With this post, I just want to put forward some plain facts about how our credit cards are doing some work for us. It goes without saying that gross generalizations in favor (or against) credit cards based on this information will not hold water.
I just checked my credit card rewards statement on Yodlee, and this is what I saw:
We have 4 Citibank cards between us (2 each) and all of them have been earning ThankYou reward points for us since we started using them. One of those Citi cards have been collecting ThankYou points since about three years ago and the other three earned us 10,000 bonus points each when we applied for them (for example, Citibank cards like this). Also, there have been on and off bonus points offers that have helped the points increase rapidly. At present, between both of us, we have about 60,000 points (it’s not 60,000 yet, but it will cross that mark after this month’s statements). That is worth $600 (depending on how we choose to use the reward points). Roughly, the conversion for Citi’s ThankYou points is like this:
- 3,000 points = $25
- 6,000 points = $50
- 10,000 points = $100 (best value)
We have been earning rewards on our other cards too, namely, Amex (cash back), Chase, and Discover cards; but their value is hardly of any significance as compared to our Citi rewards, so I am not including them. Also, two of those Citi cards and some other cards are carrying 0% APR balances which were transferred to HSBC Direct and are earning 5.05% APY. I will not specify exactly how much these balance transfers were and how much they are making in interest, but let me just put it this way: including the worth of the points, and the interest earned on the credit card arbitrage, we will very easily earn more than $1500 this year just by using credit cards. The only active effort, on my part, is making the payments on time. We don’t go out of the way to earn reward points. We have a very simply scheme: for rent there is check, for laundry there is cash, and for everything else there is MasterCard (earlier, I needed cash for my barber…but by latest barber accepts credit cards). 
That’s some passive income isn’t it?
Btw, this is peanuts when compared to some other personal finance bloggers I have seen. You can safely say that I am still a novice in this area.
We haven’t yet decided on how to efficiently use the reward points, but most probably, we would go for the Target gift card offer. That will give us a lot of flexibility with regards to how we wish to spend the gift cards; although I am not sure we will spend all 60,000 points on Target.
Has anyone tried “Your Wish Fulfilled” rewards option from ThankYou network? I will be glad to know how that works. I am guessing that, that option might allow us to order any gift card we want.
Fortunately, we don’t have any student loans to bother us, otherwise, the best option would have been this:
On a side note (just because I am anticipating some comments on this matter), more on philosophical lines, I would like to say that being debt free (or being in debt) has nothing to do with the use of credit cards or cash. It has everything to do with your temperament, attitude, and discipline. People have historically used both the systems to their advantage, so it all depends on how you look at it. Statements like “using credit cards will put you in debt†are as baseless as “cash will make you spend moreâ€. Instead of blaming credit cards or cash for our reckless spending and debt, it will be much more fruitful to focus on some fundamental introspection into our spending habits and start changing things from there. Earlier, I have expressed my aversion towards cash and my $10 per month cash experiment; however, in that case too, the problem isn’t with the cash…it’s with me not handling my cash properly.
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Golbguru,
Great point buildup. I always enjoy getting money back from credit cards, especially when it is from my corporate credit card, which is allowed by my company.
By the way, your future child would want you to work harder on the Upromise cash back:-)
I love credit cards as well. Did you sign up for the latest $250 sign-up bonus from Chase Freedom visa!
Wow, thats a lot of points! Neat! One word of warning though - dont pile them for too long… you never know when CC companies will change their policies. I have a sony card which I have been religiously using (more than 5 years) and saving points for a nice TV. I have $400+ worth of points (100 points = $1). Until late 2006, you could buy a sony product at any store with the sony card, and send the receipt to cc company and they would apply it to your cc balance. Several times I found some great deals, but decided to hold off so I could get more points. Then all of a sudden they changed the rules. Now we can use the points ONLY to buy stuff from sony style store. Their prices are exorbitant
My points are suddenly worth half of what I could have got for it by deal hunting 
I love the rewards module on Yodlee. I travel a lot for business and sign up in every single rewards program for hotels, airlines, etc. It’s really slick to be able to see it all in one place. Plus, using Yodlee Mobile, I can even check my reward account numbers from my phone so that I don’t have to carry all the cards or write them down somewhere.
you aren’t really earning anything with the credit cards through the rewards points. You are getting a discount for using the credit card. it’s a bad habit to think of these rebates as such, b/c it makes you do what the credit card companies want you to do: spend more thinking you are getting free money for charging.
now the 0% arbitrage, kudos on that.
