Well well, it looks like we finally have the return of a long lost cash back favorite from a year or two ago… the coveted 5% cashback on supermarkets, drug stores and gas stations credit card in the form of the Citi Diamond Preferred Rewards card.

A few years ago, there were a dozen of these types of cards. In the last year, that number dropped to zero. Those that did exist only offered it on gasoline and imposed ridiculously low limits such as the Discover Open Road card (gives 5% on gasoline but only up to $5 a month!). Back in the heyday, each were vying for “share of wallet,” the industry term for how much of your spending gets put on their card. They often earn a couple percentage points per transaction so the hope is that you use the card for more than the 5% categories, which is a loss leader for them (this ignores the finance charges, fees, and other charges they impose for a variety of reasons).

Looks like they’re making a come back with the Citi Diamond Preferred Rewards card is leading the way.

Any catches? Yes, there are a few. Like all Citi cards, the cashback now comes in the form of ThankYou Network points rather than straight up cash. Those with student loans can convert the points into “cash,” making it a truly 5% cashback card. If you don’t have student loans, you’ll have to take it in the form of gift cards to get a full percentage value. You can always sell the gift cards and still get close to 5% cashback in the worst case.

Another catch is that the 5% promotion is for the first 12 months. I normally don’t like promotional offers (with the exception of when the Citi CashReturns had 5% cashback on everything) but right now this is the only card that offers 5% on the “everyday shopping” category (which includes supermarket, drug stores and gas stations). There are a couple alternatives if you’re looking for a gas cashback credit card, but none exist (to my knowledge) for supermarkets.

Finally, the only limit on cashback is an annual limit of 75,000 ThankYou points - it’s unlikely you will reach that limit ($15,000 in spending in the 5% categories!).

Some other features that may be of interest: 12 month 0% APY balance transfer, no annual fee, 1% cash back on everything else. The 12 month 0% APY balance transfer is nice but it has a balance transfer fee of 3% with no limit, I’d pass on that. The no annual fee is standard and the 1% cashback on everything else is also pretty standard.

Overall, I think this card is a good option if you’re looking for a way to shave 5% off your supermarket and gas bills.

With the price of food and gas where it is, everyone’s looking for an edge and for more and more people, myself included, that edge is in maximizing what you can get out of credit card cash back reward programs. Credit card companies charge vendors a hefty percentage to process credit card transactions (AMEX and Discover charge the most, that’s why they often have the best cashback programs), so doesn’t it make sense that they pass along some of that to you? Of course it does!

So here are eight tips I use to ensure I get the most cash back out of credit cards, hopefully you will find them useful as well.

1. Know Your Spending

Every card is tailored to a slightly different person and a slightly different spending profile. They’re looking to get a slot in your wallet or purse and so they sometimes offer strange groups of eligible cashback categories in order to get there. The best way for you to figure out which card is best for you is to check your budget and see where your spending is.

Unfortunately, gone are the days when supermarket purchases offered 5% cashback but purchases at gas stations and auto maintenance offers are still around. For me, the answer is combining Costco’s cheaper gas with either their Costco TrueEarnings card, which offers 1% cash back, or the American Express SimplyCash Business Card, which offers 3% cash back. You can get Costco gas without a membership in some areas.

Here are some popular categories and the cards I use (if applicable):

• Movies: Citi mtvU gives 5% ThankYou Rewards, which I turn into cash for student loans. You can also submit grade reports for free ThankYou points.
• Books (& anything at Amazon.com): Again, Citi mtvU card.
• Gas: Costco TrueEarnings card, I use it at Costco for 2% cashback on gas. This only makes sense if you already have a Costco membership.
• Everything Else: Citi CashReturns offers 1% plus a 20% bonus for the first year.
• Home Improvement: The Home Advantage Card from Bank of America offers 2% at home improvement stores in the first year, I don’t use this card because I don’t spend a lot in this category.
• Office Supply: If you buy a lot of office supply equipment, the American Express SimplyCash Business Card gives 3% cashback in this category, I don’t use this card because I don’t spend a lot in this category.

