I have The Gold Card from American Express as my business credit card and have always had difficulty finding things to spend the points on. I’m not a huge fan of gift cards but fortunately AMEX doesn’t play the game of diluting point values at lower gift card prices. For example, Citi’s ThankYou Network turns 6,000 points into a $50 gift card, diluting the value of a point by a small percentage. $100 gift cards are 10,000 points though, giving you a true “penny a point” conversion. Anyway, with AMEX’s Membership Rewards I’ve just converted them into either Home Depot cards or Roy’s Restaurant cards (Roy’s is a Hawaiian fusion restaurant that my wife and I absolutely love).

LUV Gem in Membership Rewards Catalog

In browsing the site the other day, I discovered that you can convert AMEX Membership Reward points into Southwest Rapid Rewards (Frequent Flyer) points! Each SW point costs 1,500 AMEX points, plus a small excise tax. 16 SW points equals one free domestic flight, so it costs 24,000 AMEX points (plus $12 in fee) for a domestic flight. Compare that with any other major airline and you’ll find that the minimum point to free flight ratio is 25,000 plus ridiculous booking fees (not to mention luggage fees, food fees, headache fees). Another great aspect of this is that you don’t have to buy all 16 points at once. You simply enter in your frequent flyer number and the points are transferred over. If you are only a handful of points away from a free flight, just buy as many points as you need.

Value of Southwest Voucher

Is it worth it? Well, I’ve sold Southwest vouchers on eBay and Craigslist years ago for about $300 a piece. This was before you could extend the expiration date on the voucher ($50) but now I just keep them for my own travel (you also aren’t allowed to sell them, but I was in college and $300 goes a really long way!). With soaring fuel prices, the vouchers are worth anywhere from $350 to $400. The 24,000 points is worth $240 in gift cards so you’re really coming out ahead, even after adding in $12 of fee. This trumps any gift card by far.

Southwest Rules!

I’m a huge fan of Southwest Airlines and one of the reasons is because they the best frequent flyer program ever (giving us free champagne on our flight out to our honeymoon in Hawaii was awesome too!).

There’s a reason why Southwest’s profits jumped 11% whereas other airlines have been tanking. [Consumerist]

(Photo by Cubbie_N_Vegas)

I’m often emailed by readers to list what I feel are the best reward credit cards currently available. I personally think that “best” is such a subjective term, the best set of reward credit cards really depends on your spending profile. If you spend a lot in a particular category, you’ll want to get the best card for that category and make sure it has a place in your wallet. If you don’t know what you spend a lot on, you might as well save yourself the hassle and get one that works in all scenarios. What you’ll find below is a set that I feel represents the best in their categories and why.

Best Hassle Free Reward Card

The Chase Freedom Visa Signature card is hands down the best card for someone who has no idea what they spend their money on. It’s the best because they take your top three spending categories and they give you 3% cash back on them. You don’t have to keep track of which category is what, they take the top three and give you 3%. There is also a promotion where you’ll get $50 cashback after your first purchase and, if you are patient enough, a $50 bonus if you wait until the card accumulates $200 in cashback before requesting a check.
Runner Up: Discover More card is a great runner up because they offer 5% cashback on a changing set of categories. In July - September of 2008, you get 5% cashback at gas stations and hotels. In the 4th quarter (Oct - Dec 2008), that changes to Grocery Stores, Restaurants, and Movies.

Best “Dinner & A Movie” Card

The card I use for restaurants is the Citi mtvU Card which gives 5% cashback on purchases at restaurants and the movies (and bookstores too!), in the form of ThankYou Network points that can be converted into gift cards. It’s a great card for students because you can get free points for good grades and on-time payment.

Best Gas Card

I profiled some of the best gas reward cards a while back and the American Express Simply Cash lost its place as king of the hill to its brother, Blue Cash from American Express. The Blue Cash card offers 5% cashback at gas stations (and grocery stores and drugstores), which makes it one of the best gas cards out there. There is one downside, the 5% doesn’t kick in until after you’ve spent $6500 that year based on your anniversary date. After the first $6500, where you earn less than 5%, the 5% kicks in.

