Which credit card offers the best cash back reward program?

June 14, 2005 6:58 AM

Credit Card Rewards: I charge about $20,000 to $25,000 a year on my credit card, mostly for rent and food. I want to receive as much cash back (or a functional equivalent) as possible from a rewards program. What credit card/group of cards should I use? Any tips?

For whatever it's worth, I have a sterling credit score. Whatever plan I select, I want to pay the card off each month in full.

posted by gd779 to Work & Money (19 answers total)

Best answer: I find that the FatWallet Finance forums are good for this kind of thing. Those people are truly obsessed with saving money.

It looks like the current best deal is a Citi card that has 5% cashback for 3 months, then 1% after that (and 5% on gas/supermarket). (discussion)

Personally, I don't like to switch cards too often. So I have a Citgo Visa that has a flat 1% paid into the balance each month, and an Amazon card to use at Amazon for the 3% reward.
posted by smackfu at 7:17 AM on June 14, 2005

Best answer: I pick my credit cards based on rewards/points programs, since I pay mine off every month. My only requirement is that the card have no annual fee.

We use a combo of the Citi Driver's Edge Mastercard (3% for some purchases, and 1% for others -- annual max $1,000, total max per car $5,000) and the Target Visa (1 point per dollar -- when you get 1,000 points, get a 10% off coupon for an entire day; very valuable if you shop at Target) when we hit the annual max on the Driver's Edge
posted by pardonyou? at 7:20 AM on June 14, 2005

Best answer: The FlyerTalk Credit Card Programs fora are good places to ask this question, and I'd be willing to bet you'd find more-informed answers there than here. One principle you need to consider: take out the value of any annual fees from your expected reward when comparing programs.

If you can use non-Visa and MasterCard programs for at least some of your purchases, then I have heard the best things about Diners Club, and the Amex Starwood Preferred Guest cards. The best thing about these cards is that the points you receive are flexible and can be converted to mileage in many different frequent flier programs at attractive rates, or hotel rooms at even more attractive rates. You can also use your points to buy all kinds of junk (well, I consider it junk, but someone's buying it).

If you are looking for a Visa or MasterCard, the rewards programs there are usually more closely connected with a single airline program, so it would mainly depend on which airline you fly most often there.

Discover offers straight cashback which is nice, although $20,000 on Discover would only get you $200 (well they do give 5% at museums and aquaria for some reason), whereas it with Amex SPG it would get you enough Starpoints for a free trip on American Airlines with two stops anywhere in the continental U.S. Worth more than $200. With paid airline travel and saving for more than a year you could get international trips or upgrades which are an even better value.

If you are dining at iDine restaurants enough you might be able to get some points out of them.
posted by grouse at 7:21 AM on June 14, 2005

Go to: http://www.bankrate.com/brm/rate/brm_ccsearch_rebate.asp
for a comprehensive listing of rebate and special offer cards. Personally, I have an MBNA Mastercard and their rewards are quite good for air travel. If you get cash back, it is a much worse deal.
posted by bove at 8:48 AM on June 14, 2005

One thing you might look into is that some store cards offer their rewards specifically in the form of a discount at the store - for example, my Target card collects points that then are redeemed as a 10% discount coupon for a single Target visit which is good for a month. I'm still doing the math over time, but it appears to me (because I can use that discount trip for higher-end items I need as well as stocking up on diapers and formula and suchlike) that the final reckoning is a better deal than straight cash-back rewards.
posted by nanojath at 9:19 AM on June 14, 2005

If you don't mind driving GM vehicles, the GM card will give you 5% credit toward a new car purchase (except Saab or Saturn). There's a limit per model of $1,000 or $1,500 (maybe a few are $2,000). The credit can be used in combo with all other discounts, etc. So you can use this card until you have the credit for your next car saved up, and then switch to something else. A few early adopters of the GM card are grandfathered into no-limit credits, which means if you charge enough you get a free car from time to time.
posted by beagle at 9:39 AM on June 14, 2005

For Canadians there is a very handy no fee credit card comparison chart at redflagdeals.

Oh ya... $25,000/year? I live on about half that - including rent!

One more thing, while I am all for getting the best deal you can, every time, I think it is worth pointing out how sleazy these reward schemes are. It is a way to make consumers insist on using credit cards on every transaction, ensuring profit for the credit card company, and loss for the retailer. Do your local mom & pop stores a favor and use cash!
posted by Chuckles at 9:58 AM on June 14, 2005

Okay, I read your question again... How do you pay rent with a credit card? I can't imagine a property management company that would take a 2-4% cut in their income for customer convinience... Anyway, sorry...
posted by Chuckles at 10:04 AM on June 14, 2005

Response by poster: Thanks for all the suggestions! International airline tickets, as grouse suggested, might be useful, if they give a much better value than the cash back programs. I'll look into that, as well. But first I'll be checking into the specific programs that you all have suggested.

