Before I recap my 2017 spending trends using Mint [1], like I do every year, I wanted to elaborate on my use of credit card cashback. I do not use actual dollar amounts on my spending trends post but I’ll make an exception for cashback trends. We made a total of $926.95 on cashback on our 3 credit cards – Bank of America CashRewards, Discover, and Citi Card DoubleCash[2]

The first reaction to mentioning this to anyone is – wow! you guys must’ve spent a lot. Although there’s a strong correlation but not always a linear one. Also, we earned nearly $200 more in cashback this year compared to last year and even if you assume a 1% cashback rate, we definitely didn’t spend $200,000 more. In fact, we DEFINITELY didn’t spend that much in total. Further, even if I tell you the exact cashback rate we get on our credit cards which I will shortly, it’s nearly impossible to extrapolate that to our total spending for the year. Finally, note that for big spending items for home repair and upkeep like changing your roof, we save up and use cash. You don’t get cashback on that spending although ironically you would make the most on that. I’ll explain why you shouldn’t even if the contractors accept credit cards.

Here are the rates on our three credit cards:

  1. Bank of America CashRewards – 1% for everything, 2% on groceries and superstores, and 3% on gas. Their AmeriDeals also offer cashback ranging from 5-10% for a limited time for specific merchants. But you’ve to opt-in before you use your card. We use this option strictly for merchants we frequent anyway e.g. Petsmart, Freebirds, Hilton Hotels, etc.
  2. Discover – 1% on everything and 5% on certain categories every quarter. E.g. For Oct-Dec, you got 5% cashback on Amazon and online shopping.
  3. Citi Card DoubleCash – Flat 2% on everything (you get 1% when you spend and 1% when you pay your bill).

Until September, we used only two credit cards – BankAm and Discover. We reluctantly got a third card for two reasons. First, our BankAm card was getting skimmed fraudulently far too often and although we never lost any money, it was a major inconvenience changing it out on auto-pay sites. Second, the fine print on both cards indicated an upper limit for those special categories that offered a higher cashback rate. For e.g. you got 2% cashback on groceries ONLY on the first $1,500 you spend in three months; after which you got the regular 1%. Also, it was time-consuming and a hassle to keep track of all those categories and which card you should use.

Thankfully, The Wirecutter reviews credit cards too and their pick was the Citi Card DoubleCash[3]. It’s a no-strings-attached but flat 2% on everything. We’ve now made it our primary card for in-store purchases. We made almost as much cashback using it for last 4 months than we did on the other two cards for the full year and without expending much brainpower on deciding which card to use at the time of the transaction. I heartily recommend it and it’s worth the hit on your credit report especially if you have a good one (750+)

That said, we still have some basic rules on which cards to use for specific purposes:

  1. Bank of America CashRewards – Gas and Costco. The latter coz this is the only Visa card we have. the Citi is a MasterCard. Also, this way, we get the 2% on superstore rate while staying below the $1,500 limit. If we exceed that, it requires a household conversation :) We still keep an eye on the occasional AmeriDeals offers (see above) e.g. 10% at 5 Guys.[4]
  2. Discover – all auto-pay and most online purchases.
  3. Citi Card DoubleCash – Everything else; mostly in-person including Apple Pay. Admittedly, this card sees the most transactions.[5]

So that’s it. Some may argue using a debit card make better financial sense. To some, it may but we always pay our credit card bills in full at the end of the month. If we have to dip into our savings account (happened only once this year), we have a conversation about it and make up for it the next month. Also, it’s better not to expose your bank account via a debit card to multiple merchants. Once cash is withdrawn, the hassle to get it back far exceeds any credit card disputes. Finally, we wouldn’t have earned nearly $1000 if we used a debit card, amirite!? I’m sure the credit card companies hate us and have to suffice with our detailed spending data.

PS. The reason you shouldn’t use credit cards with home service and repair contractors is that they usually charge a 3-4% additional fee for a credit card payment. Always ask first. That far outstrips any cashback you may get. Just keep enough in your savings to pay off emergency repairs.

Footnotes:
  1. check back after Jan.1st []
  2. We’re not frequent travelers and have no interest, no pun intended, on airline miles []
  3. Yes, in Wirecutter We Trust []
  4. Plus I’ve my suspicions where most credit card skimming takes place. Psst…it’s the gas stations. BTW never a good idea to use a debit card at gas stations. Safest but inconvenient option is to walk inside and pay with cash. []
  5. Perhaps indicative that even for a couple as tuned-in as us, it’s still not everything-online []