Best Airline Card

The best airline card is the one that’s run by the airline closest to you. The programs are all pretty much modeled after one another so the differences are minor. If you live near an American Airlines hub, get the Citi AAdvantage World Mastercard. If you live near a JetBlue hub, get the JetBlue Card. Getting affordable fares is more important than the card and you’ll get that by staying loyal with an airline that makes your local airport a hub. I created a list of free miles credit card promotions if you need to pick.

Best Everything Else Card

One card everyone needs is a credit that offers 1% cashback with no limit - for us that card is the Citi CashReturns card. Back in the day it offered 5% cashback on everything, which resulted in a significant savings for us on our wedding, but nowadays it’s 1% cashback with no limit plus a 20% bonus during the first 12 months. When all else fails, we pull out this card for purchases because we know that we aren’t consuming valuable higher percentage cashback possibilities with a “regular” purchase. I personally don’t have an airline card because my Gold Card from AMEX gives me points I can convert to Southwest Rapid Rewards points, so it is in effect an airline card.

What do you consider to be the best reward credit card? Did I miss a category?

If you want to compare the economic policies and plans of Presidential hopefuls John McCain and Barack Obama, CNN Money has a good comparison between the two on a variety of issues from Social Security to Personal Taxes.

Jeremy at Generation X Finance has a very good explanation of why the GAO report of 2/3rds of companies paying zero tax is political hogwash. Besides Jeremy’s good points, famous United States Court of Appeals for the Second Circuit judge Learned Hand once said - “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

SVB tackles the question of saving for college, a question I’m going to put off for a little while.

Nickel’s favorite cashback credit card is the Blue Cash from American Express, a card I don’t have. It seems to have a lot of great features, like a comparison of your cashback performance, and good cashback categories as well.

The Consumerist confirms once again why I love Southwest in publishing it’s top 3 most and least “fee crazy” airlines. Southwest was they’re #1 least fee crazy airline.

Flexo wrote about a study that says sleep makes you smarter.

Have a great long weekend!

The reports of the death of 0% APY balance transfers are greatly exaggerated.

Many years ago, no fee 0% balance transfers were a dime a dozen. It would be difficult to find a credit card that didn’t offer a no fee 0% balance transfer as the cheap and easy credit flowed like wine at a Great Dionysia Festival. You couldn’t open your mailbox because it was stuffed full with special promotional offers from all your good friends at the major credit card companies.

The fee-free frenzy gave way to new terms like app-o-rama and balance transfer arbitrage. People would go on credit card application binges so that they could get as many cards as possible (an App-o-rama) just to take advantage of the balance transfer offer. It was not unheard of for someone to get $30,000 (and that’s just a conservative figure) in balance transfers just to put it in a high yield savings account earning 4-5% APY (that’s the arbitrage).

Now, balance transfers with 0% APY promotional rates are still available but the fees have been re-introduced and the promotional periods are quickly slipping from 12 months to a mere six. The offer now is less attractive to those looking to arbitrage (bank interest rates are now in the 3-4% range, rather than the 5-6%, cutting the interest earned side of the equation as well) but they are still attractive to those paying double digit interest rates on their existing credit debts.

Good for Debt Recovery

I think the credit card companies re-instituted fees because they found an inordinate number of consumers using these offers to arbitrage rather than pay off existing debt. While they can never be sure how someone is using the transfer, I imagine their accounting departments are telling them that the percentage of people paying off the loan after the promotional period is higher than their projects… so something is amiss.

However, their only reaction is to stop their policy of waiving balance transfer fees. Citi has been the most aggressive in this group as many of their cards have a 3% fee and no limit on the transfer fee. Other companies like Discover and Chase will also have a 3% fee but cap the fee at a double digit amount such as $75 and $99, respectively. The cap is enough to dissuade all but the most hardcore balance transfer arbitragers but it makes the cards good candidates for people looking to actually transfer debt.

