Should I get Capital One Venture Rewards Card?

[kaleida]

I am contemplating applying for a SECOND rewards card with an annual fee even through I already have one. The math adds up ... I would save money ... but the thought of having two cards with a fee still skeeves me out a little! What do you think ... can you review my logic and tell me if it's a bad idea?

I currently use my Amex card for everything - gives 6% cash back on groceries, 3% cash back on gas, and 1% cash back on everything else. It has a $75 annual fee.

I looked at my average spending for the past 3 months ... if I keep up the same spending habits, then over one year I will spend:

• $5,336 on groceries
• $1,656 on gas
• $24,564 on everything else

If I use Amex for everything:

• $5,336 x 6% = $320 cash back on groceries
• $1,656 x 3% = $50 cash back on gas
• $24,564 x 1% = $246 cash back on everything else
• $616 total cash back
• Minus $75 annual fee
• $541 "net" reward

I'm contemplating keeping that card for gas and groceries and getting a "Capital One® VentureSM Rewards Credit Card" card for everything else. (Can't link to it - not enough posts. But it says there's a $59 fee waived in the first year, I get 2 miles per dollar spent, and if I understand correctly it looks like 1 mile = 1 cent to be used towards an airplane ticket.)

If I use Amex for groceries and gas, and Capital One for everything else:

• $5,336 x 6% = $320 cash back on groceries
• $1,656 x 3% = $50 cash back on gas
• $24,564 x 2% = $491 to be used for a plane ticket (I usually buy one plane ticket per year and it costs about that much!)
• $861 total cash back and rewards
• Minus $75 annual fee AND $59 annual fee
• $727 "net" reward

What do you think?

My house purchase is at least a year away ... is that enough time that it wouldn't affect my credit score negatively, as a "recently opened account"?

[kork13]

I got the Capital One Venture card this last November. I mostly like it, though I'm iffy on whether I'll keep it once the free year expires. The 2% back on everything is great, obviously, and as a plus for me living in Japan, CapOne doesn't charge foreign currency transaction fees. Also, the rewards aren't only good on airline flights... It's ANYTHING travel related. I've not figured out exactly how far that extends, but I know it includes hotels, rental cars, airlines, cruise ships, and so on... Honestly, it's a good card, and Capital One's website and customer service are great. So I won't recommend against it.

Another option from Capital one, if you're not hot on the annual fee (which I'm considering switching to after the free year ends) is the Capital One Cash Rewards card, which effectively gets 1.5% on everything, but no annual fee.

In the end, it depends on how you spend. If you spend alot on the card (more than about $1200/mo), the Venture card is probably worth the annual fee. If not, I'd recommend the Cash Rewards card.

[thesmartnickel]

Your logic is definitely spot on. On the margin, you are comparing earning an additional $240 something dollars in rewards on your "other" purchases with the $59 annual fee which is waived the first year.

If you take the 1.5% reward card like kork13 mentioned, you would gain $24,564 * 1.5% - $246 (original rewards from Amex) = $122.46.
With the Venture Rewards, you would gain $24,564 * 2% - $246 - $59 = $245.28.

So assuming you spend the same amount of money that you project, the Venture card would be a smart decision. You also have the right considerations in mind as you have to take into account the fact that these rewards would be used for plane tickets, so as long as you know you have the use for spending it on a plane ticket, it looks like a great idea to me.

In terms of your credit score, opening a new account should not impact very much since the primary factors that go into your credit score are your history and payments. Opening one new account would minimally change your score if any, especially if you are looking at it a year from now.

As a side note, it may be worth your while to look at a few other credit cards like Discover or Chase Freedom which have 5% cash back on rotating categories. If you are looking to maximize your rewards, these cards without an annual fee would just be pure upside. Of course, there is a cost to keeping track of the extra cards so you have to take that into account, but it is a good consideration.