Some people asked me about my credit card setup to maximize cash back, so I wanted to discuss this topic. I believe maximizing credit card rewards is important as it can be a great way to earn additional money with minimal effort.
Before we dive in, a quick disclaimer – I’m not being paid by these banks. There are no affiliate links. These are just products I use. Let’s dive right in.
Chase Freedom Flex
A few months ago, I received a credit card offer for a Chase Freedom Flex:
The offer includes 10% cash back on groceries for 1 year. My wife and I live downtown, so we primarily use major grocery chains (like Trader Joe’s/Jewel Osco) to buy groceries.
This offer was perfect as 10% cash back is hard to beat. We use this card for all of our grocery purchases:
Unfortunately, I believe this offer is only a targeted promotion, and you can’t find it anywhere else (people started sharing links to it, so Chase closed it down). If you shop at a major wholesale club (like Costco), I also have a solution for you later in the email.
Citi Custom Cash
The second major card we use is Custom Cash. We have two of these card – one in my wife’s name and one in mine. You could also apply for the Double Cash card and convert it to Custom Cash to receive 2 cards.
This card offers 5% c9ash back on up to $500 spent per month. Eligible categories include restaurants, gas, grocery, select travel & transit, home improvement stores, and fitness clubs, with no annual fee. We typically spend around $300-400/month on eating out, so this card is perfect. We keep the second one just in case. Previously, we were using these two cards for groceries ($700-900/month spend).
Bank of America Customized Cash Rewards
We use this card for the 3% online shopping category for all our online purchases. I’m considering the Platinum Honors tier, which increases cash back rewards by 75% ($100,000+ qualifying investment balance in Merrill Lynch, in like VTI ETF). In that case, the 3% online category would become a 5.25% rate (up to $2,500/quarter). We would then open multiple affinity cards for a higher quarterly spending limit. This is also perfect for wholesale clubs like Costco. You can use, say, Costco.com to buy a digital gift card (coded as an online purchase, receiving 5.25% cash back) to use for in-club purchases.
One reason I’m still waiting to deposit $100k with Merrill Lynch is the new card being released by U.S. Bank, the Smartly Visa Signature Card.
It offers unlimited 2% cash back and:
So, with a $100k qualifying balance, you can earn unlimited 4% cash back. In my opinion, that’s even better than the 5.25% online category, and you can use this card for almost everything.
According to the terms and conditions: “Have “Combined Balances” with U.S. Bank in open consumer checking account(s), money market savings account(s), savings account(s), CDs and/or IRAs, U.S. Bancorp Investments and personal trust account(s) (business accounts, commercial accounts, and the Trustee-only (IFI) client relationship do not qualify)”
The U.S. Bancorp brokerage account does have a $50 annual fee, but this is waived with a $250k balance.
This card is probably not worth it without the necessary $100k balance; you could opt for Robinhood’s 3% cash back with a $60 annual cost instead.
Citi Double Cash
Lastly, another card I use for most bills is Citi Double Cash for unlimited 2% cash back. It gets the job done, though I might replace it with the U.S. Bank 4% card in the future. With 10% on groceries and 5% on restaurants, which make up most of my non-mortgage spending, I’m averaging around 6% cash back overall. Not bad!
Cards worth mentioning:
→ U.S. Bank Altitude Reserve Card
This card is worth mentioning but might not be as beneficial as the upcoming 4% card. It has a $400 annual fee, but offers a $325/year travel and dining credit, effectively bringing it to $75/year. The key benefit is 4.5% back on mobile wallet spending (Apple/Google wallets) when redeemed for travel. Other benefits include no foreign transaction fees, rental car coverage, priority passes, and Global Entry credit.
→ Amazon Visa
If you frequently shop on Amazon and have Prime, this card gives you 5% cash back on purchases, along with travel protections.
Overall, a few extra percentage points can go a long way. However, if you can’t control your spending, don’t get credit cards. Consider using the Discover 1% cash-back debit card instead.
I hope you found some value in this week’s newsletter. If you have any feedback, just reply to the email.
See you next Saturday.
MC, CPA