Credit cards: Maximizing your bonuses and rewards
Several credit cards are raising rewards bonuses or adding better travel or cash-back deals, said Martha White in CNN.com. Chase’s Sapphire Preferred travel rewards card, for instance, now offers a sign-up bonus of 60,000 points, worth $750 in travel or $600 if redeemed for cash—“the best sign-up bonus we’ve seen in years.” Another Chase card, the Freedom Unlimited, last week launched a 3 percent cash-back offer on the first $20,000 in purchases. American Express raised the sign-up bonus for its Gold Card from 25,000 points to 35,000 and added a monthly dining credit. And Barclay’s Elite Mastercard will slash up to $700 off your first year’s statement. They’re just some of a long list of cards that have “sweetened their offerings” with sign-up bonuses and higher cash-back rebates.
Rewards cards began flooding the marketplace several years ago, and they’re costing more than the banks expected, said AnnaMaria Andriotis in The Wall Street Journal. Brian Kelly deserves some of the blame. He started ThePointsGuy.com in 2010 because of how many points he had amassed on his corporate credit card. “Initially, he charged people $50 to help them book flights using their points.” The site has since become an obligatory stop for card-shoppers. But its popularity is driven by tips on “how to game the system,” such as quickly using sign-up bonus points and then abandoning the card. To pay for the perks, many creditors have raised interest rates for consumers who carry balances. As of February, the average rate, 16.91 percent, was the highest it’s been in 25 years, and 4 points higher than four years ago. That excludes the short-term 0 percent rate cards use to lure customers. Merchants also pay more in fees when consumers use rewards cards.
A travel-rewards card may work for very frequent flyers, but a cash-back card “is the best choice for many consumers,” said Chris Kissel in U.S. News & World Report. With the current generous bonuses out there, your rewards card should give you at least 2 percent cash back. You can often do better by finding cards that offer higher rewards in specific kinds of purchases. “Many credit cards offer up to 5 percent cash back in categories that rotate throughout the year,” such as gas or restaurants. Bank of America’s Cash Rewards card lets you choose six categories that will give you a 3 percent rebate. One warning, said Kathleen Elkins in CNBC.com: “When it comes to cashing in on the most lucrative welcome bonuses, timing matters.” The Chase Sapphire Reserve card offered 100,000 points when it was introduced in August 2016, but the lucrative offer was gone after five months. ■