Watch Out For…

Whenever you take on debt, there are always things you need to be aware of. After years of blogging, watching these offers, participating in arbitrage myself, and reading trade publications like Cards and Payments, I learned that you can get in trouble if you’re not careful.

It will affect your credit history and score. Every time you apply for a card, it’s recorded on your credit history and your score may be negatively affected. Every time you are approved for a card, it’s recorded and your score can be negatively affected. One thing to be very cognizant of is the long term effects of balance transfers (and any credit activity). It doesn’t make much sense to take on new credit card if you’re a couple months away from buying a home. The savings you’d get on the transfer will look like a drop of water in an Olympic-sized pool when compared to your mortgage loan.

Balance Transfer, not Cash Advance: It is very important that you request a balance transfer rather than a cash advance or otherwise ask for a “check.” The confusion comes from when you request it. I’ve known someone to request a “check for their credit limit,” which the CSR conveniently understood to mean that he wanted a cash advance rather than a balance transfer, which is what he actually wanted. Balance transfers often come by way of check, I know Citi does this, so you can see why there was confusion. Unfortunately, cash advances aren’t billed the same as balance transfers. Often times the cash advance doesn’t have the 0% APR promotional rate and the fee structure might be different. One one card I saw, there was a cap of $75 on the fee for a balance transfer but no maximum for cash advances. Be very specific when you make your request to say balance transfer.

Balance transfer fees: The best deals in balance transfers are those that have no fee whatsoever. Those types of no fee 0% balance transfer offers were abundant a year or two ago but are nearly impossible to find now. The next best thing is to find a card that will charge a percentage based fee but cap the maximum they will charge. Many Discover cards have a 3% fee with a $75 cap. If you transfer a balance greater than $2,500, the percentage will be lower than 3% because of that cap. If you transfer $5,000, the fee is now only 1.5% of the balance.

Post-0% APY interest rates: If you’re using balance transfers to combat debt, be very aware of the post-promotion interest rate you’ll be charged. You can often read this off the “important fee, APY and promotion” terms & conditions sheets for each card. What you’ll want to look in the rates section and they will often explain where the rate will go. Many cards will have the balance transfer interest rate increase to the standard APR for purchases, which is often pegged to the WSJ Prime Rate + some percentage.

Default Rules: Defaulting generally refers to when you fail to make a required payment on your credit card. If you “default,” then the credit card company often increases the interest rate on your debt to the Default Rate (also listed on those rate & fee T&Cs), which can be extremely bad. There are also several other events that can trigger a default other than non-payment. In the case of Discover, some cards have a clause that warn a default could be triggered if you exceed your account credit limit twice. The default rate on most cards is a staggering 23.99% - 28.99%, so knowing the rules is absolutely crucial.

A few years ago, some companies began enforcing a concept known as Universal Default, where defaulting on any other loan or payment resulted in defaulting on that card, though that’s slowly been abolished. Check your T&Cs to ensure the card doesn’t have that policy.

Always Be Diligent

The number one rule of working with credit cards is that they require diligence and lots of reading. Every card has its own set of rules, terms and conditions; be sure to review them and make sure you understand everything you’re agreeing to. You can take a few days to review an offer before applying, it’s much easier to change your mind before you’ve sent off your information.

I hope you found this guide informative!

All photos taken by thetruthabout.

The Consumerist posted some information about rental car insurances and credit cards with a great list of the coverages (based on whether it’s a Discover, American Express, MasterCard or Visa card). I thought that perhaps the individual issuers (like Citi, Capital One, Bank of America, etc.) might build off the base insurance so I did some more digging. It turns out that the auto rental insurances offered by your credit card is secondary coverage, not primary coverage.

When I looked at the list of auto rental insurance coverages for Citi cards, I saw that the basics matched the table on the Consumerist. However, this paragraph stood out for me:

Visa Auto Rental Insurance coverage is secondary coverage and underwritten by Indemnity Insurance Company of North America. Certain conditions, restrictions and exclusions apply. Not all vehicles and not all countries are covered. Details of coverage will be provided upon cardmembership. (emphasis mine)

The language under several of the other categories is the same… it’s secondary coverage.

