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Maximizing My Credit Card Returns

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  • Maximizing My Credit Card Returns

    I know when I'm socking away $60K per year for retirement a couple of thousand dollars isn't a big deal but for some reason, I'm hellbent on extracting as much out of my credit card use as I can. Here's my plan:

    1. Charles Schwab Platinum card opens up cashing out Amex points at 1.1 cents per point (compared to 0.6 cents per point). The important part is while you have to initially cash out into a CS brokerage account, you do not have to invest it at CS and you can transfer the cash out to another account. I will only use this card for the 5x travel points and some of the perks. I'll average $10-15K per year on this card or 50-75K points worth $550-$825 per year. This basically covers the high yearly fee but you can only get the 1.1 cents pp with this card.

    2. Amex Gold Card for groceries and dining out at 4x points. I currently average about $20K per year on this card in these categories or 80,000 points or $880 per year.

    3. Amex Blue Business Plus Card for the parent LLC gives 2x points on the first $50k per year of spending or 100,000 points or $1100 per year.

    4. Amex Blue Business Card for my member LLC gives 2x points on the first $50K per year of spending or 100,000 points or $1100 per year.

    The key is all four of these cards dump their Amex points into the same pool of Amex points.

    5. Fidelity VISA 2% cashback on everything - this is my daily card and I spend about $80K per year on this card worth $1600 per year.

    Factoring in the yearly fees for the Amex platinum and gold the net CC rewards are still ~$4500 per year which will help fund my HSA. I'm 43 and with a 6% average annual return, this could be worth $205,000 by the time I'm 65.

    It's important to say this is just for fun...over the past few months, this info has filtered into my consciousness in drips and drabs, and then suddenly this plan came together in my head...yesterday.

  • #2
    I personally use the Bank of America Preferred Rewards setup. I have a Premium Rewards card and then multiple variants of their Customized Cash Back cards. With their 75% bonus superimposed on top of their 3% cash back, I total 5.25% straight cash back on restaurants, travel, online shopping, and gas. Each Customized Cash Back card is limited to $2500 per quarter so I have 4 of them to accommodate my (relatively light) spending. Anything that doesn’t fit into a 5.25% category goes on the Premium Rewards card which is 2.62% back on anything. You get the 75% bonus from having $100,000+ in a Merrill Lynch brokerage account (mine is just $100k in VTI to keep it simple). I also have a Chase Freedom and Discover card for 5% quarterly cash back from before I had the ML 75% bonus. I got the Chase Sapphire Preferred when they ran their 100k point special last summer with the waived annual fee but I don’t think I’ll keep it once the next annual fee rolls around. I’ll just transfer point balance to Hyatt and slowly spend down since I can get 1.5-2.5 cpp fairly easily at Hyatt.

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    • #3
      The only annual fee in my permanent setup is the BoA Premium Rewards but they give a $100 travel credit which offsets the $95 annual fee so I don’t have annual fees that I’m subject to, unlike the popular AmEx or CSR approaches because with my limited credit card spend, a high annual fee setup would almost entirely negate the rewards.

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      • #4
        That’s about $215k per year in spending to “save” $4500. Hope your exercise these last few month was “fun” as you say.

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        • #5
          Originally posted by IMinMS View Post
          I personally use the Bank of America Preferred Rewards setup. I have a Premium Rewards card and then multiple variants of their Customized Cash Back cards. With their 75% bonus superimposed on top of their 3% cash back, I total 5.25% straight cash back on restaurants, travel, online shopping, and gas. Each Customized Cash Back card is limited to $2500 per quarter so I have 4 of them to accommodate my (relatively light) spending. Anything that doesn’t fit into a 5.25% category goes on the Premium Rewards card which is 2.62% back on anything. You get the 75% bonus from having $100,000+ in a Merrill Lynch brokerage account (mine is just $100k in VTI to keep it simple). I also have a Chase Freedom and Discover card for 5% quarterly cash back from before I had the ML 75% bonus. I got the Chase Sapphire Preferred when they ran their 100k point special last summer with the waived annual fee but I don’t think I’ll keep it once the next annual fee rolls around. I’ll just transfer point balance to Hyatt and slowly spend down since I can get 1.5-2.5 cpp fairly easily at Hyatt.
          That is a great return! Is the cashback true cashback that you can use for anything or are they statement credits? Part of the appeal for me in my plan is being able to take the cashback, move it to other accounts at other firms, and invest it in my existing Fidelity accounts. The other benefit is that I can pool Amex points from both personal and business cards and integrate their use with my existing Fidelity VISA and ultimately use all of them for the same purpose of funding my Fidelity accounts.

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          • #6
            It is straight cash back. It can be directly deposited in your BoA checking account or I personally just directly deposit it into my Merrill Lynch account. The ML setup/app aren’t my favorite but since I’m just buying ETFs for free, it’s not bad (wouldn’t be advisable for more frequent traders). I would be interested to see how other classify it but I classify credit card rewards as both saving and income (both numerator & denominator) when it comes to savings rate.

