I have been through various phases in my life of switching between being focused on cash back rewards and focused miles and points rewards. I think on miles and points it can be very easy to get caught up in the romance and glamour of the aspirational awards with first class trips to exotic destinations. But the fact is cash is king and there are times when having extra real hard dollars is what counts. I also find that now I have accrued so many miles and points that I travel much more, and when you travel you inevitably end up spending more money be it on getting clothes to go, food while on the road, activities etc. So I still like to keep my cash back options.
There are two credit cards I keep on hand for cash-back purposes. The first is the American Express Blue Preferred card. The first credit card I got once I arrived in the USA in the mid 2000’s was the basic Amex Blue card, but that soon got replaced by various miles and points cards and I had not used it for a long time until Amex upped the game with the Preferred. The big one for me is the 6% on grocery store purchases. We spent a lot on groceries, and it is not like we live like royalty. In 2011 we spent $1,100 per month on groceries. I don’t think this is unusual across America. So if this were all put on the Amex it would be nearly $800 in cash by the end of the year. There is a $75 annual fee that negates some of that but that still puts us up over $700.
The other card – and I have to confess I only very recently got this card and learned anything about it – is the Discover card. This is a little bit like the Chase Freedom in that it has rotating 5x earning categories. Personally I find these a little gimmicky, and I always tend to be focused on some kind of sign up spend. But where the card really shines is online shopping via ShopDiscover.com. I guess this is just another online retail bonus mall, but some of the payouts – especially given they are in cold hard cash – are awesome. Groupon pays 15% back! Right now the likes of Nordstrom, Macys and Home Depot are at 10%. I don’t use them often but when i do the payback is great. For example as I mentioned earlier, I am currently restocking my wardrobe thanks to a rather successful diet and exercise program and was looking for some chinos for work. Lands End had a nice 25% offer and have decent product, and so I looked at some of my Discover cash back earnings. What is interesting is it’s not just straight cash, you can also get gift certificates, and these multiply the bonus. For Lands End it only takes $40 of cash-back to get a $50 certificate. So that adds a 1.2x multiplier to those already high earnings – very nice! So I cashed in this weekend at Lands End, and did the same to get some Gap gift certificates. All round I managed to do a good job of re-kitting my wardrobe at very low cost.
And sometimes you just end up so mile/point rich that it makes sense to convert some points into cash-equivalents. I’ve managed to build up a great stash of Southwest points, but only have limited amounts of use for them. So I just cashed in 60k for $600 in Hyatt Check Certificates. Sure I could have generated $1,000 “worth” of flights with that but I just don’t have the need, whereas these certs will pay for our diving when we go to the Park Hyatt Maldives in October. And frankly spending several hours in the other-worldly reefs of the Southern Maldives sounds far more enjoyable than spending it listening to the same FA jokes on Southwest 737s right!?
The last reason I love to have some cash-back cards in my credit card diet is the sheer flexibility. While turning miles into cash can be quite a challenge, it is generally always possible to turn cash into miles. Maybe not at great rates, but sometimes some great offers come up. Historically it has been possible to buy Delta and US Airways miles at a penny each. So that $725 odd cash back net of annual fee can sometimes be turned into 70-75k miles. Having cash on hand for such opportunities is always a positive thing, and of course I can also use it for great clothes sales if that opportunity comes up too!