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Best Cashback Credit Cards
These are the four credit cards I recommend:
MAIN CREDIT CARD
Fidelity American Express - 2% back on everything
Benefits
1) This card gives you 2% back on every purchase. It is hard to find a better deal. (If you have a Charles Schwab 2% Visa unfortunately as of 11/1/2011 you will no longer be getting your 2%)
2) It is an American Express. American Express is known for its customer service and its willingness to take purchases even when the store won't.
Downsides
1) The card requires a Fidelity Investment Account. You need a $2,500 minimum deposit to start the account. However, once you have an account, you can transfer the money out of the account.
2) It is an American Express which is not accepted everywhere. Despite that, I have found that most places do accept them. My card has only not been accepted once since I started using it.
3) The money is deposited into your Fidelity account and you have to then transfer it back to an account where you can use it. If you invest with Fidelity this is not a problem. (Fidelity has some ETFs that are commission free so small investments can be effective with them)
Fidelity Visa - 1.5% back on Everything
This card is for those who want the high cash back but don't want the hassle of having to carry two cards for when the American Express is not accepted.
Supplementary Cards
American Express Blue Cash
Advantages:
1) 3% cash back on Groceries and 2% cash back on Gas and Department stores
2) No limits on how much you can get back
3) No annual fee
Disadvantages:
1) Superstores and Warehouse clubs do not count so Walmart Superstores, Costco and BJ's will likely not count for this deal.
2) It is an American Express so it is not as accepted but chain stores almost always accept American Express.
3) Another credit card to carry. It is up to you to make a cost benefit analysis of whether it is worth the money to carry around a few cards.
Keep in mind that if you have the Fidelity American Express you are already getting 2% back on everything so only need to use this card for groceries, not gas.
American Express Blue Cash Preferred
This is a big improvement from the old American Express Blue. You used to have to spend $6,500 before you got any big rewards, not anymore!
Advantages:
1) 6% cash back on Groceries and 3% cash back on Gas and department stores.
2) No limits on how much money you can get back
Disadvantages:
1) There is a $75 annual fee. However, if you spend $500 in the first 60 days you get $100 so the first year the annual fee can be a non issue. Also, once you spend $2,500 a year ($50 a week) on groceries you have made back your annual fee as compared to the American Express Blue Cash.
2) Superstores and Warehouse clubs do not count so Walmart Superstores, Costco and BJ's will likely not count for this deal.
3) It is an American Express so it is not as accepted but chain stores almost always accept American Express.
Discover Card - 5% back on rotating categories. 1% back on everything else.
Advantages
1) You can get up to 5% back and sometimes more. If you purchase something in the correct category you will get a minimum of 5% back. Categories can be checked from the discover.com website and sometimes include gas, groceries and home improvements (like Lowe's)
2) Your 5% can turn into 6.25%! You can use your rewards on gift cards through discover's reward center to get even more back. Many of the retailers will allow you to buy a $25 gift card for $20. This means that your rewards are actually worth 25% more. 25% of 5 is 1.25 so you are actually getting 6.25% instead of 5%! I usually use it to get $25 gift cards to Bed Bath and Beyond which I will eventually go to.
3) You always get at least 1% back on purchases that aren't in the categories that are 5%.
Disadvantages
1) You have to know what the categories are for that month and sign up for them. If you don't sign up you won't get the 5%.
2) There is a limit to how much money will qualify for the 5% rebate. Often, you can only get back 5% on up to $300 or $200 of purchases in that category.
Chase Freedom - Same as Discover
Advantages
Same as Discover but an added $200 bonus for signing up and a high maximum of 5% purchases (often you can get 5% on up to $1,500 of purchases).
My recommendations for usage:
If you are willing to put in a little work and carry a few cards, it is worth it to have them all. Use the American Express Preferred at Grocery Stores. Then use the discover on any 5% categories until the 5% bonus is maxed out so that you can get 6.25% back. Once, the discover won't get you 5% back use the Chase Freedom to get 5% back. If you have used up all my 5% options, or it isn't in one of the correct categories, use the 2% card.
I know having 4 credit cards is a lot of cards so you have to make a decision on how many you are willing to carry in order to maximize your rewards.
What are other people's favorite cards? Comments are welcome and everyone benefits.