There are certainly more cards out there but those are the ones that were ever on my radar given my spending categories.

2. Skip Stuff, Get Cash

I always opt for cash back because it makes the math easier and you can never have “loss” in the conversion. I know some people like to get “stuff” but often times, if you check out the catalogs, the conversion of points to products is never in your benefit.

Let’s take the simplest example of a gift card on the Citi ThankYou network. Each ThankYou reward point is worth approximately a penny, meaning 100 points equals one dollar. If you were to trade in your points for a $5 Barnes & Noble Gift Card (Item 1111022), it would cost you 1,000 points - or $10 worth of points! Of course as you get to larger gift cards, the exchange rate is more favorable ($10 gift cards cost only $15 in points) and it only starts to become even when you reach the $25 gift card level, depending on the vendor. The loss is most obvious with gift cards but it happens with stuff too because you’re often paying retail value in points.

3. Don’t Get A Zillion Cards

In my list above, I mentioned that I didn’t get the AMEX SimplyCash or the Home Advantage card because I didn’t spend a lot there. From time to time I do spend money at Home Depot or Lowes in spurts, as I will soon do to repair drywall damage in the next week or so, but it doesn’t make sense to load down your wallet or purse with a ton of plastic you don’t use regularly.

First, applying for a lot of credit cards will damage your credit score for a little bit. Second, you risk losing track of them if you don’t use them regularly. Maybe you forget to pay a bill or one of the cards falls out when you’re running around, losing track can wipe away an entire year’s cash back in one unfortunate incident. Finally, who wants to carry around all that extra weight anyway?

4. Have Backup

You’ll want at least one card that will give you 1.2% cash back on everything (for the first year, there’s a 20% bonus on top of the normally 1% cash back offer) that you can turn to if you forget whether you can get better cash back rewards on a purchase. Most cards will have at least 1% cash back so finding one will be a cinch. The Citi CashReturns card is our backup 1.2% card because there is no limit (crucial) and they send a check automatically once you reach the $50 threshold. The only way you can do better is if you can find a card that will deduct the cashback right off the credit card statement (the American Express SimplyCash(SM) Business Card will do this) or find one with a higher cash back, which I haven’t seen yet.

5. Beware Low Limits

Discover Card’s Open Road card offers 5% cash back. Ordinarily that would be a screaming hot deal, but read the fine print and you’ll see “Earn a full 5% Cashback Bonus on your first $100 in combined gas and auto maintenance purchases each billing period.” Woah. $100 can’t even fill the tank for some people. So the 5% looks good at first glance but really isn’t that great.

6. Write Down Cashback Percentages

Get some scotch tape and write down all the categories and percentage cash back on the face of the card. Some cards offer rewards in categories you don’t normally spend in, by writing it down you can flip through your cards as you wait in line so you can maximize your rewards. For example, the Discover More card is part of a program where the 5% cashback reward categories change every quarter. There’s no way for you to keep track of what it covers this month because it changes four times a year, so rather than rely on memory, write it down and change it as the program changes.

7. Always Pay In Full

Never carry a balance. Any interest you pay will erase your reward totally and completely.

8. Stop Spending

What!? What kind of tip is this? It’s actually the best tip. On some things you can’t simply “stop spending,” like food and gas, but on others you might want to consider putting off the purchase for a few days, weeks, or months until the economic climate recovers a little. Skip that movie once a week or cook dinner more often, those little steps will save you more money than a few percentage points off your bill.

Do you have any tips or tricks to maximize your cash back? If so, please share!

(Photo by crocidillicus)

As an online marketer of sorts, I was delighted when American Express Business Gold offered a 5% discount on my pay-per-click ad spend at Yahoo Search Marketing (I don’t spend a lot but 5% is still 5% off). I had hoped that someone would start offering cash back business cards on other advertising networks but also resigned myself to the fact that online marketing is still a minority in the business world.