How do you pay rent with a credit card? I can't imagine a property management company that would take a 2-4% cut in their income for customer convinience...

I was surprised too, but they do.
posted by gd779 at 10:56 AM on June 14, 2005

My apartment complex takes credit cards but imposes a 3% surcharge. Bummer.

It is a way to make consumers insist on using credit cards on every transaction, ensuring profit for the credit card company, and loss for the retailer.

If that were the case they'd stop taking credit cards. In reality, merchants know that customers who pay by credit card tend to buy more.
posted by kindall at 10:59 AM on June 14, 2005

My apartment complex takes credit cards but imposes a 3% surcharge.

I'm not sure they're allowed to do that under their merchant agreement with the CC companies. Seems to me that lots of merchants would do this if they could, but they can't.
posted by Mid at 11:07 AM on June 14, 2005

Chuckles:I think it is worth pointing out how sleazy these reward schemes are.

I disagree entirely. No one is forcing the merchants to take credit cards. If you'd like to give a free gift to the merchants you're welcome to pay with cash.

kindall: In the U.S. most merchant agreements prohibit the merchants from adding a charge for a credit card payment. You can report your complex to MasterCard if you want them to change. (Although they might just stop accepting credit cards instead.)
posted by grouse at 11:24 AM on June 14, 2005

I just finished setting up a local property management company's website to allow for credit card payment. So it's not that uncommon. They do impose a surcharge.
posted by glenwood at 11:25 AM on June 14, 2005

The surcharge prohibition is usually dodged by calling normal prices a "cash discount." I am sure that while we're tossing around the word "surcharge" they are very careful to use the supporter verbiage in all their documentation.
posted by phearlez at 11:42 AM on June 14, 2005

i'm using the citibank with 5% back on groceries which adds up quick. There is a limit of $300 back per account so it might be worth it to have more than one account. Recently discover has been coming out with a new 5% back deal on certain things. This summer it's 5% back on gas.
posted by jacobsee at 11:44 AM on June 14, 2005

One more thing, while I am all for getting the best deal you can, every time, I think it is worth pointing out how sleazy these reward schemes are. It is a way to make consumers insist on using credit cards on every transaction, ensuring profit for the credit card company, and loss for the retailer. Do your local mom & pop stores a favor and use cash!
posted by Chuckles at 9:58 AM PST on June 14 [!]

i read somewhere that if everybody stopped using cash and only used credit cards it would work out better for retailers, since the 1-3% transaction charge adds up to less than what it costs to pay wells fargo or whoever to send an armored car to the store to handle the cash.
posted by Ziggy Zaga at 1:20 PM on June 14, 2005

Ziggy Zaga, I'm sure that is true for Walmart, but it isn't true for small business. It probably isn't true for medium sized business either, judging by my local computer store (it has about 10 locations) and the Chinese grocery stores I go to (typically 5 cashiers at any one time, and maybe 20-30 total employees).

There are a few factors. For one, with cash there is a risk of fraud. That risk is close to zero for small business (relatively hard to steal from yourself or your family).

Very large businesses can negotiate the credit card fee pretty effectively, so for Walmart 1-3% is probably more like 1.25-1.5%. For businesses with sales around $100,000/year the fee is probably more like 2.5-4%.

Obviously nobody with sales around $100,000 is using an armored car service. I don't think the medium sized businesses I cited use such services either, but I don't know for sure.

Anyway, as for grouse and kindall with the "then stop taking credit cards" argument... That may apply in certain sectors, but in other sectors businesses really can't afford that choice. It is really the customer's expectations that dictate these things.
(which is to say, customers walk out of antique stores when they can't use credit, but they happily fork over the cash in the Chinese grocery)
posted by Chuckles at 2:55 PM on June 14, 2005

phearlez: That's pretty hard to do when you're talking about a lease. The full price would almost certainly have to be in the lease or mentioned there. And then people would just pay the lower price with a check. Well, I know I would.
posted by grouse at 3:01 PM on June 14, 2005

That may apply in certain sectors, but in other sectors businesses really can't afford that choice.

If the credit card fees are eating into their profits too much, then they should raise prices. If they can't afford to do that either for fear of losing business, then I sympathize. But they chose to operate a business in a free market economy, and those are the breaks.
posted by grouse at 3:19 PM on June 14, 2005