Wednesday, November 09, 2005

Why I Choose Cash Vs Miles

I know a lot of people who are huge fans of their credit cards with reward miles, and I myself charge all of my business expenses to my Amex Delta SkyMiles card. But right now, I feel I am getting the most out of my Citi Platinum Dividend card. Here's why...

I have very little experience using rewards tickets. I can muddle through the process, but I can't even guarantee myself a 1% return on my dollars spent on the card when I exchange miles for a ticket. It's getting harder and harder to find an available reward ticket given the industry's problems so I don't need the extra challenge (even with the Travel Gnome helping me)

I want to be guaranteed a better than 1% return...which is where my Citi card comes in. We don't do much pharmacy spending, but with the 5% back on both gas and groceries we accrue about $15-20 each month and then of course 1% on everything else we spend which usually adds another $10 give or take because we put almost *everything* on this card.

The plan is to cash out the rewards every $50+ and stuff it somewhere earning 4% (or in my Roth). Since I've only had the card since August, I've only been able to do this once so far, but I think I'll be able to cash out again in late December.

Then I can do anything I want with the money....buy cheap airline tickets or even shares of PAXWX!

It's just what works for me and turns my crank. To each his or her own. But for me, the key points still remain:
  • Greater than 1% return
  • Gas costs 5% less
  • Groceries cost 5% less
(the 3 Gs? LOL)

The card (like many other "cash rewards" cards) is running a promotion through the end of the year for 5% cash back on "department store" purchases. I'm not sure if I do much holiday shopping in department stores, their definition is as follows (according to the promotional terms):
Department Stores are defined as large stand-alone merchants selling a general line of merchandise from departments that usually have separate checkout counters
And the merchant has to ID as a department store. I wonder if Target counts? Or. Gasp.

IKEA.

Probably not IKEA. Whew. THAT was close.

8 comments:

  1. I'm with you! Give me the CASH!!! ;-)

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  2. I have Citi AAdvantage but what with miles from work travel I have more than I will use in a year or two. Maybe I need to sign up for this one? How long is the 5% cash back offer valid?

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  3. 5% cash back on groceries, gas and pharmacy is always "on" that's the pitch. And 1% back on all other purchases.

    The 5% back on "department store" purchases is a promo that runs until this 12/31.

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  4. Nice plan - good work on saving yourself some money. Now if only I had the credit to land one of those cards :)

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  5. My personal credit card is the citibank dividend plus. It gives cashback.

    Money And Investing

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  6. MBNA has a MasterCard that you can link to a Fidelity 529 account and that earns 2% back on purchases. It's free money for my son's college education, and the 529 earnings are tax-free.

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  7. I found that the best strategy for me is to have 2 cards. I use the AMEX Blue Cash (5% on gas, groceries and also CELL PHONE + 1.5% on everything else and no MAX on the amount of cashback) as a primary card and the Citibank Dividend Plus for places that don't take AMEX since the cashback amount is capped at $300.

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  8. Diffus, if I had a child, that card would be very appealing to me despite my hatred of MBNA (hey, I'm flexible)

    Oliver, thanks for the tip, I didnt realize blue cash did 1.5%

    ReplyDelete

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