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            • #7
              I would think that the Physician on Fire (POF) should be all over this question.

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              • #8
                This is like those people who need one of something yet like to "buy 3 get 1 free" instead.
                ...hook, line, and sinker.

                You will do better with debit card and no rewards program. Just contribute to the HSA.
                The CC companies have done the research: rewards and paying later increases spending... that's why they run the rewards programs. I bet you thought it was because you are such a big earner with big importance that they want to profit share and give you free money?

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                • #9
                  Originally posted by Max Power View Post
                  This is like those people who need one of something yet like to "buy 3 get 1 free" instead.
                  ...hook, line, and sinker.

                  You will do better with debit card and no rewards program. Just contribute to the HSA.
                  The CC companies have done the research: rewards and paying later increases spending... that's why they run the rewards programs. I bet you thought it was because you are such a big earner with big importance that they want to profit share and give you free money?
                  I think as someone who has paid off my balance every month for the past 20 years and can stick to a budget I'm not their target audience - I know people who have declared bankruptcy twice due to CC debt but not before carrying the debt for years. For a little effort, I'll take $4500 per year.

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                  • #10
                    Originally posted by Max Power View Post
                    This is like those people who need one of something yet like to "buy 3 get 1 free" instead.
                    ...hook, line, and sinker.

                    You will do better with debit card and no rewards program. Just contribute to the HSA.
                    The CC companies have done the research: rewards and paying later increases spending... that's why they run the rewards programs. I bet you thought it was because you are such a big earner with big importance that they want to profit share and give you free money?
                    Well I’m able to pay my rent with it so I’ll take the 5.25% back on rent instead of a direct ACH bank transfer. Pretty sure I’m not going to go out and rent 3 other apartments. Your point about paying with plastic instead of cold hard cash is reasonable except you said debit card so perhaps that wasn’t what you were getting at or you’re just going for a contrarian take for the sake of it. Will be interesting with the advent of online commerce and decreasing reliance on physical cash if people will eventually develop the same aversion to whipping out the plastic that previous generations have had to paying with cash. Regardless, I’m ok with people that pay in cash or pay interest/ credit card fees subsidizing my rewards for the time being.

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                    • #11
                      Originally posted by Tim View Post
                      That’s about $215k per year in spending to “save” $4500. Hope your exercise these last few month was “fun” as you say.
                      Yes, but as I said in the OP it is a combination of personal and TWO business cards all of which get paid in-full every month.

                      It's a bunch of killjoys around this place. This money is going to be spent anyway as I funnel most of my personal spending through CCs and I run a multi-million dollar business - why would I pass on $4500 when all I have to do is select one of three cards?

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                      • #12
                        Originally posted by PWMDMD View Post

                        Yes, but as I said in the OP it is a combination of personal and TWO business cards all of which get paid in-full every month.

                        It's a bunch of killjoys around this place. This money is going to be spent anyway as I funnel most of my personal spending through CCs and I run a multi-million dollar business - why would I pass on $4500 when all I have to do is select one of three cards?
                        Just noted that $100k was business. Help your self.

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                        • #13
                          I would consider transferring those Schwab AmEx points to airline partners and using them that way, versus cashing in for 1.1 cents per point.

                          You will get a much higher value, easily double.

                          Money is fungible.

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                          • #14
                            Originally posted by bovie View Post
                            I would consider transferring those Schwab AmEx points to airline partners and using them that way, versus cashing in for 1.1 cents per point.

                            You will get a much higher value, easily double.

                            Money is fungible.
                            While Air Canada is giving 1.9 cents pp many are at 1 cent or less pp. This is just an easy way to generate some extra retirement cash with very little work paying for things I'd already be paying for anyway.

                            https://www.nerdwallet.com/article/t...x-points-value

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                            • #15
                              For rewards staple, very hard to beat boa with platinum honors status. It's the most consistent and easy setup for daily spend without limits and either no annual fee or minimal.

                              Same for Amazon chase card. 5% without annual fee straight up.

                              Then there's the rest of things. We eat out. Alot. Amex gold card gets that lift. So ce we eat shake shack monthly that alone pays nearly the annual fee.

                              The sweet spot for rewards isn't cashback....it's premium travel. For those paying for business class or nice hotel stays, points will get you there a lot cheaper and returns are significant. Throw in status upgrades and suites, you're at inspirational travel at cut rates. That's what the points pay off with a little foresight.

                              Yes, the common person probably would get sucked into the business bank spend spend spend on credit. Those in this forum I bet pay off their cards 100% of the time (unless playing the zero float game) and would be players of the churning cards game if they wanted to with great credit scores. So don't think folk need to worry about banks taking our members along the finance fees credit ride

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