Back in September our family got our very first family credit card. We did it to maximize the amount of interest income we would receive from our high yield online savings account and to earn back some of that hard earned cash. While I was expecting the income from our savings account to net us tens of dollars (tens!), I figured that the cash back rewards could possibly bring back hundreds of dollars into the family coffers. I did some research on what card might give me the best results and it boiled down to two – the Chase Freedom Credit Card and the American Express Cash Rebate Credit Card.
Each of these cards has its own set of advantages. The Chase card racks up the rewards quicker, offering 3% back on the three predetermined categories of spending in which you spent the most that month and 1% back on all other purchases made on the card. They also were offering, and still are by the way, a $50 cash back award for first time card user after your first purchase. When this is combined with their offer of redeeming $200 worth of rewards for a $250 check, it serves as a lucrative deal to users who don’t really charge that much to their cards.
The American Express, on the other hand, is made for big spenders. After charging $6,500 on your card you start accumulating an impressive 5% cash back on grocery, gas station, and drug store purchases, all while raking in 1.5% of every other purchase on the card. Unfortunately, the rates before reaching the $6,500 mark are a measly 1% and .5% respectively. So if you have big purchases planned ahead or you have a large monthly bill, the American Express card is definitely the way to go.
When I ran each award system against our monthly numbers back in September the Chase card just barely came out on top. The actual rewards earned on the Chase card were significantly smaller, but when you added on the additional bonus $50 dollar bonus for joining and the extra $50 they throw at you for waiting to reach $200 until you redeem your rewards the Chase card came out on top. So we went with the Chase card.
Since we started making purchase with it in early October we have spent $4,702 on our card and have earned $72 on those purchases according to our most recent statement (but when you include our extra $50 our current rewards balance equals $122). That represents a savings of 1.52% (3.65%) on our purchases. Not too shabby if you consider we had to make all these purchases anyway. I will count this a some nice additional income for the family.
After reading a ridiculous post over at My Dollar Plan about how they have a credit card balance of $223,270 I wanted to revisit this issue to see if we really had made the right choice in going with Chase. If they can make over $11,000 dollars a year on their credit card scheme I would sure like to make my card choice go as far as it can, since it is essentially free money if you can work the system right.
So I ran some numbers. At our current pace of shopping (about $58 a day worth of charges) we will save $422 dollars with the Chase card, including our two $50 dollar bonuses, one for signing up and the other for waiting to redeem until we reach a balance of $200 . With the American Express card I estimated that we would earn $386 given our current spending habits. So it looks like I made the right choice after all. I rock … or do I?!?
You rock! $422 for money you would have spent anyways is awesome in my opinion. The Chase Freedom Card has time and time again been called the best card for low spenders – which seems to be people that spend less than $2000 per month.