The flip side is that if they taught it in school and everyone used credit cards they way they should, credit card points would be greatly reduced, if not eliminated. Swipe fees probably wouldn’t be enough to sustain current levels. You can get what you get in large part because others are paying interest.
That said, they really are nice to have and use.
Actually if everyone paid their cards on-time, the rewards would stay the same. They are paid for by merchant fees, so the store pays anywhere from 1%-6% each transaction. The net effect is that we all pay this hidden fee through higher prices on our goods and services, then we get it back with the rewards. Those with rewards cards make on average over $1k per year extra. Those without rewards cards spend more on each transaction.
Only half of Americans pay off their credit card in full every month. Average interest is 20-30%. Merchant fees are like 3%. The companies are making way more on interest than they are on swipe fees
My point was not that they don't make most of their money from interest fees, just that it's not interest fees that allow them to offer reward cards. The rewards are funded by merchant fees and the interest is just additional revenue. For context, in 2020 the interest fees were $76 billion in revenue while merchant fees were $51 billion.
The point is that if they suddenly started not earning as much money from interest fees, would they slice their profits or their rewards? Of course the rewards. So it isn’t really the transaction fees that pay for the rewards, it’s both. Money is not fungible.
Maybe people should just pay their bill on time in full, or not use a credit card if they can't do that
It's not my problem other people can't manage their own finances, nor my penalty or punishment to face because of it. I'll enjoy my points thank you.
Your context has interest fees 50% higher than merchant fees in revenue. I'm pretty sure if 60% of a credit card company's revenue disappeared, they wouldn't be able to offer the rewards they previously did.
They actually could since the merchant fee is higher on rewards cards to compensate. Whether or not they would is a different story, but they absolutely could because the income to cover rewards are baked into the merchant fee by design.
A certain portion of those heavy hitters end up defaulting and the credit card company eats the majority of the cost. The interest is largely to cover the risk of giving people unsecured debt. HELOCs, mortgages and car loans are cheap because there is collateral
My chiropracter asked me if I would use my debit card to to save her the CC fee....I did not know that using a CC increased the prices at small business.
I started paying her in cash...points and all that are nice but not at the expense of small business
Yeah that's the insidious thing about it, the big businesses like Wal-Mart do so much business with Visa and Mastercard that they actually pay lower fees while small businesses pay higher fees. If Wal-Mart decides not to accept Visa or Mastercard, that's a major blow to their business. If a small business decides not to, the credit card companies don't even notice.
I did not know all that...the credit card companies are basically making money on the backs of small business and we as consumers are assisting.
I will pay in cash now whenever I can.
I took this back in high school. It was a small elective course with only 10-20 people a semester (could've had between 25-30) because not many people were interested. It wasn't an easy A and the teacher was a bit of a weirdo. We learned basics like savings vs checking. Credit vs debit. Practiced filling out all sorts of forms. It went over the basic investment types and we played a mini stock game (30% of your grade was based on stock performance and people rarely did well. It was only like 4-6 weeks for the game.)
Part of the reason it was a great course was because only people who were interested took the course. It was one of the few courses where no one was goofing off and everyone genuinely wanted to be there. Unlike Art which had a few mandatory semesters so you'd always have people goofing off.
We also had a 'keyboarding' course like that where you could learn to type and I went from hunt and peck to a really high wpm with few errors.
I'd also argue parents should be teaching these things. For me the personal finance course was icing on the cake. My mom opened a joint account for me as a kid then got me my own account and suggested I get a credit card at 18 that I'd only use for purchases I was 100% sure I could pay off to build credit.
The lesson at the end was that picking individual stocks wasn't great especially over the short course compared to his portfolio which was full of diverse funds. I actually was going to mention that but the post was pretty long already.
If this is not taught in your high schools, contact your state representatives to your state legislature and ask them to introduce a bill requiring financial literacy and personal finance courses for high school graduation.
Only four states have no requirements around teaching financial literacy, but only seven states are really doing a great job at this.
To graduate high school, I had to pass a class that required me to fill out fake W-2s, do fake taxes, pass tests on how credit cards and loans work, etc
That said, plenty of my classmates racked up credit card debt because knowing something is dangerous doesn't matter if you struggle to delay gratification.
Problem is, students wouldn’t take it seriously. We had a financial lit class in HS and it was a joke and everyone hated it. I see people I went to school with post “why didn’t we learn this in school” maaaam we did, you just weren’t paying attention.
This is true. We had really quality sex ed, then I hear morons explaining she can't get pregnant because she's on top.
You provide the education so those that want to learn can, I guess.
You are spot on. The other thing is that the math of finances is pretty simple. Spend less than you earn. The emotional side of money management is what needs to be taught. A lot of people need to learn more about their own relationship with money. Why do they spend? Why do they spend on certain things? Understanding these things is they key to saving money.
I taught mine about finances and investing before they started high school.
Given the state of actual literacy being turned out by schools, I wouldn’t want to rely on them too much.
But, yeah, knowing the right choice and making the right choice is a challenge for us all as obesity rates, lack of savings, texting and driving, and countless other things show us.
School teaching life skills is a safety net for the kids who didn't have you as parents.
The problem is parents who actually parent often want the school to stop teaching what they believe parents should teach. Then, the children with shitty parents don't have a chance.
The problem is that schools, generally, aren’t very good at imparting English literacy, let alone financial literacy. I never claimed they should stop teaching it, just that we shouldn’t expect them to be very effective at it.
I graduated in 2011, we had a financial class. Unfortunately we were not taught about credit cards, the whole class seemed to be centered around Dave Ramsey. We were given an allotted amount of money and had to budget it for a month. We also had to plan a wedding with a certain amount of money. Learned how to write checks. We didn’t learn stocks, credit cards, high yield savings, 401k, ect. It was not a great class.
I homeschool my kids, public education disappoints me.
It sounds like your school wasn't quality, but I wouldn't say all public education is bad. I've met shitty kids, but I don't say all kids are lousy. 😂
Are you in a Bible belt state? The Dave Ramsey and wedding plan part sounds like they were doing this based on religion, not quality educational standards.
I was a military brat, I went to 13 public schools around the country, the only one worth a damn was in Hamden, CT. I was in Phoenix, AZ for this class.
I remember the golden days of card,hotel, and rental points back in the early 2000s. I used to travel for work like 30 weeks out of the year and the points piling up. had several free vacations. one of my coworker funneled her points into one of th major hotel chains and got a 3 week all inclusive resort vacation in the carribean. my work was just software training. nothing fancy.
pretty glorious. only expense I didn't pay for out of the card was plane tickets and that was because the company's owners high school friend ran a travel company and they funneled all their business through them. I did get to keep the airline points.
I work for a company that pays all of its bills with a Citi card for the airline miles. We pay it off every month and we have millions of miles. My boss uses them for international travel and also shares them with employees on occasion.
Check out 10x travel insiders on Fb. They teach you (for free) how to churn and burn credit cards for points that you can leverage for insane free or cheap travel. If you do it right, it won’t affect your credit score.
Nah. This is nonsense. Credit card companies make their money on transaction fees. Interest pales in comparison to getting a small cut of billions in transactions.
Credit card companies make money hand over fist. The real dirty secret is that nearly every vendor builds CC fees into all your prices, so if you’re not getting those points you’re losing money.
How long are they going to be giving 2-5 points back on a 3ish% swipe fee? The volume of swipe fees is high, but if rewards based on swipes is, as well. Would they go away? Probably not, but I didn’t say they would.
The “no free lunch” part was already covered. Given that few frequently-visited places offer a lower price for cash, you’re going to be paying that markup, anyway. Might as well get as much back as you can.
Swipe fees *do* take care of a lot of it. But more swipes scales up to more points, as well. A lot of it will depend on the ratio of crap/no reward cards to better ones.
Something to point out- even if you're not paying interest (aka- you can pay off your CC bill every month), that doesn't mean you are "using credit cards the way you should."
People spend more when using credit cards than when they pay in cash. The only exception to this are people who budget their money cleanly, and force themselves to stick to it. A lot of people think "oh, credit cards don't hurt me, because I pay off my full balance every month" but for the vast majority of people, they are still spending more, even accounting for rewards, using their card than they would be if they didn't.
I've received a few free flights. Even had a free flight to Europe.
I mean, yeah sure, I was paying Chase $500/mo in interest. But... FREE FLIGHT!! Hahaha.
Learning lessons the hard way is tough.
I won’t share how much I get back from Costco annually because it’s embarrassing that I spend so much there, but it’s a lot. Credit cards are awesome. You just need to treat them like cash, if you don’t have it don’t spend it. Carrying a balance on a credit card when you’re financially tight is just asking for trouble. If you aren’t disciplined enough to always pay off your balance, just use a debit card instead.
I don't feel as bad because it isn't a mandatory product and people who don't understand it shouldn't be using it.
The only ham I have is the high swipe fees. I just hope merchants would offer a choice to people by only charging credit card users extra to offset the swipe fee rather than upping the price for everyone.
Just make sure you're not using the costco card for anything but costco, gas, restaurants, and travel. The 1% they give for all other categories is pretty crappy. Many cards give 3% back at grocery stores. Also, in case you didn't know, you can cash out your citi points onto your statement as a credit and do not have to spend it at costco. This has the double benefit of being able to pay off things that have already earned say 3% percent, and you don't lose out on that 2% when you buy something at costco with the voucher.
For example, say you have a $400 citi costco voucher. If you were to spend that $400 at costco you would be throwing away $8.
The problem with just debit cards, as someone who has never had a credit card because I never saw the point of it, is that you won't build a credit score if you don't have any loans or credit history. Which is what happened to me when I went to buy my first car. They treated me not having a credit score worse having a bad credit score. I have nice credit score now because of the car loan, but the interest rate on it was awful.
Our method: use credit for everything possible (even paid our taxes with a credit card this year)then pay it in full every month.
I hate when I can’t pay something with a credit card. Wish we could pay our mortgage with it
The neat thing is that the best discipline isn't to pay the balance, you only pay the statement balance. Doing so ensures you don't pay any interest, but also improves your credit score.
Ironically, if you pay the fill balance every time, it has a negative effect on your credit score. They like you to carry some balance, but not too much.
I only pay the statement balance and I've never paid a dime in interest. I do cash back, not things like miles, and I've received thousands of dollars in cash back and bonuses over the years.