Woah.

From what I understand, secondary insurance kicks in after primary insurance (your auto insurance) or when primary insurance doesn’t exist or doesn’t apply (such as on international trips). The auto insurance coverage provided by your credit card is not the same as the waivers offered by the rental car companies.

When you get the insurance from your rental car company, you’re absolved of all responsibility if something were to happen to the car (you’re still on the hook if you’re at fault and did damage to something else, but that’s a different issue). Your insurance is never called, your premium won’t go up, and it’s as if nothing happened. When you decline the insurance, damage to the car is still covered by your own auto insurance policy.

When you don’t get that insurance and rely on a credit card, when something happens the credit card company will point to the fine print that says “secondary insurance” and tell you to call your auto insurance underwriter. If the demands exceed your primary insurance, that’s when secondary insurance comes in. In other words, if you destroy a Lamborghini, your credit card insurance will kick in.

I think I read that right but for years the advice was to always decline this waiver because you have it covered between your credit card and your own insurance. Am I misunderstanding it?

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)

In the pantheon of credit card reward programs you essentially had those cards which offered you straight cash back or those cards which offered you points that could be redeemed for various rewards. Until the last year so, I’d always used a cash back credit card rather than a points reward card because I wanted the discount. 5% cash back is a 5% discount, 5% in points might be a 5% discount if the reward program offered rewards I would’ve otherwise purchased with cash, but there’s never a guarantee. With 5% cash back, I’m guaranteed to get the maximum value out of it.

A year ago I signed up for the American Express Business Gold Rewards card because I needed a business credit card to segregate expenses (their sizzling hot $250 promotion helped too) and kept using it because it offered 5% off Yahoo products such as their advertising network. Without the 5% off (this was a direct discount, not 5% in points), I don’t know if I’d still be using it because it’s a rewards card that gave you 1% in points.

One side effect of my business spending is that we’ve been able to convert those points into gift cards at restaurants we normally would go to (though we wouldn’t go as often without them!). One such restaurant is Roy’s, a well-known Hawaiian fusion restaurant chain located near the Inner Harbor of Baltimore. In fact, we used those cards twice in Hawaii (once in Kauai and once in Hawaii Kai, Oahu) to entirely pay for our meals.

I can see the allure of these types of rewards program though, you get to enjoy all of the spending without any of the guilt.

What’s your take on different programs? Are you a strict cash back person or do you like rewards? Both? It depends?

(Photo by crispyteriyaki)

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?

Credit card offers total value: $1,175.

Here is every credit card promotional offer I am aware of, listed in a handy table along with fulfillment requirements. The only rules about having a card appear on the list is that the promotional offer be worth at least $50 and it must be a mainstream brand like Citi, Discover, Capital One, American Express, etc. No offers available only to a small geographic region, these are all mainstream ones that are potentially available to everyone if you qualify.

They are listed in order of value and I will attempt to keep this list updated monthly. (this list does not include free airline miles promotions, i.e. those cards that give only miles as a promotions, but some of these cards allow you to convert points into miles) For the cards that have (pts) next to the dollar value, which currently is all of them, you will get your rewards in points (which can often be converted into gift cards) and the maximum value is displayed there. $100 in points is usually 10,000 points, but not always, so be sure to read the terms and conditions. Without further ado, here are the $1,300 in promotions!

Who is eligible for a business card? Anyone can be a sole proprietorship without filling out any additional paperwork. Put in your name as the business name, your social security number as the ID number, and you can apply as a business. You don’t pay extra taxes, you don’t have to fill out any extra paperwork, this is 100% legal and acceptable.

If you know of an offer that isn’t on the list, please leave it in the comments or email me, thanks!

(Fat stack photo taken by Refracted Moments™ on Flickr)

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.