Have you figured out if this has affected your credit score at all? If so, has it affected the rates you pay for insurance or other expenses that are swayed by your credit score?
That is pretty sweet! I need to get me some rewards cards. I love how you guys are making money off the credit card companies. They are making plenty on us. Even if we always pay the balance down every month and never pay interest. They charge merchants for taling cards.
Super Saver: Yeah I am trying to see how I can start increasing the Upromise rewards…so far I haven’t figured that out.
Yan: I read about the $250 bonus for the Chase card. I will give it a thought. Thanks for mentioning it.
ISPF: will keep that in mind. In fact something like that happened (although we didn’t loose anything). Citi ThankYou changed the worth of the points some time back. Earlier, 5000 points could get you $50…but now $50 takes 6000 points. Hopefully, they don’t mess with the $100 for 10,000 points before I use them.
Jordan: I almost thought you are from Yodlee.
(probably people think of me in the same way)…but your IP address proved me wrong. I have never used Yodlee mobile, should try it once and see how it goes.
Tim: “spend more thinking you are getting free money for charging.” That would have been true if we went beyond our means and *needs*, however we have a very good budgeting in place…so hopefully we are not falling in that trap.
Financial Hack: I didn’t quite get your question. Do you mean to ask that getting so many points is affecting my credit score? If you are asking that then the answer is ‘no’.
Rebel: Yeah it’s pretty satisfying to get some money from credit cards
instead of the other way round.
Like Tim, I like think to think of credit card rewards as rebates and not earnings. I like to think that I’m saving a percentage of what I’m spending, not that I’m getting more money to spend. It’s all just mental gymnastics, it is the same either way.
Using credit cards this much CAN negatively affect your credit score, even when you pay your balance in full every time! I just ran my credit reports and it has happened to me.
The credit card companies report your statement balance each month, ie, your total debt before you make any payments. You want to keep this amount low, or your FICO score will be penalized (on the other hand, you want to always have _some_ recent credit history).
So, sure, $600 sounds like a lot of money for nothing, but if it lowers your credit score even a little bit, imagine how much that could cost you should you have to take out a loan or refinance.
Hi Everyone,
Obviously this info will vary in how it helps depending on everyone’s geographical location, current gas prices, the car you drive, and personal preference. However, now that I finally have my own car, this is how I plan to save big money on gasoline:
My card of choice - Citi Driver’s Edge Mastercard
My gas station of choice - Speedway/Super America
Take a standard fillup of 10 gallons at $2.50 per gallon = $25.00
Speedway initial gift card discount of 2% = $0.50 ($1 off $50). This discount is storewide. Load a gift card with $50 and pay $49.
6% cash back with Citi card on $24.50 = $1.47
Citi Driver’s Edge Rebates, 300 miles at $.01 per mile = $3.00
(My car is a Honda Civic, so it gets an average of 30 miles/gallon)
Entertainment Book $1 coupon off 8 gallon or more fillup = $1.00
Speedy Rewards Points earned with $25 purchase = 500 points
(Usually 10 points per dollar, but with gift card discount you receive an additional 500 points, so it’s like receiving double points)
NOTABLE SPEEDY REWARDS REDEMPTION LEVELS:
1,750 points = 10 cent per gallon discount on next fillup (max 25 gallons)
4,375 points = 25 cent per gallon discount on next fillup (max 25 gallons)
8,750 points = 50 cent per gallon discount on next fillup (max 25 gallons)
17,500 points = $25 Speedy Cash Gift Card (BEST REDEMPTION)
So as you can see, the savings potential is enormous. When all is said and done, and even before the Speedy Rewards points, you can save a total of $5.97 off $25, or a total of 60 cents per gallon at $2.50 per gallon.
Wow…that’s some savings
Thanks for sharing.
When you play with snakes, you will eventually get bitten. Its great that you are “gaming the system” and make a little extra cash, but be careful not to slip up. There is obviously a reason why credit card companies have these types of programs because they know that 99.9% of people will eventually slip up. There has also been many studies done that show that people who use credit cards subconciously spend 12-18% more. You are on a budget and you seem to stick to it, but that many not always be the case. Its a lot easier to justify spending a little bit more from time to time with a credit card than using cash. Personally, I don’t think its worth the time, trouble and risk to play such games, but good for you for making a little extra coin…just be very careful. The wealthy people in this country did not get that way by earning rewards on credit cards.
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