that offers 5% cash back on groceries with no spending limit and no annual fee? If not, what would be the next best option?

Thanks for any help!


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CarefulBuilder14
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Postby CarefulBuilder14 » Sun Nov 09, 2014 8:54 pm

No card, at least as far as I know, has everything you want.

You may or may not know this, but there are two variants of the Arrival currently available to new customers. One has no annual fee, but the rewards are somewhat inferior. The other has an AF but better rewards, and is also accepted by more merchants internationally / can be less of a hassle to use when you travel.

If you were spending much more than $500 a month on groceries, I'd suggest trying to get the old Amex Blue Cash card. At the $500 in groceries per month level, your best bet might be combine a Barclaycard Sallie Mae with an Amex Blue Cash Everyday (BCE - one of the two newer variants of the Blue Cash). You could average about 4% cash back on groceries that way. That's what I do. Neither BCE nor Sallie Mae have annual fees.

The reason I don't suggest you get the old Blue Cash is that you earn much less than 5% on gas and groceries (something like 1% or even 0.5%) until you've spent a few thousand on the card each year. From then on, gas and groceries earn 5% with no limit. If someone's shopping for a spouse and 5 kids at a place like Whole Foods, then it can be a good deal.

You don't say much about your credit history - only that you're new to rewards cards. All the cards I've mentioned require good-to-great credit.
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
SD: Arrival BrooksBros BCE ED IHG
Letting new accounts cool off since May
Really not sure what I'll add next or when

Cre
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Postby Cre » Mon Nov 10, 2014 1:11 am

Ok, this is a really silly question. Or rather, I feel really silly asking it... but what are "groceries" to a credit card issuer?

If I buy AA batteries for my flashlight at a grocery store like Safeway, is that considered "Groceries" to a bank? Does the bank analyze the line item contents of each receipt, looking for items like spinach, eggs, and orange juice?

And conversely, if I buy a gallon of milk and a package of lasagna at Target, which is mostly known for being a housewares store, not a grocery store, but some Targets do indeed sell food and groceries... will the bank discern the line item distinctions in the Target transaction as well?

That sounds really weird to me... this business of credit cards making determinations and basing rewards on the character of purchases.
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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PlyrStar93
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Postby PlyrStar93 » Mon Nov 10, 2014 1:23 am

Cre wrote:what are "groceries" to a credit card issuer?

In most cases it's basically the merchant category code applied. The MCC is somehow a merchant tells credit card company the category (if it's grocery, gas, restaurant, etc.).

Cre wrote:If I buy AA batteries for my flashlight at a grocery store like Safeway, is that considered "Groceries" to a bank?

Yes, as long as the MCC is grocery store, which in most cases indeed is when checking out at the lanes.

Cre wrote:Does the bank analyze the line item contents of each receipt, looking for items like spinach, eggs, and orange juice?

Usually, no.

Cre wrote:And conversely, if I buy a gallon of milk and a package of lasagna at Target, which is mostly known for being a housewares store, not a grocery store, but some Targets do indeed sell food and groceries... will the bank discern the line item distinctions in the Target transaction as well?

Still depends on what the MCC is. This may even differ between card processing networks, probably how the merchant signs the agreement with the acquirer to assign codes differently between networks.

For Target specifically, American Express classifies it as "Wholesale Stores" while my Visa card recognizes it as grocery store.
Citi Forward Visa $5000 10/2012 | American Express Blue Cash Everyday $8000 2/2014 | Discover it $7000 5/2014
Chase Freedom Visa Signature $7000 6/2014 | Citi ThankYou Premier Visa Signature $5000 1/2015
All EMV.

freyj6
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Postby freyj6 » Mon Nov 10, 2014 2:06 am

@ OP - Your best bet for groceries would be the regular Blue Cash Preferred. Yes, it has an annual fee, but if you're spending $500 a month, you'll still come out ahead of any no-fee card (or combination of cards). If you spend a little less, Sallie Mae is probably your best option.