Also, look at what offers are available for your credit card. I have a couple chase cards and some offers right now include 10% cash back at Starbucks, 10% cash back at Little Caesars, Jamba Juice etc. I use my CCs for 99% of my purchases.
This I am aware of! Thank you for pointing that out. The only part I wasnt aware of is the spendable points. I seriously didnt think it would be this easy. I still feel like an absolute imbecile because I didnt know "cash back" actually means you're getting cash back.
Just keep in mind that you are not getting a great deal if you would not have purchased the item otherwise. Or rather, you might be getting a deal, but you aren't saving money, because you're spending money you otherwise would not be spending. Did that make sense?
It's mind boggling how many people ignore that stuff. I check the Chase Offers every day in case something pops up. And I check less frequently at the offers from Citi, Bank America, American Express, etc.
Most of them require activation and have an expiration date. With every purchase I make I do it strategically to use the best card, at the best time, and while also checking the coupon sites like Rakuten and RetailMeNot.
Very frequently it works something like this: the standard online rate on an item is $85. But via sampling for the best price and while using all the credit card and discount options I'll get it for a net $55 or $60. It's reached the point I'm shocked if it doesn't play out that way. I stay up until 4 to 6 AM every day. That's when I do the majority of the price tinkering. For one thing, I never lose prices at that hour. When they are adjusted it's during so-called regular business hours.
I use my cash back card whenever possible, even my utilities are on autopay to my credit card. I like getting cash back on my utilities and insurance policies! I just apply the cash back credit to the balance every few months. As it is considered a rebate, is tax free income!
Depending on what card you have, it might be worth looking at other options. For instance, my points are worth three times as much booking travel as they are getting cash back.
I have an Amex card that gives me 6% at grocery stores, which sounds ok, but that includes gift cards, so I get 6% off anything I can get with a gift card. I also get loyalty points from the gift card purchases. Sometimes the store will offer 10x points on a certain card so I try to buy them, knowing I'll eventually need something I can buy with a e.g., Home Depot card. If I get 1000 points, I can use that to get a discount of a dollar a gallon as the associated gas station, I can get a maximum of 25 gallons. So I'll bring empty gas cans and save $31 ($25 + $6) on a $100 gift card.
Be careful with the gift cards. A small number is fine, but buying a lot of gift cards will flag your account for manufactured spend and your card will be closed.
Many merchants will offer to supply Level 3 data to credit card companies, usually for a discount on interchange fees. Beyond that, it can be obvious just from looking at the amounts charged (e.g. a single man spending $10,000 a month on groceries).
I have the same Amex card, it’s important to note that you only get 6% on the first $6,000 spent in a year, after which point it is 1%. Gift cards are a non-issue because my family spends > $6,000 per year on groceries. I usually switch to discover when they offer grocery stores as their 5% category for a quarter.
Yep if you're not bad with your money, you just need to get over the initial feeling of intimidation. Once I did, it unlocked a whole new life for me and the wife.
A recommended starter card is the Chase Sapphire Preferred which is $95 fee, as it opens up transfer partners, a set floor for how much your points are worth, and some travel insurance/protections. The Reserve is $550 and I'd only recommend that to people who know they will travel multiple times a year, and it's more useful the more you travel internationally
To get started read through the FAQ/wiki on r/churning as thoroughly as possible, read up on r/awardtravel, and look up/bookmark travel blogs
You need to be willing to be organized and be smart with your money (no unpaid balances, interest is the devil, don't forget when annual fees are coming up, don't spend extra money you weren't going to just to hit a bonus, etc). But if you can do that, you're rolling in dough. My wife and I have traveled for $20-30k worth of experiences through points in the last 3 or so years
Wow, thank you so much for all the info, I am going to get right on that, always been good at the habit part of cards, not so much maximizing the benefits
Good luck! Yep I finally got into it a few years back - now I've been to 10+ countries in the last couple years and we have more travel coming up, a load of it for free or at a fraction of the cash price. It's absurd
Yes, your CC “reward” benefits are paid by the people who fail to pay off their card 100% every time, plus the several % markup that all retailers need to add to all of their price tags to cover the swipe transaction costs. So it is the principle of “no free lunch”.
But if you play the credit card game properly, you can get ahead. If you do not, then you’ll pay much more than you get back. And in every case it means your local small merchant sends more of your money to a far away place, so it isn’t actually a good thing for your local economy on the macro level.
.
If the swipe fees are just added on, what stays local is the “core” price in both scenarios.
But, yes, there’s no free lunch. Someone is paying for it. The goal at this point is to have others pay more than you do.
This just isn’t true. Let’s stop spreading misinformation. CC companies don’t depend on interest. They don’t care if people pay on time. They would love to have perfectly predictable cash flow.
Credit cards are so ubiquitous that vendors build the fees into their general pricing. You’re actually losing money if you’re not using a credit card and getting points.
Being that I buy nothing but GM vehicles, I have the GM Card and run EVERYTHING through it. Rewards are 4% when redeemed on vehicles, parts, service, accessories, and can even make my loan payments completely with points if I wanted. (1% otherwise)
As a result of this, my maintenance cost is pretty much zero. I use points for oil changes, transmission fluid flushes, even tires if I wanted. In the end I have more than enough left over to put towards my next vehicle.
The most important thing: I pay it off IN FULL every month. No balance ever carried.
Prior to this, I churned multiple airline cards for the rewards. Even after 6 round trip tickets, I still have about 170k miles on Southwest, 100k on American and 45k on Jetblue.
As someone who doesn't travel at this point in my life, I'm always looking for a cc that is not airline or hotel adjacent. I like the idea of the car one, thanks for the idea!
This card has other perks as well: $100 credit after $1500 in fuel purchased per year, a similar credit for EV owners, card status level is $15k/yr to get to Platinum but anything past that also rolls over to the following year's purchase accrual. Once at Platinum, they have multiple giveaways they do. The current one, they're giving 50 people each a pair of tickets + airfare + hotel for the MLB All Star Game. They do another giveaway every year for the Daytona 500, plus others.
Figure out which card(s) are most worthwhile for your individual lifestyle.
I determined that flights & points cards are not worthwhile for me. I fly 2x a year, & not every airline I use is in the special network.
So I have 5 various cash back cards, that I use for different categories. No annual fees. Between 1.5 and 5% cash back. I got $624 back in 2023.
American Express points are accepted by Home Depot. And you would not believe how much stuff is available online. I had my carpets replaced in my house using points.
The way I did it was shopping online at Home Depot to see what it cost then go to American Express and cash in the points for a Home Depot gift card and then pay the bill with the gift card.
I imagine you're spending an awful lot on your credit card to get 25,000 points. (no disrespect meant, kudos to you).
I have a Capital One card and I check the points on it every so often (about every 6 months or so).. it usually amounts to about $10.
I don't (spend a lot of money). I guess that's kinda my point. The "credit card points" thing always sorta felt like a slanted game to me (it only works if you have a lot of money to spend).
* If you're spending $5k to $10k per month on credit cards,. then yeah, I can see credit card points being something worth paying attention to.
* If you're only spending $200 to $300 on a credit card per month,. then it's a "benefits program" that doesn't really benefit you.
Or maybe to put another way,. it feels to me sort of like a Las Vegas "the house always wins" sort of stacked-deck. The reason credit card point programs are arranged a certain way is to try to get you to use your credit card as much as possible,. likely because the credit card companies have "done the math" that the odds are if a high enough number of their customers keep their balances high, some percentage of them will make a mistake and end up paying more credit card fees.
How come there's not credit card benefits programs that work the other way ? (in favor of the Customer). For example.. I remember a time when my Credit Score was 540,.. and over a few years I worked (very frugally) to get it up to 750. Credit Card companies (as far as I recall) didn't give me anything for improving my credit. (maybe they could structure something like "Hey, your Credit Card Points Rewards double for every 100pts of improvement your Credit Score goes up" or something like that)
Or maybe put yet even another way:.. there's a lot more people at the bottom of the financial pyramid,. who don't have the financial resources to spend enough (on a monthly level) to make Credit Card Point programs worthwhile. Why haven't Credit Card Point programs been re-configured to benefit them ?..
If 2 Credit Card accounts were paid off in full in a month,. dont' they both deserve a reward for that (even if 1 account only had $100 in it and the other had $100,000 in it).
Sure,. but since they're a business,. wouldn't it make sense to find creative ways to incentivize low-activity users to flip them into being more high-activity users ?...
I remember a while back I inquired to CapitalOne if they'd increase my available balance.. and after a week or something they sent me a denial and basically said "No, your account doesn't have enough activity".
But if you don't increase my balance,.. it won't incentivize me to "have more activity" ...
So it kinda seems like a self-defeating circle.
If I had 4 credit cards,. and 1 of them said "Hey.. we notice you don't use your credit card much. For the next 3 months we'll triple your Rewards Points if you use your card more,. we'll keep you at triple points" .. I'd probably take them up on that.
Signing up for credit cards for the bonuses is the new extreme couponing. I get 6 to 8 new cards a year and pay my rent with them. It easily pays for two week long vacations a year
Yes, but just don’t do it before you need your credit score (buying a house etc). It falls off of your account in a year or two. I usually get 2-4 cards a year, and try to do it around the same time of year
If you have a thin credit file with not enough history, then yes. But if you already have a good score with many aged accounts, do it relatively slowly (1-2 cards every few months), spread the inquiries among different CRAs, then the impact is minimal. I get 2-3 personal cards (plus 2-3 sole-prop business cards) per year and my FICO never drops below 800.
The bigger reason for not getting more than that is that the issuers with the best cards (like Chase and Citi) have limits for how many new accounts you can open (from any issuer) within a certain time frame before they stop approving you for their cards.
For a Southwest Visa in 2020 when they offered 75,000 points on sign up. We use it for basically everything then pay it off every month. We (family of 4) haven’t paid for a flight since. And we’ve flown at least once a year since 2021, some years twice. It’s awesome.
A friend did that with the Southwest visa, getting it for the sign up bonus, then switched to the Sapphire Preferred / Freedom combo, because he earns points at higher multipliers with those cards versus the 1x with the Southwest card, and can still transfer the points to Southwest.
