A new gas card rewards strategy
by rocketcMost regular readers of Rocket Finance know that we use the Chase Freedom Card almost exclusively. We have earned over $500 cash back (including the sign-up bonus) during the past fourteen months. The Chase FreedomSM cash back rewards are 3% on your top three spending categories. All other purchase categories earn 1% cash back. You will get $50 cash back after your first purchase as well.
When we first started using this particular card we were only spending about $175 a month in gasoline, approximately $25 at quick serve restaurants and then another $100 in the wireless/communications category. We were earning about $9 per month in bonus category spending. However, as a result of our move and the uptick (upsurge?) in gas prices, we have had several statement periods where our spending eclipsed $600 in the 3% categories and the problem with the Freedom Card is that once you reach $600 in spending in bonus category spending, the cash back percentage drops back down to 1% regardless of category. In essence, 3% earnings are limited to $18 per month, but 1% cash back is unlimited up to your line of credit. We are leaving money on the table.
So we are going to put another credit card into regular usage: the Chase PerfectCard Mastercard. The PerfectCard is offering 6% cash back on gasoline purchases for the first 90 days and 3% thereafter. The card also comes with a generous introductory 0% balance transfer APR with a capped fee, although we won’t use it for balance transfers. Unlike the Freedom Card the PerfectCard is really only a gas card. It offers 3% cash back for gasoline, but only 1% on all other purchases. Furthermore, the PerfectCard rewards are capped at $15 per month.
So, in order to max out our rewards, we are going to use the Freedom Card for groceries, wireless/internet/cable, and quick serve restaurants. I doubt that we will ever go over $600 in these spending categories. The PerfectCard will be our gas card.
I know that many in the personal finance blogosphere strongly oppose credit card usage, and I understand and sometimes share their concerns. However, if you stick to your budget and pay off your balance every 30 days, your credit card could help you save an extra $30 or $40 every month.
5 Responses to “A new gas card rewards strategy”
By Ben E. on Jul 24, 2008 | Reply
I’m curious though – can you open another identical Chase Freedom Card that has the same deal? I mean you can effectively double the amount of categories, or use the same categories without leaving the money on the table. Any thoughts?
By SHP on Jul 24, 2008 | Reply
While it is good to get the reward I wonder if the card itself actually increases your monthly spending? There are many studies that show your expenses increase when you use a credit card.
By rocketc on Jul 25, 2008 | Reply
Ben, I think you can . . .if you open one card in your name and one card in someone else’s name – if you are married. They will issue as many extra cards as you request.
SHP, This is a danger. We try to keep very close tabs on our spending and only purchase items called for in our budget.
By Mrs. Accountability on Jul 27, 2008 | Reply
I wasn’t aware that rewards cards had caps. We spend so much money in gasoline I keep thinking we need to get a card that gives us money back. I’ve got to find the time to do this.
By rocketc on Jul 27, 2008 | Reply
Some cards have caps, some don’t. Sometimes it is hard to wiggle through all of the fine print. Let me try to summarize:
The Freedom Card caps cash back at $18 per statement period on purchases that qualify for the 3% cash back. It does not cap the 1% cash back that you earn on every thing else. For, instance we had a month where we spent $1200 on gasoline (when we moved). We earned $24 in cash back – $18 on the first $600 and $6 on the balance.
From what I have read, the PerfectCard caps all rewards to $15 per statement period.