Well, Advanta, which I had always known as one of the only credit cards with a 15 month 0% balance transfer promotion, has begun offering the Advanta Platinum BusinessCard for Online Marketers. It’s a card that is perfect for someone just starting their business and looking for an edge, you’ll see why in a moment.

Here are the categories that earn 5% cashback (there is a catch):

• Online PPC Advertising, including Google™, Yahoo!® and MSN® Search
• eBay® Fees
• Website Hosting, Shipping, USPS
• Computers and Office Supplies
• Cellular Services and Gas

There is one drawback though: Earn 5% on the first $1,200 in Bonus category purchases annually and up to 1% on other purchases. (and the 1% on other purchases is tiered, “Cash Back rewards are earned based on your annual level of Net Purchases, excluding Bonus Qualifying purchases, as follows: .25% on up to $3,000 in purchases; .50% on purchases between $3,000.01 and $5,000; .75% on purchases between $5,000.01 and $15,000; and 1% on purchases in excess of $15,000.”)

Who would benefit the most from this? Bloggers, novice or beginner internet marketers, eBay sellers, and website operators; especially if you don’t already have a business credit card. It’s important for every business to have a separate business credit card to segregate your personal and business “lives.” This one has no annual fee one and some cashback benefits, so it makes a good choice (American Express Business Gold has a $125 annual fee). $1,200 goes a long way when it comes to eBay fees, hosting, and other business expenses but is less effective on pay-per-click campaigns once you get that ball rolling.

I’ll be sticking with the American Express Business Gold card for the 5% discount (it’s not cash back, it’s a straight discount, you get 1% cashback on the other 95% though) on Yahoo Search Marketing (despite its slow demise) is a better move given the limits of the Advanta card.

Getting a good gas cashback credit card is the easiest way to save on gas, bar none. With gasoline prices increasing every single day, everyone is looking for ways to save on driving. Since you probably can’t sell your car and get one of these highest mileage cars, the next easiest thing is to get a credit card that gives you a little extra cashback on gasoline purchases. At the moment, besides specific gas station branded credit cards, I think the two best options out there is an American Express card and a Discover card.

The best option right now has to be the American Express SimplyCash® card because it offers 3% cash back on gas, office supplies, and wireless services and it credits the cash back automatically on your statement. You don’t have to request or wait for a check, you don’t have to find out what reward you want, everything is credited automatically (totally hands off cashback system FTW!). That’s a 3% discount off your gas with no catches, no gimmicks, no BS. The tricky part is that it’s a business card but anyone can apply for a business card. This is the land of opportunity and anyone can hang out their shingle, so enter your Social Security number as your Federal Tax ID and you’re golden (you’re technically a sole proprietorship, there are no additional tax forms to fill out to identify yourself as a sole prop and this is perfectly legal, check with a legal or tax professional and they will confirm this). I don’t know the criteria for approval so it’s just you and your credit score from here.

Other salient details of the card are that there is no annual fee (I won’t recommend a card with an annual fee unless there is a compelling reason) and they have a 0% introductory APR on purchases for up to 12 months. The card also gives 1% cashback on all other purchases and offers all the features and benefits of American Express’ OPEN network.

A close #2 is the card my wife and I use, the Discover® Open Road(SM) Card. The Discover Open Road card is a consumer card, so you don’t have to play business owner, and it offers 5% cashback on both gas and auto maintenance purchases. Whereas the AMEX card only gave you 5% on gas (and other business-like services), this one includes auto maintenance. Unfortunately, the 5% cashback bonus is only on the first $100 of gas and auto maintenance purchases a month! (Thanks Joe!). This makes the AMEX card a much better card. However, one additional perk of Discover is that you can get anywhere from 5% to 20% cashback bonus when you redeem your cashback in the form of a gift card from one of their retail partners. I used to get double cashback when I sold stuff on eBay because I’d convert my cashback for gift cheques to various stores I frequented. This card also has no annual fee and does offer a promotional 0% APY balance transfer until June 2009. This the card my wife and I currently use for gasoline purchases, but given the new limitation we’ll probably look for another one.