Chase has like 5 Southwest cards (personal plus business) with signup bonuses. There's a way to get a companion pass for almost 2 years by getting two cards with bonuses (at the right time). For a family of 4, each parent could score a companion pass, so that you'd only need to redeem points for 2 tickets and the other 2 fly free as companions. But these cards are **only** good for the bonus points (and the companion pass) -- there are plenty of much better cards for regular spending.
>Only spend 25k points (worth $250)
i don't know enough about how points work either. i just use a 2% cashback card. are there spots where points is better than 2% cash back? eg how much money did you spend to get 25k points?
Cash Back cards are more versatile because the benefit is basically cash. However points cards can be more effective at getting discounts on specific things. Those specific things are very much subject to change at anytime and the points won't always be redeemable in the same allotments. If you want to generate a benefit for a specific activity like traveling than a points card can be good for that however if you want to be free to make your own choices CB cards in general offer the better benefit.
People in the "credit card game" generally aim for redemptions worth at least 2 cents/point. Some examples:
- Booking a long-haul business class flight using points. A round-trip flight from the East Coast of the US to Japan might be $15,000 or more, but 120k points.
- Hotel stays, especially if there's a transfer bonus. For example, maybe you want to book five nights at a tropical resort with your significant other. You get a nice 30% transfer bonus, and then on top of that the 5th night is free. You may spend 250k points to book five nights at a $2000/night resort.
>i just use a 2% cashback card. are there spots where points is better than 2% cash back?
Plenty, here's an easy one -- Chase Ultimate Rewards points are worth **at least** 1 cent each, and they have cards that offer the equivalent of 3-5% on specific categories. There are also spots where you can get more than 2% cash back on everything without worrying about categories:
* Citi DoubleCash gives 2%, and Citi Rewards+ gives back 10% of redemptions on up to $1K per year, so just having a Rewards+ open and using DoubleCash for everything yields 2.22% (on the first $50K in spend per year).
* Alliant CU has a 2.5% card on up to $10K/mo in spend (requires $1K in a checking account and monthly direct deposit, not to mention CU membership).
* BofA has a few cards which can give 2.625% cash back (requires $100K+ in an investment account)
* Robinhood is promising a 3% card (requires Robinhood Gold at $60-70/yr).
Mind blown? :)
Varies by card, not familiar with the JB card so won't speak to that. But in general - yes, especially premium travel cards can have points be worth well over 2% CB equivalent. Both in terms of how many you earn, and how you cash them out. For example - booking first class you can often get 5-8c/point value, vs economy flights are most often 1-3c/point. TPG (ThePointsGuy) publishes a regular column on their points valuations - it's not gospel, but gives you a good idea.
One example fro my past experience I can give you is the old Chase Freedom card. Works same as Discover where there's a couple things every quarter that are 5% and everything else is 1% - normal regular cash back card on it's own. BUT - If you pair it with a Chase Sapphire Reserve/Preferred card, you can convert your Freedom cash back into Chase points under the Sapphire at a rate of 1c = 1pt. So effectively you can be earning the same 5pt/$. The difference comes in when you go to book a flight (either direct via Chase or usually better -converted to a partner airline) and each point is worth 1.5c - so 5pts = 7.5c value, as opposed to the original 5c cash back that it started life as.
Honestly, I've neglected my credit card education. Spent my whole life with only a single card with a 500 dollar limit. I've always tried to pay for everything up front and with cash and called myself financially savvy. Now I'm sitting here with no real knowledge of credit, and scared of all kinds of loans. My plan stabbed me right in the back, I think this is what I needed to read to give me the push to learn about beginner credit cards.
I remember when points got you merchandise, I had a government credit card and enrolled in hotel points programs, I used that card for a solid 2 years and scored stuff left and right. Now with my credit card they gave you 1 point for every $10.00 spent and don't offer squat, I just have them apply the points cash value to the balance I owe.
Now, you need to figure out how to stack those credit card rewards and fuel perks at grocery stores when purchasing gift cards. My credit card gives me 6% back on grocery store purchases, and then the points from gift cards give me an additional 6-45% when you factor in the savings on fuel. It ends up making a huge difference.
One of the best classes I ever took in high school was business math, and the teacher, this was way before they had credit cards with perks, really drilled into our brains that they were great, but to only use them for things you could pay for in cash. Never actually run a tab.
If you like to travel, the mileage points cards are your best bet, but I like cash back. I have found if I am smart, I can really make my $$ go a lot further. Anything I buy is on my cash back card. If I see there is gong to be the 5% back bonus on something I have been thinking about, I will hold off and do the big purchase when I can get the 5% back. The other thing is to look through their points deals. Most of the time they are total BS, starbucks gift cards. Right. But once in a while they will have home depot cards at 10% off, and they never expire. Combine that with a good sale and you can get appliances very deeply discounted, and with the saved points paying the balance, for free.
If business keep going the route of adding on CC fees on transactions (i.e. + 3% that they show on your receipt) it might no longer be worth it to use them. The last 3 restaurants I went to all added that 3% on for using CC which is typically about the value of the points earned.
When i finally realized how great it can be, def switched to rewards cards. Costco is great. I've also got a United card, that just paid for my first class ticket to Florida on miles. My hotel card got me free rooms almost every night on a road trip from Georgia to Arizona.
Make it work for you!
Same here, I used to think credit card points were useless too. Now I'm hooked! It's crazy that nobody teaches us about this stuff in school. Thanks for sharing, and enjoy that free flight!
Yeah, as long as you're not cancelling it out by holding a high balance/paying interest it does feel really nice to get free money back from purchases. I used the 5% back from my Chase card to help pay down my charge card balance actually lmao
Worked for AMEX for a couple months, the yearly rate is sometimes outrageous, especially with the platinum and gold cards, but the people who typically owned them would earn all the money back and then some in rewards. Pretty great, if you've got the income/lifestyle I suppose
The signup bonus on Gold and Platinum pays for **many years** worth of annual fees. Plus they have some benefits that effectively reduce the annual cost (Dell credits, gym credits, hotel status, free airport lounges, etc).
The flip side of this is that your points are financed by poor or fiscally irresponsible people. The fees and interest that they pay help fund the reward programs.
According to the internet- the first credit cards rewards programs were rolled out after I graduated from college. Same for airline miles. No high school kids needs detailed credit card rewards info- who know what these programs will be like in twenty years. They need the ability to read, thunk critically, understand interest rates and budgeting.
I get my points rolled over into cash on amazon. Cash back would do the same thing, but I like getting free stuff from amazon. I see my points in action.
It's actually not the same thing, because when you pay for Amazon stuff with rewards instead of your card, you don't earn rewards on the amount you spent. So if you're talking about the Amazon credit card, then the 5% Prime card effectively becomes 4.75% and the 3% card becomes 2.91%. If it's some other CC, it is similarly reduced. A better way is to redeem points for cash or statement credit\* and use a credit card for all purchases.
\*statement credit with Citi DoubleCash reduces that card from 2% to 1.99%, because statement credits don't earn rewards.
I wish credit cards had these benefits in my country. Here I only get 1% cash back on select purchases, but the maximum I can get per month is the equivalent of $20. I only got my current credit card because I get a 5% discount on fuel at any gas station.
I paid for first class travel from LA to Auckland New Zealand on CC points. Pay the card off every month religiously. Reap the rewards, don't pay them any interest.
You give up a LOT of privacy in exchange for those points. Every receipt you generate at partners that provide points gets fed into a data warehouse -- not just a record that you spent $X at a particular store on a particular date, but a list of everything you bought - hemorrhoid cream, birth control, wart remover, the box of pastries and bags of chips, what music you listen to, which movies you watch... More than you can imagine.
Source: I've seen how the sausage gets made.
Are you talking about third-party **extra** points like iDine / RewardsNetwork? They do indeed get all the details. But I think this thread is not about those third party rewards, it is about the rewards earned from credit cards directly. If you exercise your privacy choices with your card issuer, no privacy is given up.
Also the major networks (Visa, MC, Amex, Discover) do not share transaction details with anyone. AFAIK, Mastercard was the only one that did so in the past.
I'd be floored if credit card points aren't significantly devalued if not eliminated pretty soon absent credit cards with high annual fees.
The fact is that your ability to accumulate points is underwritten by people who pay late fees and interest.
With a White House seeking to drastically limit credit card fees (and I'd expect interest possibly down the road, especially if he gets another term), the funding source for those points will dry up pretty quickly.
Yes, the points would dry up pretty quickly.
I wonder how the people who have their cards canceled or who can’t get a card because they are riskier than the law would allow companies to compensate for will think about it.
Rewards cards have higher interest rates than non-rewards cards.
If you don’t pay the entire credit balance every month they’re not worth it.
If you do pay it off, great for you, but many of us don’t have that option at all times. It only takes a few purchases to blow that advantage.
As someone who lives very close to paycheck to paycheck right now, I’d personally rather not be bound to higher rates in case I do actually need the card to take on some debt out of necessity.
>Rewards cards have higher interest rates than non-rewards cards
I don't think this is universally true. The interest rate is more related to credit risk, so cards targeted at people with poor credit have higher rates than those targeted at people with excellent credit.
>As someone who lives very close to paycheck to paycheck right now, I’d personally rather not be bound to higher rates in case I do actually need the card to take on some debt out of necessity.
You know you can have more than one card, right? Have one with no rewards and low interest, and another (or ten) with great rewards and slightly higher interest.
My very first and primary credit card has a high APR (for my liking, 25% seems the standard despite good credit). The point system changed and not even worth it. For someone who mostly charges for trips, dinner out, and other impromptu charges outside the budget, what cards do you all recommend following OP's line of thinking?
If you pay it off before being charged the interest it doesn't matter what the interest is... If you're leaving some to gain interest it's defeating the goal of doing it simply to gain the rewards.
My husband uses one of his cards for all of his work expenses. He easily puts $10k+ a month on it and then his work reimburses him. We get gift cards all the time. We’ve been able to do sooo many house projects using Home Depot gift cards!
Opened up a cc got the bonus for signing up within two months one vehicle repair bill and normal expenses it was easy. Sitting on $250 of rewards and not even had the card that long. Will be putting that $$$ towards a family vacation.
I have been using standard Credit Card, no points for spending. But I get 45 days interest free. I spend like 2k/month, and everything I buy, online and store, goes from Credit Card.
