The following is a staff writer post from MikeS. He is a married father of 2. So, with the cat, he ranks number 5 in the house. He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.
A while back, I talked about revising my credit card strategy. I was looking for a way to increase the amount of cash I received by using my credit card for all my purchases. I was curious as to whether I saw the increase that I thought I would, turns out, I did.
My Credit Card Summary
If you didn’t see that post, I basically used one card for all of the household purchases. I was using the Bank of America 1-2-3 card. The card gave 1% on all purchases, 2% on groceries and 3% on gas. If you deposited your cash reward into a Bank of America bank account, they would give you a 10% bonus. I was averaging between 1.2% and 1.4% for most months.
I then saw an ad for the new Citi Double-Cash back card. You earn 1% on your purchases and then you earn another 1% on your payments. Since I always pay my balance in full every month, that means I would effectively earn 2% on everything. Not being one to turn down free money, I signed up.
My Credit Card Rewards Update
To see whether the card was better, I went to my budget to look at the past few months, compared with the same months last year. I am able to compare March through September of this year with March through September last year. Last year, I spent a total of about $26,000 using my credit card.
I was a little surprised by that number. It has been quite some time since I monitored just how much money is spent. Since I basically budget for everything and all the savings goals are being met, I don’t worry about how much I spend.
On that roughly $26,000, I earned a total of $331 of cash back rewards. In contrast, this year, I spent just under $21,000. I wish it was a conscious decision to spend less, but there were just a few large purchases last year. Some unexpected car maintenance, root canal expenses, and larger heating costs seem to be the bulk of the difference between this year and last year.
On that roughly $21,000 for this year, I have earned about $413. Not only did I spend less, but I earned more cash back. Had I been able to use the Citi card last year, I would have earned an additional $200 of rewards. I am averaging an additional $20 a month by doing nothing different.
The other change I made was that I added an additional card. By being a member of BJ’s Wholesale Club, we received an offer for a BJ’s branded card. The perk was that we would earn 3% back on our purchases there and 10 cents off per gallon of gas. I probably average between $200-$300 dollars there every month and their gas is usually the cheapest around anyway.
The 1% difference between the Citi card and the BJ’s card was enough for me. It probably means only another $20 to $30 a year, but why not. The gas savings are harder to quantify as I don’t track the gallons that I buy, just the total paid. Since gas prices have been a lot lower this year compared with last year, it’s hard to tell how much of the $500 savings in gas purchases from last year to this year is due to the new BJ’s card.
It is times like this when I realize that my penchant for numbers and information really comes in handy. My budget in Excel has information going back 17 years. By having the information on past purchases and the rewards that I earned on them, I was able to evaluate whether the Citi card was a better deal.
Are you doing anything differently to earn a little extra cash?