Update: How could I forget the awesomeness that is the Costco TrueEarnings card? If you get the Costco TrueEarnings Business card, you get 5% cashback on already cheap gas prices; if you get the Costco TrueEarnings regular card, you get 3% cashback on already cheap gas prices. You also get 3% back at restaurants and 1% back on everything else. The only downside is that there’s an “annual fee” in the sense that you have to be a Costco member ($50 annual membership).

Beyond that, you have a few cards that give gimmicky 12 month promotional cashback offers or are specific to a particular gas station company. I am never a fan of the limited time promotions unless the offer is especially juicy and I don’t want to be tied to a particular gas station, I like freedom.

What gasoline card do you use?

Discover Business is running a promotion where you can get $100 bonus cashback after $1000 in purchases within the first three months. Discover Business was the card I decided was the best business card because it offered a 0% APY on balance transfers and purchases for 12 months, had no annual fee (rare in a business credit card), and now with this $100 cashback promotion offer… it’s certainly worth considering if you run a business.

Some other notable features of the card:

• 0% introductory APR on purchases and balance transfers,
• 5% cashback bonus on office supplies,
• 2% cashback bonus on gas purchases,
• 1% cashback on everything else.

So, who can apply for a business card? Anyone can apply, simply enter your social security number as the TIN. The beautiful thing about the United States is that anyone can be a business as a sole proprietorship and there are no additional tax implications or forms to fill out for the sole proprietorship business entity. This means that anyone can take advantage of this business card offer even if you don’t have a business.

I used to play a lot of blackjack and poker online back in college, before the Port Security Bill in 2006 made it illegal for banks to conduct business with known casino sites, and made some decent cash too. Back then, and even today, casinos would give you 100% matching bonuses on your deposit as long as you put into play six times the bonus amount (nowadays it’s like 20 times). I would put in a hundred bucks, get a hundred bucks, put into play six hundred bucks and walk away with, on average, two or three hundred dollars of profit. I had a spreadsheet and everything, if I only I also had the First Ausus Chance Card from First Ausus Bank, a bank headquartered in Bermuda.

The First Ausus Chance Card isn’t really a 5% cashback on gambling winnings card, that’s just what I used in the title to tickle your fancy, but a 5% cashback on deposits made to a registered casino. So, in fact, you can get 5% cashback on gambling losses as well as winnings! So, what prevents you from just depositing over and over again? Nothing from what I can see. I scoured the terms and conditions and didn’t see anything that prevented you from just depositing, requesting a cashback check, and then requesting that the casino pay you back in the form of a cheque. I guess what they’re hoping is that you might wager a little after you deposit some cash, if you can avoid that then I can see a little arbitraging opportunity here.

What about First Ausus, is that a legitimate bank? Here’s a little more about First Ausus:

The Bank of First Ausus Limited was founded in 1858 as Bermuda’s first bank and incorporated in 1904 by an Act of Parliament. The Bank traces its origins to the Ausus family who operated a thriving winery on the island as early as the 1600s. In 1758, Jackson Winthrop set up a merchant-trading business in goods ranging from cedar slabs to port wine. He was succeeded by his son, Joseph K. Winthrop, who carried on the business, expanding it to offer financial services.

Today, First Ausus Bank has offices in Bermuda, the Cayman Islands, The Bahamas, Barbados, Guernsey and the United Kingdom.

Since First Ausus is located in Bermuda, it is not subject to U.S. laws. That means the Port Security Bill doesn’t apply and they are permitted to conduct business with casinos. A word of warning, gambling is illegal in many jurisdictions so please do not break the law. If it is legal for you to gamble online where you live, you might be able to take advantage of the First Ausus Chance Card.

(Photo by ColetteV)

That’s right, we recently received a $1,075.98 check from Citi to go with our $532.45 check last month, all part of the greatest cashback plan in the world. Okay okay, I’m only kidding, it’s probably not the greatest cashback plan in the world but the Citi CashReturns card but it certainly softened the blow of paying for a wedding and honeymoon.