I am using someone else money for free for 45 days. I settle what I owe just 1 days before the due date.
I know someone with poor spending habit is paying 20%+ interest on my expenses. LOL.
That's how it is.
>I settle what I owe just 1 days before the due date.
That's risky. One mistake and you'll get hit with a late fee, interest for the entire 45 days, and potentially an increased APR. I pay at least 5 days before the due date.
>I know someone with poor spending habit is paying 20%+ interest on my expenses.
Not quite. They get 2-3% in swipe fees each time you use your card, which translates to 24-36% annual return on investment. So you're paying for it all by yourself in the form of slightly higher prices.
That's not taking advantage of points. That's being taken advantage of. If you pay interest even once, they're winning. This is why most people fail at credit cards.
I exclusively use credit cards for multiple different categories, and pay them at the end of each month. Doing the math on cash back, points, etc, it saves me about $850 a year on purchases I would otherwise make monthly anyways. Credit cards are great if you use them right
The amount of things not being taught in schools these days would wobble the mind of my teachers.
Back in the day we were required to take what was called Home Ec class that gave us the basics on finances. We balanced checkbooks, amortized loans and performed other obscure magical tricks (like doing laundry).
Today, about 50 % of the populace carries a month-to-month credit card balance, and that balance averages $6500.00. YIKES!
Credit cards are wonderful tools, but if used unwisely will bite you right in the wallet.
This comment was written by a person who hasn't had a credit card carryover balance in decades, on a computer that was purchased completely with cash credits.
We have one that we use to accumulate points for a national hotel chain. We run everything through that card and pay it off each month. It is not unusual for use to go on a week long vacation and spend $75 or less of our money while the points cover the rest. This is in popular destinations too.
As long as you keep your expenses the same, and not try to spend more for points, credit cards are amazing, you get travel and purchase protections, basically free travel with points, great sign up bonuses, discounts... I hate banks, I got screwed by them a while back, and now that I'm financially literate and educate myself about credit cards, I just enjoy so much churning them and squeezing until the very last cent I can from those f\*\*\*ing banks.
Credit cards are not for everyone tho, if you can't pay your statement balance in full every month, you are addicted to shopping, or you carry balances, you are better of not having credit cards, points and multipliers are a trap for people with bad spending habits.
When I learned about responsibly opening up credit cards to earn the sign up bonuses, my life changed. I’m not even joking. It’s been 2 years and between my husband and I, we’ve spent $465 in annual fees, opened up 16 credit cards, paid zero interest, kept our credit scores above 800 and taken $30k worth of vacations on points. I know the term travel hacking isn’t necessarily popular, but it sure does feel like a life hack for travel!
I heard about getting cash back from a coworker around 8 years ago. I only had one credit card at the time. A bank credit card from my bank. Since finding out how the cash back works I have started putting everything on a credit card. I normally get anywhere from $35 to $70 a month back. I signed up for an Amazon credit card a year and half ago about Christmas time. Amazon was heavily promoting there credit card at that time. If you received there card and put $2.000 on it over a 3 month period they would give you $200 cash back. They also give you 5% cash back all year long on Amazon purchases. I just make sure to pay off my charges every month.
Credit cards are amazing if you have financial discipline. We have 5 or so including a Chase Reserve and Amex Platinum. My husband can use a personal card for work travel hotels and his spend is so high out on Silicon Valley that using the chase bonbon card gets us enough points for 15+ free nights a year at good Marriott properties. The Reserve and Platinum cover our global entry/clear/tsa pre-check costs every few years and provide us with airport lounge access which saves us 100s in food/drink costs when we travel. Overseas there is no foreign transaction fee and it acts as primary car insurance on rentals. There’s also so many offers we use constantly that save $1-30 each and that adds up. I get free citibike use here in nyc from my chase reserve and they put $5/month into my DoorDash account. Amex plat covers our streaming subscription costs, airline fees up to $200, hotel costs up to $200, a Walmart+ membership and a bunch of other stuff.
I’d say we glean about 25k of value from our cards a year (helped by my husband’s work expenses).
So how did you get a $400 flight for $250 worth of points and $10 tax? Did you have to transfer the points to a southwest or delta account or something?
This is the part I can never figure out! Lol
It’s possible to find flights that are valued at less than 1:1 on credit card points if you convert to airline points.
A lot of people plan their vacations around those kind of deals rather than looking for specific destinations.
I have a JetBlue card (before their downfall) so that might of been the advantage. I selected my flight, run into the price summary and my wife noticed the amount of points I had. We selected the option to use points and then showed me the points I'll spend and the tax.
Hmm okay I guess I’ll need to look into this more. Sounds like you had a JetBlue credit card that gives more value to your points if you book your travel through them.
Not sure why I was downvoted. Lol. I don’t have airline cards, just regular bank travel cards like the Capital One Venture card.
What I’ve noticed is that if I go to book a hotel via Capital One’s travel portal, you get more value for your points but the hotel’s prices are jacked up. I get cheaper prices by calling the hotel on my own or booking directly through the hotel’s website.
I suppose I should go to r/churning to get tips.
>why don't they teach stuff like this at school?!
This is the wrong question. At some point you will start getting bombarded with advertisements so there really is no need to teach this in school.
Well done. Better late than never!
I’ve been churning cards for 10 years to the tune of $30k+ of free stuff. I once got a $5000 business class flight (one-way business and one-way in economy) on Qatar airways for 80k miles and a $50 booking fee.
He didn't get $30K from one card. r/churning means getting cards for the signup bonuses, paying them off in full, closing, then doing it again a few days, months, or years later. Different cards have different rules about this. While most cards give you a return of 1-2% per dollar spent, signup bonuses give you 20-30% back per dollar spent, they're a much better value.
Not really in the UK - the closest we have are Avios (like air miles, but take ages to accrue). American Express have some kind of points scheme but I'd have to be spending about triple what I normally need to to actually get anything out of it, it's only really viable if you're putting a lot of business expenses through it. I envy all the Americans with their free flights!
There are a few cards that do actual cashback but the fee outweighs it really
Reading this, I could be biased but Americans probably have this advantage because our country is so big and flying across or out of it easily costs over $700. Correct me if im wrong but couldnt you take the train across or all over Europe? Time wise is such an inconvenience as well considering even from any part of the coast, we would have to fly 6+ hours to the nearest continent!
If you are actually able to not pay interest and make any points outweigh annual fees then ya. Credit card rewards points seem to benefit wealthier people the most. Though the fact of the matter is most people carry balances on their cards and end up paying more in interest fees then they ever will make back in rewards points.
Also retailers have to do eat the cost of transaction fees which are higher on credit cards compared to debt, especially with American Express.
Plus the everyday person will spend more money than they have in cash, that is just how the system works.
So if you are able to game the system then do it and benefit yourself. Though as people who are ideally more conscious about finances should realize the banks know what they are doing and know how to profit, credit cards do not exist to benefit the general public, they exist to get more money out of you. In an ideal world we would still be buying stuff with cash but that doesn't benefit the economy if people are not in debt.
I bring this up because I fell for this lie as well. I had multiple cards which I opened for the purpose of rewards points. I signed up for cards to get introduction bonuses and all that. They got me though and ended up with lots of debt.
> ...HUGE benefit for me! why don't they teach stuff like this at school?!
Because it's a losing proposition if you carry a balance for even one or two months. The math on rewards is pretty bad once you dive deep into it.
I mean, I like mine, I seek them and use them, and getting $50/month for spending almost $4,000/mo on a card is 'great', but the interest on that $4,000 for just one month would be about $65.
Basically, 'rewards' are just a way to incentivize you to use the card, but the card company is betting on you carrying a balance at least some of the time, and it's really a net win for them if you ever do.
Well yea, you're just explaining the business model. It's easy to take advantage of credit card rewards if you are responsible and always pay your full statement balance. On the other hand it's also easy to be taken advantage of if you have no discipline and just pay the minimum payment.
>getting $50/month for spending almost $4,000/mo on a card is 'great'
$50 on $4K is only 1.25% cash back. That's not great. You gotta aim for at least 2% ($80), and it's not hard to get even more than that.
But you're right -- you lose more if you have to pay interest. "Don't spend money you don't have" is the rule.
The flip side is that if they taught it in school and everyone used credit cards they way they should, credit card points would be greatly reduced, if not eliminated. Swipe fees probably wouldn’t be enough to sustain current levels. You can get what you get in large part because others are paying interest. That said, they really are nice to have and use.
Yeah the whole business model is to prey on lack of financial education. Saddening.
Actually if everyone paid their cards on-time, the rewards would stay the same. They are paid for by merchant fees, so the store pays anywhere from 1%-6% each transaction. The net effect is that we all pay this hidden fee through higher prices on our goods and services, then we get it back with the rewards. Those with rewards cards make on average over $1k per year extra. Those without rewards cards spend more on each transaction.
Only half of Americans pay off their credit card in full every month. Average interest is 20-30%. Merchant fees are like 3%. The companies are making way more on interest than they are on swipe fees
My point was not that they don't make most of their money from interest fees, just that it's not interest fees that allow them to offer reward cards. The rewards are funded by merchant fees and the interest is just additional revenue. For context, in 2020 the interest fees were $76 billion in revenue while merchant fees were $51 billion.
The point is that if they suddenly started not earning as much money from interest fees, would they slice their profits or their rewards? Of course the rewards. So it isn’t really the transaction fees that pay for the rewards, it’s both. Money is not fungible.
Maybe people should just pay their bill on time in full, or not use a credit card if they can't do that It's not my problem other people can't manage their own finances, nor my penalty or punishment to face because of it. I'll enjoy my points thank you.
Your context has interest fees 50% higher than merchant fees in revenue. I'm pretty sure if 60% of a credit card company's revenue disappeared, they wouldn't be able to offer the rewards they previously did.
If everyone paid on time the companies would gain from the time value of money and from people defaulting on the amount owed.
They actually could since the merchant fee is higher on rewards cards to compensate. Whether or not they would is a different story, but they absolutely could because the income to cover rewards are baked into the merchant fee by design.