Basically for groceries:
<$4500 per year spend --> Sallie Mae + Blue Cash Everyday
~ $4500-6000 --> Blue Cash Preferred
~ $6000-15000 ---> Blue Cash Preferred + Sallie Mae
> $15000 ---> Old Blue Cash

For an general spending card, right now Double Cash blows all others out of the water (unless you're able to get crazy redemption rates for UR or MR, but since you're new to the points game that's probably not the case). The only other real consideration, however, is the sign up bonus. It just depends on whether you want to set up an sustainable long term strategy first or milk the sign-up bonuses on cards you'll most likely cancel later. What I'd do is pick up the Arrival for the signup bonus and pay for your trip to Europe with it, then cancel it when the annual fee rolls around.
Current Strategy

Chase Freedom + Discover IT + Churning

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Xorand
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Postby Xorand » Mon Nov 10, 2014 8:38 am

Cre wrote:If I buy AA batteries for my flashlight at a grocery store like Safeway, is that considered "Groceries" to a bank? Does the bank analyze the line item contents of each receipt, looking for items like spinach, eggs, and orange juice?


This is one reason cards such as the Blue Cash Preferred, which offers 6% back on "groceries", has a yearly $6,000 cap on "groceries". I don't spend that much yearly on groceries, so I buy a lot of gift cards at the grocery store for gifts or just to get 6% cash back on places where I usually spend money (i.e. Amazon, Starbucks, Target).
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)

Cre
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Postby Cre » Mon Nov 10, 2014 2:30 pm

Whoa Xorand... this is a teaching moment here...

You use your BCP to buy gift cards from a merchant that puts an MCC code on the receipt. This gives you a 6% discount on all purchases made with that gift card at merchants that do not have an MCC code on the receipt. Do I understand both you and PlyrStar93 so far on this?

If so, then what about the fee to activate the gift card? Isn't that between 3% to 5%?
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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Postby Xorand » Mon Nov 10, 2014 4:19 pm

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.
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)

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Vattené
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Postby Vattené » Mon Nov 10, 2014 4:31 pm

Cre wrote:what about the fee to activate the gift card? Isn't that between 3% to 5%?

Most gift cards to a certain store have no fees whatsoever. Any rewards boost you get is pure profit. Prepaid cards (Visa/MC/Amex gift cards) do have activation fees, so one has to be careful trying it with these.

This strategy is known as manufactured spending.
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

NuHere
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Postby NuHere » Mon Nov 10, 2014 6:50 pm

Thanks a lot everyone! Very helpful tips!

CarefulBuilder14 , I know about the no fee Arrival version. Citi Double Cash gives me 2% on every purchase, so as a no fee card, I think it'd be a better choice than Arrival. Interesting idea to combine Sallie Mae (5% for $250 a month) and BCE (3% for $500 a month). I do shop at Whole Foods, but no spouse and 5 kids, haha. You're right, the old Blue Cash wouldn't make sense in my case. I usually spend less than $2000 a month. I don't know my FICO score, but last time (years ago) I checked it was when renting an apartment and it was in the really good/excellent range. I really don't remember. High 700s I believe. Since then I've kept paying off my monthly balance on my CO Signature card and I'm never late on bills, so it should be roughly the same.

freyj6, that's a great breakdown. Assuming we stick with $500 a month, if my math is correct, the combo of Sallie Mae and CBE would give me $240 a year, while the Blue Cash Preferred only $225 a year. So it might not be a better option in the end. I'd have to spend more to make it worth the $75 annual fee. After groceries, my biggest expense is transportation (subway and railroad passes... and unfortunately, they are not in the 5% category).

I actually considered exactly what you're suggesting regarding signing up for a card with bonus, but with CO Venture instead of Arrival. Same bonus and I could combine with my existing CO Signature miles. My next trip is in the spring and I wouldn't spend enough on Arrival by then to be able to get a ticket. Venture and Signature together would probably get me one. What I wasn't sure about this tactic is if it hurts my credit or not (opening and canceling a card within a relatively short period of time).

In your current strategy, you say "Barclaycard Arrival: $4000 [AMEX Gift Cards=6% all spending]". Can you explain it to me, please? Is it the same thing Xorand is talking about?



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