some advice

[s.jenkins]

hi! i'm looking in to which credit card offers the best rewards. thanks!

[jIM_Ohio]

My GMAC card pays 1% of all purchases to pay down my mortgage.

[sweeps]

Jim, that doesn't seem like a smart move to me.
(a) There are other cards that pay on average more than 1%, and
(b) I assume the rebate that is being credited to your mortgage is not deductible on your taxes as taking the cash and paying it yourself to the mortgage would be.

[jIM_Ohio]

I can get 2% rebate on my citi drivers edge card. I like the 1% back on mortgage, as that balance is much bigger, and the drivers edge card has a yearly cap on the benefit anyway.

Why would paying extra cash on mortgage be deductable? If anything a cash rebate from discover might generate taxes (on the rebate) where as the 1% going to my mortgage should be tax free.

[sweeps]

Credit card rebates are not taxable.

But I just realized my reason (b) doesn't make any difference because the amount being paid is toward principal, not interest. So there is no tax deduction for that, never mind.

I would still argue you could earn more than 1% on average, and I like the idea of getting cash so I can put the rebate toward whatever I like.

[sweeps]

OP, here is a long list of cards. Choose the card or set of cards that work for your particular situation.

[jIM_Ohio]

Credit card rebates are not taxable.

But I just realized my reason (b) doesn't make any difference because the amount being paid is toward principal, not interest. So there is no tax deduction for that, never mind.

I would still argue you could earn more than 1% on average, and I like the idea of getting cash so I can put the rebate toward whatever I like.

Fair-

We rarely use the card. I use it for gas, I use it for travel.

So we might save $50/year on mortgage. Which is 5.25%.

I don't budget the rebate (meaning I could not tell you how many payments $50 saves me now on a $1500 mortgage payment).

[disneysteve]

hi! i'm looking in to which credit card offers the best rewards. thanks!

There is no such thing as the "best" reward. It all depends on you, your charging habits, your lifestyle and what types of rewards are of most value to you. Also, many reward cards do various promotions throughout the year that make them temporarily the best game in town. For example, I normally use our Marriott Visa at restaurants because we get double reward points there. Currently, however, Discover is giving 5% cashback for restaurants, so we are using that instead. And our AOL Visa is currently doing 5x reward points for groceries and travel expenses so we're using that one for those bills. Next month, the deals will change, and so will our card usage.

[s.jenkins]

thanks, everyone!

disneysteve, really really helpful insight. thanks!

[MonkeyMama]

Agreed - it depends.

We prefer the cash back and like the Chase Freedom. You earn 3% on the first $600 you spend every month on groceries, gas dining. Then 1% on everything else.

Plus if you wait to $200 in rewards, you get $250 instead.

Likewise, we are earning 2% on every purchase, or averaging about $500 cash every year.

We personally prefer cash to other rewards, like how we don't have to think about it, and we easily spend the $600 monthly on groceries/gas which makes it very worthwhile. Plus it's Visa (not a fan of Discover or Am Ex, personally).

This may or may not fit your criteria though. There are lots of choices out there.

[Slug]

I have a Upromise card that puts a minimum of 1% on purchases towards my son's 529 plan. Maxes at $300 per year. My wife uses this more than I do.

I primarily use my Pentagon Federal Credit Union Visa. It pays 5% on gas, 2% on groceries, and 1.25% on all other purchases. I write about it on my blog if you want more info.

For gas I use the Perfectcard Mastercard which pays 3%.

I'm considering re-starting my use of Discover. There rotating rewards are both cool and also a pain to keep track of.