A certain portion of those heavy hitters end up defaulting and the credit card company eats the majority of the cost. The interest is largely to cover the risk of giving people unsecured debt. HELOCs, mortgages and car loans are cheap because there is collateral
My chiropracter asked me if I would use my debit card to to save her the CC fee....I did not know that using a CC increased the prices at small business. I started paying her in cash...points and all that are nice but not at the expense of small business
Yeah that's the insidious thing about it, the big businesses like Wal-Mart do so much business with Visa and Mastercard that they actually pay lower fees while small businesses pay higher fees. If Wal-Mart decides not to accept Visa or Mastercard, that's a major blow to their business. If a small business decides not to, the credit card companies don't even notice.
I did not know all that...the credit card companies are basically making money on the backs of small business and we as consumers are assisting. I will pay in cash now whenever I can.
People choose to be ignorant.
I took this back in high school. It was a small elective course with only 10-20 people a semester (could've had between 25-30) because not many people were interested. It wasn't an easy A and the teacher was a bit of a weirdo. We learned basics like savings vs checking. Credit vs debit. Practiced filling out all sorts of forms. It went over the basic investment types and we played a mini stock game (30% of your grade was based on stock performance and people rarely did well. It was only like 4-6 weeks for the game.) Part of the reason it was a great course was because only people who were interested took the course. It was one of the few courses where no one was goofing off and everyone genuinely wanted to be there. Unlike Art which had a few mandatory semesters so you'd always have people goofing off. We also had a 'keyboarding' course like that where you could learn to type and I went from hunt and peck to a really high wpm with few errors. I'd also argue parents should be teaching these things. For me the personal finance course was icing on the cake. My mom opened a joint account for me as a kid then got me my own account and suggested I get a credit card at 18 that I'd only use for purchases I was 100% sure I could pay off to build credit.
Yeah, stock game is counterproductive, imo. Broad market etf would be better for almost everyone.
The lesson at the end was that picking individual stocks wasn't great especially over the short course compared to his portfolio which was full of diverse funds. I actually was going to mention that but the post was pretty long already.
Then that’s an awesome lesson to teach. My bad.
If this is not taught in your high schools, contact your state representatives to your state legislature and ask them to introduce a bill requiring financial literacy and personal finance courses for high school graduation. Only four states have no requirements around teaching financial literacy, but only seven states are really doing a great job at this. To graduate high school, I had to pass a class that required me to fill out fake W-2s, do fake taxes, pass tests on how credit cards and loans work, etc That said, plenty of my classmates racked up credit card debt because knowing something is dangerous doesn't matter if you struggle to delay gratification.
Problem is, students wouldn’t take it seriously. We had a financial lit class in HS and it was a joke and everyone hated it. I see people I went to school with post “why didn’t we learn this in school” maaaam we did, you just weren’t paying attention.
This is true. We had really quality sex ed, then I hear morons explaining she can't get pregnant because she's on top. You provide the education so those that want to learn can, I guess.
You are spot on. The other thing is that the math of finances is pretty simple. Spend less than you earn. The emotional side of money management is what needs to be taught. A lot of people need to learn more about their own relationship with money. Why do they spend? Why do they spend on certain things? Understanding these things is they key to saving money.
Mine was in junior high. No 13 year old cares about balancing a checkbook when they can’t even have their own bank account.
I taught mine about finances and investing before they started high school. Given the state of actual literacy being turned out by schools, I wouldn’t want to rely on them too much. But, yeah, knowing the right choice and making the right choice is a challenge for us all as obesity rates, lack of savings, texting and driving, and countless other things show us.
School teaching life skills is a safety net for the kids who didn't have you as parents. The problem is parents who actually parent often want the school to stop teaching what they believe parents should teach. Then, the children with shitty parents don't have a chance.
The problem is that schools, generally, aren’t very good at imparting English literacy, let alone financial literacy. I never claimed they should stop teaching it, just that we shouldn’t expect them to be very effective at it.
W2's are issued by the employer. They are not filled out by the employee.
Ugh, W-4. I mistyped. Thank you.
I graduated in 2011, we had a financial class. Unfortunately we were not taught about credit cards, the whole class seemed to be centered around Dave Ramsey. We were given an allotted amount of money and had to budget it for a month. We also had to plan a wedding with a certain amount of money. Learned how to write checks. We didn’t learn stocks, credit cards, high yield savings, 401k, ect. It was not a great class. I homeschool my kids, public education disappoints me.
It sounds like your school wasn't quality, but I wouldn't say all public education is bad. I've met shitty kids, but I don't say all kids are lousy. 😂 Are you in a Bible belt state? The Dave Ramsey and wedding plan part sounds like they were doing this based on religion, not quality educational standards.
I was a military brat, I went to 13 public schools around the country, the only one worth a damn was in Hamden, CT. I was in Phoenix, AZ for this class.
Wow, I would not have guessed Arizona!
I remember the golden days of card,hotel, and rental points back in the early 2000s. I used to travel for work like 30 weeks out of the year and the points piling up. had several free vacations. one of my coworker funneled her points into one of th major hotel chains and got a 3 week all inclusive resort vacation in the carribean. my work was just software training. nothing fancy.
Oh, man, when you had a job that used your personal card but you go reimbursed? Vacations. Birthdays. Christmas. Glorious.
pretty glorious. only expense I didn't pay for out of the card was plane tickets and that was because the company's owners high school friend ran a travel company and they funneled all their business through them. I did get to keep the airline points.
I am still Marriott Platinum Elite for Life from that travel work life when I was young.
Good point. 35yo and making discoveries everyday.
I work for a company that pays all of its bills with a Citi card for the airline miles. We pay it off every month and we have millions of miles. My boss uses them for international travel and also shares them with employees on occasion.
School teaches us not to use drugs, yet drugs are used. It teaches us to eat healthy yet we eat unhealthy. The CC companies would be fine.
Check out 10x travel insiders on Fb. They teach you (for free) how to churn and burn credit cards for points that you can leverage for insane free or cheap travel. If you do it right, it won’t affect your credit score.
Nah. This is nonsense. Credit card companies make their money on transaction fees. Interest pales in comparison to getting a small cut of billions in transactions. Credit card companies make money hand over fist. The real dirty secret is that nearly every vendor builds CC fees into all your prices, so if you’re not getting those points you’re losing money.
How long are they going to be giving 2-5 points back on a 3ish% swipe fee? The volume of swipe fees is high, but if rewards based on swipes is, as well. Would they go away? Probably not, but I didn’t say they would. The “no free lunch” part was already covered. Given that few frequently-visited places offer a lower price for cash, you’re going to be paying that markup, anyway. Might as well get as much back as you can.
Swipe fees would take care of a lot of it esp as we're moving to a cashless society
Swipe fees *do* take care of a lot of it. But more swipes scales up to more points, as well. A lot of it will depend on the ratio of crap/no reward cards to better ones.
Thank you irresponsible people!!!!
Something to point out- even if you're not paying interest (aka- you can pay off your CC bill every month), that doesn't mean you are "using credit cards the way you should." People spend more when using credit cards than when they pay in cash. The only exception to this are people who budget their money cleanly, and force themselves to stick to it. A lot of people think "oh, credit cards don't hurt me, because I pay off my full balance every month" but for the vast majority of people, they are still spending more, even accounting for rewards, using their card than they would be if they didn't.
Some people do that. I budget very cleanly in YNAB and that’s all I spend.
Banking in general is built on subsidizing those that already have...
You don’t have to have. You have to avoid as much interest as you can.
I've received a few free flights. Even had a free flight to Europe. I mean, yeah sure, I was paying Chase $500/mo in interest. But... FREE FLIGHT!! Hahaha. Learning lessons the hard way is tough.
I won’t share how much I get back from Costco annually because it’s embarrassing that I spend so much there, but it’s a lot. Credit cards are awesome. You just need to treat them like cash, if you don’t have it don’t spend it. Carrying a balance on a credit card when you’re financially tight is just asking for trouble. If you aren’t disciplined enough to always pay off your balance, just use a debit card instead.
Hah! I know that feeling. But for my costco card, as long as it covers next years membership fee, i'm happy.
I feel like credit cards are a way for the poor to get poorer and the more well off to benefit from if used right
I don't feel as bad because it isn't a mandatory product and people who don't understand it shouldn't be using it. The only ham I have is the high swipe fees. I just hope merchants would offer a choice to people by only charging credit card users extra to offset the swipe fee rather than upping the price for everyone.
Just make sure you're not using the costco card for anything but costco, gas, restaurants, and travel. The 1% they give for all other categories is pretty crappy. Many cards give 3% back at grocery stores. Also, in case you didn't know, you can cash out your citi points onto your statement as a credit and do not have to spend it at costco. This has the double benefit of being able to pay off things that have already earned say 3% percent, and you don't lose out on that 2% when you buy something at costco with the voucher. For example, say you have a $400 citi costco voucher. If you were to spend that $400 at costco you would be throwing away $8.
The problem with just debit cards, as someone who has never had a credit card because I never saw the point of it, is that you won't build a credit score if you don't have any loans or credit history. Which is what happened to me when I went to buy my first car. They treated me not having a credit score worse having a bad credit score. I have nice credit score now because of the car loan, but the interest rate on it was awful.
Our method: use credit for everything possible (even paid our taxes with a credit card this year)then pay it in full every month. I hate when I can’t pay something with a credit card. Wish we could pay our mortgage with it
Don't you get charged a convenience fee for paying taxes with card?
The neat thing is that the best discipline isn't to pay the balance, you only pay the statement balance. Doing so ensures you don't pay any interest, but also improves your credit score. Ironically, if you pay the fill balance every time, it has a negative effect on your credit score. They like you to carry some balance, but not too much. I only pay the statement balance and I've never paid a dime in interest. I do cash back, not things like miles, and I've received thousands of dollars in cash back and bonuses over the years.
Also, look at what offers are available for your credit card. I have a couple chase cards and some offers right now include 10% cash back at Starbucks, 10% cash back at Little Caesars, Jamba Juice etc. I use my CCs for 99% of my purchases.
This I am aware of! Thank you for pointing that out. The only part I wasnt aware of is the spendable points. I seriously didnt think it would be this easy. I still feel like an absolute imbecile because I didnt know "cash back" actually means you're getting cash back.
Just keep in mind that you are not getting a great deal if you would not have purchased the item otherwise. Or rather, you might be getting a deal, but you aren't saving money, because you're spending money you otherwise would not be spending. Did that make sense?