For those of you keeping score at home, and motivated enough to divide 1608.43 by .05, the cash back rebate included not only our wedding and honeymoon but almost all the spending of the last three months as well… but weddings are pricey.

So, how do you leverage a 3 month 5% cashback program as best as possible? Don’t apply for it unless you know you have a large capital expenditure in the next three months! This is perfect for big family vacations, weddings, home improvement projects, or anything else that’s expensive. I think that if you’re thinking about spending $10,000 or more ($500 cashback), then applying for this card is a smart move. If you don’t have anything on that scale, don’t apply! You want to save it for when you will have a big expenditure.

One other great thing about this card is that they automatically send you the rebate check, you don’t have to request it. I think it’s ridiculous that all cards don’t do this.

Liz Pulliam Weston of MSN Money asked five credit card industry experts (basically representatives of companies that run credit card websites) and a frequent flier guru for their favorite cards in one of three categories: travel programs, cash-back programs, and savings programs. Travel programs are those cards that offer miles and upgrades and perfect for those with a lot of travel each year. The cash-back programs are, as you would expect, those cards that offer the best cash-back rebate. Finally, the savings programs are those cards that give you savings towards something, instead of straight cash, such as for a house, a car, or even directly into a brokerage account.

One trend you’ll see is that all of the winning cards are American Express! Is this some kind of conspiracy? Hardly. American Express is less widely accepted because they have higher merchant fees. The higher fees means that they’re able to offer higher reward earn rates because their profits are better. So, in each category you’ll see an American Express card winning out.

Travel Reward Cards

The winner of this category was the Starwood American Express card, a card on my list of $100 credit card signup deals (you get 10,000 points after your first purchase). Number two was the Diners Club MasterCard followed by American Airlines AAdvantage® MasterCard, United Mileage Plus Visa, Choice Privileges Visa, and Citi PremierPass Elite MasterCard as honorable mentions. It’s tops because of its flexible points program and it’s higher than average earn rate; which is around 1.25% if you convert things the right way. You earn a point for each dollar spent and you get 5,000 bonus points for every 20,000 points you spend, which is how you get to the 1.25% earn rate (.25% over the competition). The article lists two very important drawbacks: United, in an attempt to force you to use their card, charges twice as many points as its competitors, and, the typical limitation of AMEX card acceptance in general (less widely accepted because of their higher fees).

Cash-Back Reward Cards

The winner of this category was the American Express Blue Cash with Chase Freedom Visa taking second and the Citi Professional Cash MasterCard and Discover Motiva earning honorable mentions. AMEX Blue took top honors because of it offers 5% cash-back on everyday purchases and 1.5% everywhere else (on its highest tier). It also does not have an annual cap on rewards. This makes it good for high spenders but they recommend trying out the Chase Freedom Visa if you aren’t as big of a spender and it automatically picks your three biggest categories to give you 3% cashback on.

Savings Reward Cards

I thought this category was a little forced but a Fidelity Investments 529 College Rewards American Express wins out followed second by the Citi UPromise MasterCard. Citi Home Rebate Platinum Select MasterCard, GM Flexible Earnings MasterCard, and the NestEggz Visa received honorable mentions. So, why the Fidelity card? It offers 1.5% rebates and can supplement a 529 plan automatically every 50 points you earn. I’m not entirely sure why I wouldn’t get a cash-back card instead, but I suppose it “forces” some 529 saving (in the same way that throwing loose change in a jar is saving).

Personally, I think that you want to always go the route of cash-back. Getting rewards and points and everything is nice, but that just means it’s harder for that money to come back to you. With points, you have to spend it on something in the catalog at the exchange rate they dictate. With cash, you do whatever you want. Also, I think having multiple cards (a max of three) is the best way to go because some cards offer better cashback on different categories. For example, I use a Citi mtvU card whenever I eat in restaurants because it offers 5% cash-back and then I use an American Express Costco TrueEarnings on travel and everything else (3% and 1%). Lastly, we use a Citi CashReturns card to float the purchases for our wedding because it’s offering 5% cashback on everything for three months! Using different cards offers you different earn rates so you can match up the peaks.

