Cash-back CCs; which way to get rewards is best?

ericasjOctober 8, 2003

It's time for me to change credit cards, as my current one recently switched billing methods (which is costing me more $) and offers no reward program. Perhaps someone here can give me some new ideas on choosing a new one.

Chase has the Perfectcard, which pays 1% back on most purchases, and 3% back on gas (6% for the first 3 months). The credits show up every month, so you don't have to wait for your money or worry about the program changing and losing everything. (Which happened to me in the Amazon Nextcard fiasco.)

On the other hand, if I get small amounts each month the extra cash is liable to just dribble away. Citibank has a card where you get a check every time your rewards reach $100. As of yesterday, they were offering 5% cash back on everything through 4/1/04. On this one I'm afraid I may be tempted to charge as much as possible to move toward each $100 faster.

Citibank also has a Driver's Edge card which lets your 1% reward accrue toward the purchase of any car, new or used, OR, you can use it for a rebate on car repairs. The reward % is lower, but at least I'd be forced to use it for something necessary instead of frittering it away.

It seems nonsensical to choose the Driver's Edge because the % back is so much lower. The numbers say take the one giving 5% for 5 months, instead. But I have a feeling that for psychological reasons the Driver's Edge might be better for my overall finances.

Anyone care to voice an opinion?

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quirk

ummm, maybe I'm misinterpreting, but... if the change in billing methods is costing you money, I'm assuming you carry a balance? If so, shouldn't you be more interested in low interest rate than cash back awards? You haven't mentioned interest rates. Are they all identical?

    Bookmark   October 8, 2003 at 1:37PM
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ericasj

No, I only rarely carry a balance. In fact, that is kind of the problem. They switched to two-cycle billing, which I didn't really understand until I was hit with the disadvantage of it.

We had an emergency kind of thing come up a few months back, and I broke up the payoff over two months. Even though it was paid off last month, when I got the bill this month they charged me $7 interest. That's because they now go back two billing periods to figure the average balance the interest charge is based on.

From what I've read about it, two-cycle billing doesn't make that much of a difference if you are carrying a balance because from month to month the balance isn't changing very much.

$7 isn't that much, but it's maddening to be charged that way when 1) most other cards don't bill that way and 2) other people are earning rewards instead of being billed an extra $7!

    Bookmark   October 8, 2003 at 5:41PM
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quirk

Oh. My bad. I agree w/you, I wouldn't want the extra charge, either. Don't know the answer to the actual question you asked, though, so I guess I'm no help whatsoever.

    Bookmark   October 14, 2003 at 5:29PM
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nycefarm_gw

Can you negotiate with the current credit card company? Sometimes, if you are a long time customer, they will lower interest rates or waive fees if you ask. The worst thing that can happen is they say no.
Currently, we use a GM card that offers 5% toward the purchase of a new vehicle. Good for us, the last time we bought a truck, we redeemed close to $2,000. And we'll do it again.
Five years later we are almost up to $3,000. We usually pay it off every month, make gas and grocery purchases as well as any unusual expenses. I prefer to write one check than several every month or carry cash.

    Bookmark   October 18, 2003 at 2:00PM
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joyfulguy

I hope that you didn't just cut up the offending card without letting the carrier know of your dissatisfaction.

Most offerors of services welcome feedback from clients - perhaps especially from clients who are unhappy with it for some reason.

Be soft-spoken, reasonable, courteous.

Since it's difficult to recruit new customeers, many business people will take action to meet a customer's wishes.

More frequently found in locally owned stores than in nationwide (or international) chains. Their local staff have limited freedom to make deals, offer extra service, etc.

Remember - ya don't ask ... ya don't get.

I only bought a new car once - about 25 years ago.

I figure that when you buy a new car, receive the keys and drive it home, you place 50 $100. bills on the passenger seat beside you and roll the passenger window down. On the road home, all of those bills fly out of the window, never to be seen by you again.

My financial calculator says that $5,000. invested at age 35 at growth rate of 5% would grow to over $300,000. at age 65.

Have a great week, all.

joyful guy

    Bookmark   October 29, 2003 at 3:50AM
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askonovd

Hi Joyful Guy, I love reading your down to earth advice. Keep 'em comin! Andrea

    Bookmark   November 4, 2003 at 9:56PM
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