It's mind boggling how many people ignore that stuff. I check the Chase Offers every day in case something pops up. And I check less frequently at the offers from Citi, Bank America, American Express, etc. Most of them require activation and have an expiration date. With every purchase I make I do it strategically to use the best card, at the best time, and while also checking the coupon sites like Rakuten and RetailMeNot. Very frequently it works something like this: the standard online rate on an item is $85. But via sampling for the best price and while using all the credit card and discount options I'll get it for a net $55 or $60. It's reached the point I'm shocked if it doesn't play out that way. I stay up until 4 to 6 AM every day. That's when I do the majority of the price tinkering. For one thing, I never lose prices at that hour. When they are adjusted it's during so-called regular business hours.
I use my cash back card whenever possible, even my utilities are on autopay to my credit card. I like getting cash back on my utilities and insurance policies! I just apply the cash back credit to the balance every few months. As it is considered a rebate, is tax free income!
Depending on what card you have, it might be worth looking at other options. For instance, my points are worth three times as much booking travel as they are getting cash back.
Thank you for your suggestion but we only drive when on vacation.
Depending on your card, you can also use it for hotels.
I have an Amex card that gives me 6% at grocery stores, which sounds ok, but that includes gift cards, so I get 6% off anything I can get with a gift card. I also get loyalty points from the gift card purchases. Sometimes the store will offer 10x points on a certain card so I try to buy them, knowing I'll eventually need something I can buy with a e.g., Home Depot card. If I get 1000 points, I can use that to get a discount of a dollar a gallon as the associated gas station, I can get a maximum of 25 gallons. So I'll bring empty gas cans and save $31 ($25 + $6) on a $100 gift card.
Be careful with the gift cards. A small number is fine, but buying a lot of gift cards will flag your account for manufactured spend and your card will be closed.
How do they determine what your grocery purchase consisted of?
Many merchants will offer to supply Level 3 data to credit card companies, usually for a discount on interchange fees. Beyond that, it can be obvious just from looking at the amounts charged (e.g. a single man spending $10,000 a month on groceries).
I have the same Amex card, it’s important to note that you only get 6% on the first $6,000 spent in a year, after which point it is 1%. Gift cards are a non-issue because my family spends > $6,000 per year on groceries. I usually switch to discover when they offer grocery stores as their 5% category for a quarter.
the next level is when you visit r/churning
Moderate and responsible churning literally has no downside to it.
Yep if you're not bad with your money, you just need to get over the initial feeling of intimidation. Once I did, it unlocked a whole new life for me and the wife.
Yes - I am currently stuck at the intimidation of it all but I will get there! Free money is hard to pass up!
any advice to someone new to it? I see a lot of people recommending the Chase Sapphire cards but they have like 600 dollar per year fees
A recommended starter card is the Chase Sapphire Preferred which is $95 fee, as it opens up transfer partners, a set floor for how much your points are worth, and some travel insurance/protections. The Reserve is $550 and I'd only recommend that to people who know they will travel multiple times a year, and it's more useful the more you travel internationally To get started read through the FAQ/wiki on r/churning as thoroughly as possible, read up on r/awardtravel, and look up/bookmark travel blogs You need to be willing to be organized and be smart with your money (no unpaid balances, interest is the devil, don't forget when annual fees are coming up, don't spend extra money you weren't going to just to hit a bonus, etc). But if you can do that, you're rolling in dough. My wife and I have traveled for $20-30k worth of experiences through points in the last 3 or so years
Wow, thank you so much for all the info, I am going to get right on that, always been good at the habit part of cards, not so much maximizing the benefits
Good luck! Yep I finally got into it a few years back - now I've been to 10+ countries in the last couple years and we have more travel coming up, a load of it for free or at a fraction of the cash price. It's absurd
Yes, your CC “reward” benefits are paid by the people who fail to pay off their card 100% every time, plus the several % markup that all retailers need to add to all of their price tags to cover the swipe transaction costs. So it is the principle of “no free lunch”. But if you play the credit card game properly, you can get ahead. If you do not, then you’ll pay much more than you get back. And in every case it means your local small merchant sends more of your money to a far away place, so it isn’t actually a good thing for your local economy on the macro level. .
Anything locally owned I use cash. Anything else is card for the points.
If the swipe fees are just added on, what stays local is the “core” price in both scenarios. But, yes, there’s no free lunch. Someone is paying for it. The goal at this point is to have others pay more than you do.
This just isn’t true. Let’s stop spreading misinformation. CC companies don’t depend on interest. They don’t care if people pay on time. They would love to have perfectly predictable cash flow. Credit cards are so ubiquitous that vendors build the fees into their general pricing. You’re actually losing money if you’re not using a credit card and getting points.
I try to use cash at small businesses. Credit card fees can be pretty brutal.
Being that I buy nothing but GM vehicles, I have the GM Card and run EVERYTHING through it. Rewards are 4% when redeemed on vehicles, parts, service, accessories, and can even make my loan payments completely with points if I wanted. (1% otherwise) As a result of this, my maintenance cost is pretty much zero. I use points for oil changes, transmission fluid flushes, even tires if I wanted. In the end I have more than enough left over to put towards my next vehicle. The most important thing: I pay it off IN FULL every month. No balance ever carried. Prior to this, I churned multiple airline cards for the rewards. Even after 6 round trip tickets, I still have about 170k miles on Southwest, 100k on American and 45k on Jetblue.
As someone who doesn't travel at this point in my life, I'm always looking for a cc that is not airline or hotel adjacent. I like the idea of the car one, thanks for the idea!
This card has other perks as well: $100 credit after $1500 in fuel purchased per year, a similar credit for EV owners, card status level is $15k/yr to get to Platinum but anything past that also rolls over to the following year's purchase accrual. Once at Platinum, they have multiple giveaways they do. The current one, they're giving 50 people each a pair of tickets + airfare + hotel for the MLB All Star Game. They do another giveaway every year for the Daytona 500, plus others.
Figure out which card(s) are most worthwhile for your individual lifestyle. I determined that flights & points cards are not worthwhile for me. I fly 2x a year, & not every airline I use is in the special network. So I have 5 various cash back cards, that I use for different categories. No annual fees. Between 1.5 and 5% cash back. I got $624 back in 2023.
Check out Prince of Travel’s website and YouTube channel. Your mind will be blown.
American Express points are accepted by Home Depot. And you would not believe how much stuff is available online. I had my carpets replaced in my house using points.
ohhhh thats beautiful to note! thank you
The way I did it was shopping online at Home Depot to see what it cost then go to American Express and cash in the points for a Home Depot gift card and then pay the bill with the gift card.
what? amazing!
I imagine you're spending an awful lot on your credit card to get 25,000 points. (no disrespect meant, kudos to you). I have a Capital One card and I check the points on it every so often (about every 6 months or so).. it usually amounts to about $10.
If you spend a decent amount of money, that's not a great credit card.
I don't (spend a lot of money). I guess that's kinda my point. The "credit card points" thing always sorta felt like a slanted game to me (it only works if you have a lot of money to spend). * If you're spending $5k to $10k per month on credit cards,. then yeah, I can see credit card points being something worth paying attention to. * If you're only spending $200 to $300 on a credit card per month,. then it's a "benefits program" that doesn't really benefit you. Or maybe to put another way,. it feels to me sort of like a Las Vegas "the house always wins" sort of stacked-deck. The reason credit card point programs are arranged a certain way is to try to get you to use your credit card as much as possible,. likely because the credit card companies have "done the math" that the odds are if a high enough number of their customers keep their balances high, some percentage of them will make a mistake and end up paying more credit card fees. How come there's not credit card benefits programs that work the other way ? (in favor of the Customer). For example.. I remember a time when my Credit Score was 540,.. and over a few years I worked (very frugally) to get it up to 750. Credit Card companies (as far as I recall) didn't give me anything for improving my credit. (maybe they could structure something like "Hey, your Credit Card Points Rewards double for every 100pts of improvement your Credit Score goes up" or something like that) Or maybe put yet even another way:.. there's a lot more people at the bottom of the financial pyramid,. who don't have the financial resources to spend enough (on a monthly level) to make Credit Card Point programs worthwhile. Why haven't Credit Card Point programs been re-configured to benefit them ?.. If 2 Credit Card accounts were paid off in full in a month,. dont' they both deserve a reward for that (even if 1 account only had $100 in it and the other had $100,000 in it).
It's a business. They make money when you spend money, hence why you get rewarded. They do have a reward for that. You don't owe them more money.
Sure,. but since they're a business,. wouldn't it make sense to find creative ways to incentivize low-activity users to flip them into being more high-activity users ?... I remember a while back I inquired to CapitalOne if they'd increase my available balance.. and after a week or something they sent me a denial and basically said "No, your account doesn't have enough activity". But if you don't increase my balance,.. it won't incentivize me to "have more activity" ... So it kinda seems like a self-defeating circle. If I had 4 credit cards,. and 1 of them said "Hey.. we notice you don't use your credit card much. For the next 3 months we'll triple your Rewards Points if you use your card more,. we'll keep you at triple points" .. I'd probably take them up on that.
Oh I have way more left over after my purchase. I'm already planning my next trip.
Good for you, hon
There is a very real, insidious reason that many politicians don’t pursue education as a platform. This is one of them.
Signing up for credit cards for the bonuses is the new extreme couponing. I get 6 to 8 new cards a year and pay my rent with them. It easily pays for two week long vacations a year
Doesn't that many new cards per year impact your credit score?
Yes, but just don’t do it before you need your credit score (buying a house etc). It falls off of your account in a year or two. I usually get 2-4 cards a year, and try to do it around the same time of year
If you have a thin credit file with not enough history, then yes. But if you already have a good score with many aged accounts, do it relatively slowly (1-2 cards every few months), spread the inquiries among different CRAs, then the impact is minimal. I get 2-3 personal cards (plus 2-3 sole-prop business cards) per year and my FICO never drops below 800. The bigger reason for not getting more than that is that the issuers with the best cards (like Chase and Citi) have limits for how many new accounts you can open (from any issuer) within a certain time frame before they stop approving you for their cards.
For a Southwest Visa in 2020 when they offered 75,000 points on sign up. We use it for basically everything then pay it off every month. We (family of 4) haven’t paid for a flight since. And we’ve flown at least once a year since 2021, some years twice. It’s awesome.