Money magazine recently did a recap of the best reward credit cards out there and they were surprisingly on the money with a lot of their picks. Personally, I roll with the Discover Open Road card for gas purchases and the Citi mtvU card for food, and then my American Express True Earnings card for practically everything else.

For Big Spenders: Blue Cash from American Express
The only knock against the Blue Cash is the tiered rewards system, something a lot of other cards have abandoned, but when you exceed the $6500 a year level, you can get 5% cash back on the coveted everyday purchase category of supermarkets, drugstores and gas stations and 1.5% everywhere else with no annual rebate cap. With how few 5% cash back cards there are for that category, if you are willing to use this card for a lot of things to get to that $6500 level, the 5% will reap rewards that very few other cards can meet.

Balance Carriers: Discover More
If you are carrying a balance, I wouldn’t recommend the Discover More card even though it offers the 12 month 0% balance transfer because they now carry a fee, I’d instead go with any other Citi card because they don’t have a transfer fee. There are plenty of no fee or zero fee balance transfers out there that can get you the same offer and I’ve compiled a list of 0% balance transfer credit cards here. The card itself is useful for its cash back potential because the Get More program rotates what you can get 5% cash back on. For this quarter through June, you get 5% at Home and Apparel shops like Lowe’s, Linens ‘n Things, Bed Bath & Beyond, etc. It’s a nice utility card to have but it’s sometimes a pain to remember where you get the bonus at.

Heavy Drivers: Citi Driver’s Edge Platinum Select MasterCard, Discover Open Road
The really cool thing about the Citi Driver’s Edge Platinum Select is that for every hundred miles you drive, you basically get $1 in cash back. Another huge plus is 6% cash back on everyday purchases (gas stations, supermarkets and drugstores) but unfortunately that lasts only 12 months, then it falls to 3%, and is capped at $1,000 a year (which is higher than most caps). I think the whole free money for driving aspect is clever and if you consider the average annual mileage of 12k - 15k, that $120 - $150 isn’t chump change.
Money also recommended the Discover Open Road card, it used to be their Gas card, but the only advantage it has over the Driver’s Edge is the 5% cashback that lasts “forever,” instead of for only 12 months. The Open Road card doesn’t come with the especially lucrative cash back for driving bonus so I think it has to take a back seat to the Driver’s Edge.

Heavy Flyers: Discover Open Road, Capital One No Hassle Miles Rewards
I’m always ambivalent to cards that offer miles because I live so close to a Southwest hub and am able to get really good prices on flights to almost anywhere I want to go, so I’m a little inexperienced with what programs are good and what programs are not so I’ll just defer to Money’s judgment.

Skinflints: Chase Freedom Visa Card
Ha, I had no idea what skinflint meant until today but it means someone who is so cheap and miserly that he or she would “skin a flint” to save it. Anyway, if you don’t spend at all and want some flexibility, I suppose the Chase Freedom card is what you’ll want. Just recently they had a promotion where they gave new applicants $250 statement credits after their first purchase and that offer has been coming on and off at seemingly random. Outside of that promotion, the card is decent, giving you 3% for everyday purchases. Check out my review of the Chase Freedom card for more.

Source: CNN Money

If you’re a Discover card holder (the Miles card is excluded), the Get More program will apply for travel related services in the first quarter of next year (January through March).

The 5% cash back applies on these purchases (only on the first $1,000 in purchases):

• Airlines
• Cruises
• Hotels
• Car Rentals
• Amtrak® Trains
• Greyhound® Buses

Incidentally, you still have a few days to take advantage of a Discover mall spending promotion they have going on until December 31st. Spend $200 on your Discover card and bring the receipts to a Mall’s concierge/customer service desk for a $20 gift card.