These are the four credit cards I recommend:
MAIN CREDIT CARD
Fidelity American Express - 2% back on everything
Benefits
1) This card gives you 2% back on every purchase. It is hard to find a better deal. (If you have a Charles Schwab 2% Visa unfortunately as of 11/1/2011 you will no longer be getting your 2%)
2) It is an American Express. American Express is known for its customer service and its willingness to take purchases even when the store won't.
Downsides
1) The card requires a Fidelity Investment Account. You need a $2,500 minimum deposit to start the account. However, once you have an account, you can transfer the money out of the account.
2) It is an American Express which is not accepted everywhere. Despite that, I have found that most places do accept them. My card has only not been accepted once since I started using it.
3) The money is deposited into your Fidelity account and you have to then transfer it back to an account where you can use it. If you invest with Fidelity this is not a problem. (Fidelity has some ETFs that are commission free so small investments can be effective with them)
Fidelity Visa - 1.5% back on Everything
This card is for those who want the high cash back but don't want the hassle of having to carry two cards for when the American Express is not accepted.
Supplementary Cards
American Express Blue Cash
Advantages:
1) 3% cash back on Groceries and 2% cash back on Gas and Department stores
2) No limits on how much you can get back
3) No annual fee
Disadvantages:
1) Superstores and Warehouse clubs do not count so Walmart Superstores, Costco and BJ's will likely not count for this deal.
2) It is an American Express so it is not as accepted but chain stores almost always accept American Express.
3) Another credit card to carry. It is up to you to make a cost benefit analysis of whether it is worth the money to carry around a few cards.
Keep in mind that if you have the Fidelity American Express you are already getting 2% back on everything so only need to use this card for groceries, not gas.
American Express Blue Cash Preferred
This is a big improvement from the old American Express Blue. You used to have to spend $6,500 before you got any big rewards, not anymore!
Advantages:
1) 6% cash back on Groceries and 3% cash back on Gas and department stores.
2) No limits on how much money you can get back
Disadvantages:
1) There is a $75 annual fee. However, if you spend $500 in the first 60 days you get $100 so the first year the annual fee can be a non issue. Also, once you spend $2,500 a year ($50 a week) on groceries you have made back your annual fee as compared to the American Express Blue Cash.
2) Superstores and Warehouse clubs do not count so Walmart Superstores, Costco and BJ's will likely not count for this deal.
3) It is an American Express so it is not as accepted but chain stores almost always accept American Express.
Discover Card - 5% back on rotating categories. 1% back on everything else.
Advantages
1) You can get up to 5% back and sometimes more. If you purchase something in the correct category you will get a minimum of 5% back. Categories can be checked from the discover.com website and sometimes include gas, groceries and home improvements (like Lowe's)
2) Your 5% can turn into 6.25%! You can use your rewards on gift cards through discover's reward center to get even more back. Many of the retailers will allow you to buy a $25 gift card for $20. This means that your rewards are actually worth 25% more. 25% of 5 is 1.25 so you are actually getting 6.25% instead of 5%! I usually use it to get $25 gift cards to Bed Bath and Beyond which I will eventually go to.
3) You always get at least 1% back on purchases that aren't in the categories that are 5%.
Disadvantages
1) You have to know what the categories are for that month and sign up for them. If you don't sign up you won't get the 5%.
2) There is a limit to how much money will qualify for the 5% rebate. Often, you can only get back 5% on up to $300 or $200 of purchases in that category.
Chase Freedom - Same as Discover
Advantages
Same as Discover but an added $200 bonus for signing up and a high maximum of 5% purchases (often you can get 5% on up to $1,500 of purchases).
My recommendations for usage:
If you are willing to put in a little work and carry a few cards, it is worth it to have them all. Use the American Express Preferred at Grocery Stores. Then use the discover on any 5% categories until the 5% bonus is maxed out so that you can get 6.25% back. Once, the discover won't get you 5% back use the Chase Freedom to get 5% back. If you have used up all my 5% options, or it isn't in one of the correct categories, use the 2% card.
I know having 4 credit cards is a lot of cards so you have to make a decision on how many you are willing to carry in order to maximize your rewards.
What are other people's favorite cards? Comments are welcome and everyone benefits.
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