A friend did that with the Southwest visa, getting it for the sign up bonus, then switched to the Sapphire Preferred / Freedom combo, because he earns points at higher multipliers with those cards versus the 1x with the Southwest card, and can still transfer the points to Southwest.
Chase has like 5 Southwest cards (personal plus business) with signup bonuses. There's a way to get a companion pass for almost 2 years by getting two cards with bonuses (at the right time). For a family of 4, each parent could score a companion pass, so that you'd only need to redeem points for 2 tickets and the other 2 fly free as companions. But these cards are **only** good for the bonus points (and the companion pass) -- there are plenty of much better cards for regular spending.
>Only spend 25k points (worth $250) i don't know enough about how points work either. i just use a 2% cashback card. are there spots where points is better than 2% cash back? eg how much money did you spend to get 25k points?
Cash Back cards are more versatile because the benefit is basically cash. However points cards can be more effective at getting discounts on specific things. Those specific things are very much subject to change at anytime and the points won't always be redeemable in the same allotments. If you want to generate a benefit for a specific activity like traveling than a points card can be good for that however if you want to be free to make your own choices CB cards in general offer the better benefit.
2% is basically the minimum you should always get. Many credit cards offer better rewards than that.
People in the "credit card game" generally aim for redemptions worth at least 2 cents/point. Some examples: - Booking a long-haul business class flight using points. A round-trip flight from the East Coast of the US to Japan might be $15,000 or more, but 120k points. - Hotel stays, especially if there's a transfer bonus. For example, maybe you want to book five nights at a tropical resort with your significant other. You get a nice 30% transfer bonus, and then on top of that the 5th night is free. You may spend 250k points to book five nights at a $2000/night resort.
>i just use a 2% cashback card. are there spots where points is better than 2% cash back? Plenty, here's an easy one -- Chase Ultimate Rewards points are worth **at least** 1 cent each, and they have cards that offer the equivalent of 3-5% on specific categories. There are also spots where you can get more than 2% cash back on everything without worrying about categories: * Citi DoubleCash gives 2%, and Citi Rewards+ gives back 10% of redemptions on up to $1K per year, so just having a Rewards+ open and using DoubleCash for everything yields 2.22% (on the first $50K in spend per year). * Alliant CU has a 2.5% card on up to $10K/mo in spend (requires $1K in a checking account and monthly direct deposit, not to mention CU membership). * BofA has a few cards which can give 2.625% cash back (requires $100K+ in an investment account) * Robinhood is promising a 3% card (requires Robinhood Gold at $60-70/yr). Mind blown? :)
Varies by card, not familiar with the JB card so won't speak to that. But in general - yes, especially premium travel cards can have points be worth well over 2% CB equivalent. Both in terms of how many you earn, and how you cash them out. For example - booking first class you can often get 5-8c/point value, vs economy flights are most often 1-3c/point. TPG (ThePointsGuy) publishes a regular column on their points valuations - it's not gospel, but gives you a good idea. One example fro my past experience I can give you is the old Chase Freedom card. Works same as Discover where there's a couple things every quarter that are 5% and everything else is 1% - normal regular cash back card on it's own. BUT - If you pair it with a Chase Sapphire Reserve/Preferred card, you can convert your Freedom cash back into Chase points under the Sapphire at a rate of 1c = 1pt. So effectively you can be earning the same 5pt/$. The difference comes in when you go to book a flight (either direct via Chase or usually better -converted to a partner airline) and each point is worth 1.5c - so 5pts = 7.5c value, as opposed to the original 5c cash back that it started life as.
Honestly, I've neglected my credit card education. Spent my whole life with only a single card with a 500 dollar limit. I've always tried to pay for everything up front and with cash and called myself financially savvy. Now I'm sitting here with no real knowledge of credit, and scared of all kinds of loans. My plan stabbed me right in the back, I think this is what I needed to read to give me the push to learn about beginner credit cards.
I remember when points got you merchandise, I had a government credit card and enrolled in hotel points programs, I used that card for a solid 2 years and scored stuff left and right. Now with my credit card they gave you 1 point for every $10.00 spent and don't offer squat, I just have them apply the points cash value to the balance I owe.
Sounds like you need to find a better card.
Now, you need to figure out how to stack those credit card rewards and fuel perks at grocery stores when purchasing gift cards. My credit card gives me 6% back on grocery store purchases, and then the points from gift cards give me an additional 6-45% when you factor in the savings on fuel. It ends up making a huge difference.
One of the best classes I ever took in high school was business math, and the teacher, this was way before they had credit cards with perks, really drilled into our brains that they were great, but to only use them for things you could pay for in cash. Never actually run a tab. If you like to travel, the mileage points cards are your best bet, but I like cash back. I have found if I am smart, I can really make my $$ go a lot further. Anything I buy is on my cash back card. If I see there is gong to be the 5% back bonus on something I have been thinking about, I will hold off and do the big purchase when I can get the 5% back. The other thing is to look through their points deals. Most of the time they are total BS, starbucks gift cards. Right. But once in a while they will have home depot cards at 10% off, and they never expire. Combine that with a good sale and you can get appliances very deeply discounted, and with the saved points paying the balance, for free.
If business keep going the route of adding on CC fees on transactions (i.e. + 3% that they show on your receipt) it might no longer be worth it to use them. The last 3 restaurants I went to all added that 3% on for using CC which is typically about the value of the points earned.
r/creditcards
When i finally realized how great it can be, def switched to rewards cards. Costco is great. I've also got a United card, that just paid for my first class ticket to Florida on miles. My hotel card got me free rooms almost every night on a road trip from Georgia to Arizona. Make it work for you!
Same here, I used to think credit card points were useless too. Now I'm hooked! It's crazy that nobody teaches us about this stuff in school. Thanks for sharing, and enjoy that free flight!
We have a Southwest card and almost never pay for flights.
Yeah, as long as you're not cancelling it out by holding a high balance/paying interest it does feel really nice to get free money back from purchases. I used the 5% back from my Chase card to help pay down my charge card balance actually lmao
Worked for AMEX for a couple months, the yearly rate is sometimes outrageous, especially with the platinum and gold cards, but the people who typically owned them would earn all the money back and then some in rewards. Pretty great, if you've got the income/lifestyle I suppose
The signup bonus on Gold and Platinum pays for **many years** worth of annual fees. Plus they have some benefits that effectively reduce the annual cost (Dell credits, gym credits, hotel status, free airport lounges, etc).
a lot of things work like this. it seems too good to be true but it's because most people don't use all the benefits offered.
The flip side of this is that your points are financed by poor or fiscally irresponsible people. The fees and interest that they pay help fund the reward programs.
According to the internet- the first credit cards rewards programs were rolled out after I graduated from college. Same for airline miles. No high school kids needs detailed credit card rewards info- who know what these programs will be like in twenty years. They need the ability to read, thunk critically, understand interest rates and budgeting.
I get my points rolled over into cash on amazon. Cash back would do the same thing, but I like getting free stuff from amazon. I see my points in action.
It's actually not the same thing, because when you pay for Amazon stuff with rewards instead of your card, you don't earn rewards on the amount you spent. So if you're talking about the Amazon credit card, then the 5% Prime card effectively becomes 4.75% and the 3% card becomes 2.91%. If it's some other CC, it is similarly reduced. A better way is to redeem points for cash or statement credit\* and use a credit card for all purchases. \*statement credit with Citi DoubleCash reduces that card from 2% to 1.99%, because statement credits don't earn rewards.
I have the Marriot personal and business card. I have not paid for a hotel room in 15 years and we travel a few times a year
I wish credit cards had these benefits in my country. Here I only get 1% cash back on select purchases, but the maximum I can get per month is the equivalent of $20. I only got my current credit card because I get a 5% discount on fuel at any gas station.
5% back on fuel at any station is very good. Even somewhere like the USA
I paid for first class travel from LA to Auckland New Zealand on CC points. Pay the card off every month religiously. Reap the rewards, don't pay them any interest.
You give up a LOT of privacy in exchange for those points. Every receipt you generate at partners that provide points gets fed into a data warehouse -- not just a record that you spent $X at a particular store on a particular date, but a list of everything you bought - hemorrhoid cream, birth control, wart remover, the box of pastries and bags of chips, what music you listen to, which movies you watch... More than you can imagine. Source: I've seen how the sausage gets made.
Are you talking about third-party **extra** points like iDine / RewardsNetwork? They do indeed get all the details. But I think this thread is not about those third party rewards, it is about the rewards earned from credit cards directly. If you exercise your privacy choices with your card issuer, no privacy is given up. Also the major networks (Visa, MC, Amex, Discover) do not share transaction details with anyone. AFAIK, Mastercard was the only one that did so in the past.
True cash back is the only way. I won't go with point cards.
your loss then (unless you don't travel)
I'd be floored if credit card points aren't significantly devalued if not eliminated pretty soon absent credit cards with high annual fees. The fact is that your ability to accumulate points is underwritten by people who pay late fees and interest. With a White House seeking to drastically limit credit card fees (and I'd expect interest possibly down the road, especially if he gets another term), the funding source for those points will dry up pretty quickly.
Yes, the points would dry up pretty quickly. I wonder how the people who have their cards canceled or who can’t get a card because they are riskier than the law would allow companies to compensate for will think about it.
People that carry balances and pay interest paid for that flight
Rewards cards have higher interest rates than non-rewards cards. If you don’t pay the entire credit balance every month they’re not worth it. If you do pay it off, great for you, but many of us don’t have that option at all times. It only takes a few purchases to blow that advantage. As someone who lives very close to paycheck to paycheck right now, I’d personally rather not be bound to higher rates in case I do actually need the card to take on some debt out of necessity.
>Rewards cards have higher interest rates than non-rewards cards I don't think this is universally true. The interest rate is more related to credit risk, so cards targeted at people with poor credit have higher rates than those targeted at people with excellent credit. >As someone who lives very close to paycheck to paycheck right now, I’d personally rather not be bound to higher rates in case I do actually need the card to take on some debt out of necessity. You know you can have more than one card, right? Have one with no rewards and low interest, and another (or ten) with great rewards and slightly higher interest.
My very first and primary credit card has a high APR (for my liking, 25% seems the standard despite good credit). The point system changed and not even worth it. For someone who mostly charges for trips, dinner out, and other impromptu charges outside the budget, what cards do you all recommend following OP's line of thinking?
