Excavating Gold from Forgotten Credit Cards: New Rules in the Age of Cashback
By Robert McGarvey
Take those travel rewards and, well, shove ‘em. In 2023, with ever fewer good travel rewards on offer usually at too high prices, there’s a pivot into maximizing cashback returns – and even I, a longtime disdainer of any effort to optimize cashback, have plunged into the fray.
That was made obvious in last week’s column where I sing the praises of the Amex Blue Preferred card and its 6% cashback on groceries.
Arguably, too, I am pleased with the Amex Plat card because I have in effect turned it into a cashback card. If it were just miles and club access – which for years was all I expected from the card – it would have been binned at the last renewal. But, with very little effort on my part, the card is cashflow positive. That’s the language I want to hear in 2023.
This week I am on a related but different hunt, it’s to maximize returns from cards that I already have. Why? I have 10. Average American has two or three; CreditKarma members average five. Ten should be plenty for me
I already got one card this year (Blue) and that’s enough. Besides, nothing really tempts me.
Which brings us to this: Are there more benefits to be squeezed out of the cards I have?
The biggest potential in my wallet – and probably yours too because 57 million of us have the card – is the basic fee free Discover. The distinguishing Discover feature is that every three months it has a different set of 5% cashback retailers. For January – March it’s grocers, drugstores and streaming services.
Discover has not announced the categories for the remaining three quarters but in 2022 they were Grocery, Gym & Fitness Club; Gasoline and Target; Restaurants Paypal; and Amazon.com Digital Wallets. Probably the 2023 5% categories will be similar.
Know this: Discover caps 5% back at $75, that is, $1500 in spend.
This leads to picky decisions. In Q1 I will max out the Discover 5% grocery spend, sidelining the 6% Amex Blue cashback but that is because Blue caps at $300 back and I can use that in Q2 into Q3.
This a.m., too, I switched Netflix billing from Discover to Blue, although Blue offers only 3% back. That’s because I’d rather have the 5% Discover cashback on groceries.
Then there’s the utility cashback player in my wallet, the Venmo credit card, which offers 3% on my biggest spending category, 2% on the next biggest, 1% on everything else. I continue to take that in Bitcoin where I am down 25%…but at least I can claim to be a crypto player and have the losses to prove it.
I have two special purpose cards. One from Capital One that’s connected to REI and it offers 5% back on REI purchases, 1.5% on everything else. My intent is to use it only at REI.
The Apple Card, via Goldman, delivers 2% cashback at many merchants if used in Apple Pay. 1% if the physical card is used. The real draw is 3% cashback at Apple and that is the only place I have used it.
Probably the card I expect to use much more this year is an unlikely one, the Barclays AA card. For a few years it has been an inert slab of plastic in my wallet but this just may be its year. I named AA as the airline where I get $200 in flight credits via Amex Plat – almost named Southwestern but then Christmas happened – and plan to fly it much more this year than I had in recent years.
AA is a good choice since I live in Phoenix and it and SWA own Sky Harbor.
Now I see AA has a dining program where I can buy meals and earn miles – and pay for it with the Barclays card for more miles.
But what about cashback? There’s some of it too. $25 is available against inflight WiFi charges paid for with the card. There’s 25% back on inflight f & b purchases. Of course there’s also a free checked bag and free priority boarding,
It’s not a great card but with maybe four AA flights in 2023 it will pay for its $99 fee and more.
And then there’s my most lucrative cashback card, the Chase Amazon card which gives 5% back on Amazon and Whole Foods purchases. Last year it returned $624 to me (pretty much evenly split between Whole Foods and Amazon). This year I am expecting about half that because lately I haven’t been shopping at Whole Foods. But that’s still an easy $300+, just for using a particular piece of plastic.
Whew. But here’s my belief: do this once a year with most cards and once a month with Plat (to scroll through new offers in a few minutes) and you will maximize the return on your cards and take away meaningful cashback.
It’s likely not a windfall, but if it takes only minutes it’s a good deal.
Make your cards work for you in 2023.