Credit Card Cashback Update

by Kevin on January 27, 2009

If you have been reading No Debt Plan for any serious amount of time you have noticed I am not afraid of credit cards. In fact I think credit cards are a great tool that if used properly essentially earns you free money for purchases you would make regardless of using the card or cash or your debit card.

We use American Express’ Blue Cash card to earn our credit card rewards. There are other cards where you can earn points for flights and hotels and all of that, but I’m not a fan of those. With a cash back credit card you get cash… back. Cash can be applied to anything whether it be groceries, your utility bills, hotels, flights, etc. The cash can go toward anything. Rewards points are likely to cause you to spend more money. You earn a free flight, so you likely need a place to stay wherever you are flying. And you’ll likely eat at your destination. So you get a free flight, but now you’re paying out of pocket for a hotel and food.

Cash is cash. Straight in my pocket. Straight to the bottom line of the budget.

Tracking and Comparing Cash Back

Our credit card cash back “year” runs July to June.The AMEX Blue Cash card is tiered. Tier 1 pays 0.5% on non-special purchases, and 1.0% on special purchases (defined as groceries, gas, and drug stores). Once you spend $6,500 in a year you get kicked up the top tier where the regular purchases earn 1.5% and the others earn 5.0%.

We’ve had this card for almost three years. Let’s compare what we’ve earned:

  • In our first year we racked up $432 in interest-free, fee-free money.
  • In our second year we racked up $470 in free money.

We are in the midst of our third year and we are up to $144. We’ve got roughly five more months. Based on our previous spending amounts and how much of our normal spending is regular vs. bonus purchases, I’m estimating we will end the year in the $350-400 range.

I’m attributing the lesser payout to lower gas prices. I’ll gladly take a lower cash back payout when it is the result of lower spending on those items.

For those of you that use credit cards successfully, how is your rewards year shaping up?


Philip January 27, 2009 at 9:37 am

With chase freedom it is not based on the year like that. Just today I get to claim my second $250 check for 200 points with my card that I have had since last march so right now I am at $500 in 10 months. I use that card for practically everything!

Kelly January 27, 2009 at 10:25 am

We use discover and we love the cash back. A few months ago, we could have cashed out $80, but a few businesses offer more money if we use our cash toward their gift cards. Pier 1 was offering an extra $20 on a pier 1 gift card, so I now have $100 in free money to go toward decorating the house. I do a lot of my shopping at pier 1 anyway, so it was perfect for me!

LAL January 27, 2009 at 12:42 pm

I think I made $2k last year in cash back. Nice.

Matt Ranlett January 27, 2009 at 1:37 pm

This year I’m at $500 in cash back from my Chase Visa Freedom card and an unknown number above $0 from my Amex card. Just like Philip I was able to turn two different $200 payments into $250 each (I just did them at one time).

LAL making two thousand dollars is impressive and reflects an enormous amount of spending. I’d love to see tips on that while not carrying a balance.

Start-Up January 27, 2009 at 1:41 pm

I can’t say that I know how much I made in cash back over the past year. I use the costco/AMEX business card to get 5% on gas and 3% back at restaurants. I don’t have to reach a plateau to start getting the high cash back rates.

Miss M January 27, 2009 at 2:57 pm

I get about $500 a year back on a chase freedom card. How do you get $2000 back? I know some places you can pay your mortgage or rent with your credit card, that would be nice 🙂

Jenny January 28, 2009 at 4:35 am

I have a pcfinancial mastercard (Canadian) and I have had it for almost 2 years, and have gotten 300$ worth of points. These points can be redeemed at a large grocery/household items store that I often shop at so they can be used with no extra spending. With this card you get a certain amount of points per dollar spent on the card anywhere, more for money spent at their store, and even bonus points for bringing reuseable bags with you when you shop there (awesome). And you don’t have to redeem the points before you can use them, just tell the cashier as you are checking out that you want to use your points.

LAL January 28, 2009 at 9:47 am

I spent over $20k on tuition for my DH’s MBA alone last year. So while our personal spending wasn’t ridiculously high and I might make back $500, the bulk of our spending was preplanned tuition expenses.

I wrote a post on what an MBA has cost us thus far and it’s around $1k a month for a part-time MBA.

So everyone who wants to know? You can either be paying what we are in tuition or keep your money. I’d rather keep the money but at least my DH is happy.

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