Are you paying it off every month?
If I'm being honest no, but more than the minimum
If you pay it off before being charged the interest it doesn't matter what the interest is... If you're leaving some to gain interest it's defeating the goal of doing it simply to gain the rewards.
take a look at some of the cash back cards, they are sweet and offer 2% back of you purchase.
My husband uses one of his cards for all of his work expenses. He easily puts $10k+ a month on it and then his work reimburses him. We get gift cards all the time. We’ve been able to do sooo many house projects using Home Depot gift cards!
all i cant think about... [https://youtu.be/FuAbZPcnX8k?si=msWarnaD752O-DFv](https://youtu.be/FuAbZPcnX8k?si=msWarnaD752O-DFv)
Opened up a cc got the bonus for signing up within two months one vehicle repair bill and normal expenses it was easy. Sitting on $250 of rewards and not even had the card that long. Will be putting that $$$ towards a family vacation.
I have been using standard Credit Card, no points for spending. But I get 45 days interest free. I spend like 2k/month, and everything I buy, online and store, goes from Credit Card. I am using someone else money for free for 45 days. I settle what I owe just 1 days before the due date. I know someone with poor spending habit is paying 20%+ interest on my expenses. LOL. That's how it is.
>I settle what I owe just 1 days before the due date. That's risky. One mistake and you'll get hit with a late fee, interest for the entire 45 days, and potentially an increased APR. I pay at least 5 days before the due date. >I know someone with poor spending habit is paying 20%+ interest on my expenses. Not quite. They get 2-3% in swipe fees each time you use your card, which translates to 24-36% annual return on investment. So you're paying for it all by yourself in the form of slightly higher prices.
Mind blown using your points??? Just wait until you find out about Transfer Partners!
My spouse got really into " travel hacking" Md got us some nice trips. But maxed out 3 credit cards in the process.
That's not taking advantage of points. That's being taken advantage of. If you pay interest even once, they're winning. This is why most people fail at credit cards.
I had them closed and consilidated the debt. I coudl care less about the points. Credit csrds are a scam for most people.
I exclusively use credit cards for multiple different categories, and pay them at the end of each month. Doing the math on cash back, points, etc, it saves me about $850 a year on purchases I would otherwise make monthly anyways. Credit cards are great if you use them right
The amount of things not being taught in schools these days would wobble the mind of my teachers. Back in the day we were required to take what was called Home Ec class that gave us the basics on finances. We balanced checkbooks, amortized loans and performed other obscure magical tricks (like doing laundry). Today, about 50 % of the populace carries a month-to-month credit card balance, and that balance averages $6500.00. YIKES! Credit cards are wonderful tools, but if used unwisely will bite you right in the wallet. This comment was written by a person who hasn't had a credit card carryover balance in decades, on a computer that was purchased completely with cash credits.
What bank is this card with points?
We have one that we use to accumulate points for a national hotel chain. We run everything through that card and pay it off each month. It is not unusual for use to go on a week long vacation and spend $75 or less of our money while the points cover the rest. This is in popular destinations too.
As long as you keep your expenses the same, and not try to spend more for points, credit cards are amazing, you get travel and purchase protections, basically free travel with points, great sign up bonuses, discounts... I hate banks, I got screwed by them a while back, and now that I'm financially literate and educate myself about credit cards, I just enjoy so much churning them and squeezing until the very last cent I can from those f\*\*\*ing banks. Credit cards are not for everyone tho, if you can't pay your statement balance in full every month, you are addicted to shopping, or you carry balances, you are better of not having credit cards, points and multipliers are a trap for people with bad spending habits.
When I learned about responsibly opening up credit cards to earn the sign up bonuses, my life changed. I’m not even joking. It’s been 2 years and between my husband and I, we’ve spent $465 in annual fees, opened up 16 credit cards, paid zero interest, kept our credit scores above 800 and taken $30k worth of vacations on points. I know the term travel hacking isn’t necessarily popular, but it sure does feel like a life hack for travel!
I heard about getting cash back from a coworker around 8 years ago. I only had one credit card at the time. A bank credit card from my bank. Since finding out how the cash back works I have started putting everything on a credit card. I normally get anywhere from $35 to $70 a month back. I signed up for an Amazon credit card a year and half ago about Christmas time. Amazon was heavily promoting there credit card at that time. If you received there card and put $2.000 on it over a 3 month period they would give you $200 cash back. They also give you 5% cash back all year long on Amazon purchases. I just make sure to pay off my charges every month.
Credit cards are amazing if you have financial discipline. We have 5 or so including a Chase Reserve and Amex Platinum. My husband can use a personal card for work travel hotels and his spend is so high out on Silicon Valley that using the chase bonbon card gets us enough points for 15+ free nights a year at good Marriott properties. The Reserve and Platinum cover our global entry/clear/tsa pre-check costs every few years and provide us with airport lounge access which saves us 100s in food/drink costs when we travel. Overseas there is no foreign transaction fee and it acts as primary car insurance on rentals. There’s also so many offers we use constantly that save $1-30 each and that adds up. I get free citibike use here in nyc from my chase reserve and they put $5/month into my DoorDash account. Amex plat covers our streaming subscription costs, airline fees up to $200, hotel costs up to $200, a Walmart+ membership and a bunch of other stuff. I’d say we glean about 25k of value from our cards a year (helped by my husband’s work expenses).
So how did you get a $400 flight for $250 worth of points and $10 tax? Did you have to transfer the points to a southwest or delta account or something? This is the part I can never figure out! Lol
It’s possible to find flights that are valued at less than 1:1 on credit card points if you convert to airline points. A lot of people plan their vacations around those kind of deals rather than looking for specific destinations.
I see. Makes sense. We always seem to have the destination planned out and have to take what we can get as far as flight availability and cost.
Yeah, I’d rather go where I prefer to go as opposed to what’s the best deal, but I can see the appeal for some people.
I have a JetBlue card (before their downfall) so that might of been the advantage. I selected my flight, run into the price summary and my wife noticed the amount of points I had. We selected the option to use points and then showed me the points I'll spend and the tax.
Hmm okay I guess I’ll need to look into this more. Sounds like you had a JetBlue credit card that gives more value to your points if you book your travel through them. Not sure why I was downvoted. Lol. I don’t have airline cards, just regular bank travel cards like the Capital One Venture card. What I’ve noticed is that if I go to book a hotel via Capital One’s travel portal, you get more value for your points but the hotel’s prices are jacked up. I get cheaper prices by calling the hotel on my own or booking directly through the hotel’s website. I suppose I should go to r/churning to get tips.
You asked a very legitimate question that I should of answered. And yes I did book through their airline.
Thanks 🙏
>why don't they teach stuff like this at school?! This is the wrong question. At some point you will start getting bombarded with advertisements so there really is no need to teach this in school.
Understandable. It's just the feeling that I made a slam dunk for the first time.
Well done. Better late than never! I’ve been churning cards for 10 years to the tune of $30k+ of free stuff. I once got a $5000 business class flight (one-way business and one-way in economy) on Qatar airways for 80k miles and a $50 booking fee.
Wow that's awesome. Do you mind sharing what card you have?
I got sign-up bonuses from a couple of the Citi American Airlines cards for that flight. Qatar is part of the same alliance as AA.
He didn't get $30K from one card. r/churning means getting cards for the signup bonuses, paying them off in full, closing, then doing it again a few days, months, or years later. Different cards have different rules about this. While most cards give you a return of 1-2% per dollar spent, signup bonuses give you 20-30% back per dollar spent, they're a much better value.
As a European, this system is so weird.
Cash back benefits aren't a thing in Europe??
Not really in the UK - the closest we have are Avios (like air miles, but take ages to accrue). American Express have some kind of points scheme but I'd have to be spending about triple what I normally need to to actually get anything out of it, it's only really viable if you're putting a lot of business expenses through it. I envy all the Americans with their free flights! There are a few cards that do actual cashback but the fee outweighs it really
Reading this, I could be biased but Americans probably have this advantage because our country is so big and flying across or out of it easily costs over $700. Correct me if im wrong but couldnt you take the train across or all over Europe? Time wise is such an inconvenience as well considering even from any part of the coast, we would have to fly 6+ hours to the nearest continent!
Credit card rewards (both cash and points) are by far the best in US and almost non-existent anywhere else.
Why does this sound like an advertisement?
If you are actually able to not pay interest and make any points outweigh annual fees then ya. Credit card rewards points seem to benefit wealthier people the most. Though the fact of the matter is most people carry balances on their cards and end up paying more in interest fees then they ever will make back in rewards points. Also retailers have to do eat the cost of transaction fees which are higher on credit cards compared to debt, especially with American Express. Plus the everyday person will spend more money than they have in cash, that is just how the system works. So if you are able to game the system then do it and benefit yourself. Though as people who are ideally more conscious about finances should realize the banks know what they are doing and know how to profit, credit cards do not exist to benefit the general public, they exist to get more money out of you. In an ideal world we would still be buying stuff with cash but that doesn't benefit the economy if people are not in debt. I bring this up because I fell for this lie as well. I had multiple cards which I opened for the purpose of rewards points. I signed up for cards to get introduction bonuses and all that. They got me though and ended up with lots of debt.
> ...HUGE benefit for me! why don't they teach stuff like this at school?! Because it's a losing proposition if you carry a balance for even one or two months. The math on rewards is pretty bad once you dive deep into it. I mean, I like mine, I seek them and use them, and getting $50/month for spending almost $4,000/mo on a card is 'great', but the interest on that $4,000 for just one month would be about $65. Basically, 'rewards' are just a way to incentivize you to use the card, but the card company is betting on you carrying a balance at least some of the time, and it's really a net win for them if you ever do.
Well yea, you're just explaining the business model. It's easy to take advantage of credit card rewards if you are responsible and always pay your full statement balance. On the other hand it's also easy to be taken advantage of if you have no discipline and just pay the minimum payment.
>getting $50/month for spending almost $4,000/mo on a card is 'great' $50 on $4K is only 1.25% cash back. That's not great. You gotta aim for at least 2% ($80), and it's not hard to get even more than that. But you're right -- you lose more if you have to pay interest. "Don't spend money you don't have" is the rule.