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Wow, I’ve Been Giving 1 Bad Piece of Credit Card Advice, And I’d Like to Rectify It Now

I’m going to step up and be an adult and admit something. Pssst, come a little closer….I don’t want to shout. OK, that’s too close. Yes, right there.

Shhhh…I’ve been giving a piece of advice that, now that I think more about it, is, how do I put this….wrong. I’ve been giving a wrong piece of advice.

But I have good news – I’m going to correct myself. Here goes:

I’ve been saying for a while that for many people their best bet is to get a 2% cash back card as their everyday card, and to stop using it only to hit minimum spends on new cards where you’re going for a bonus (or if there are cards with a category bonus – say, the Sapphire Preferred on dining and travel – where you get at least 2% back in points on certain categories). For those who don’t use points for business class international travel, most people are best off getting the 2% cash back card as their everyday card. (The other way of looking at this is that all points you earn through spend cost 2 cents, which is what you’re forgoing by not getting the Amex Fidelity card that offers 2% cash back).

However, that advice is wrong. Or at very least, it doesn’t maximize your outcome.

If you have a 2% cash back card for everyday spend, your best bet is to buy Vanilla Reloads to satisfy your minimum spends on cards you’ve churned. Why? Let’s look at it this way:

If you have a card (like the Amex SPG) where you need to spend $5,000 to earn a bonus, you can purchase 10 Vanilla Reloads for a total of $39.50, then go deposit the money into your Bluebird account and pay off the $5,000 credit card bill with those funds.

If you do what I was previously suggesting – just putting $5,000 worth of regular spend on that Amex SPG to hit the minimum spend – you are forgoing $100 in cash back on that $5,000 spend. You’ve just cost yourself and extra $60.50 by listening to me.

It’s worth doing the math for whatever everyday card you use. I use the United Club card as my everyday card, where I earn 1.5 points for regular spend. If I shift $5,000 in spend from that to a card where I’m trying to hit a bonus, I’m forgoing 7,500 United miles. If I go the Vanilla Reload route, I’m basically paying $39.50 for 7,500 United miles. That’s not a bad cost per mile (roughly $5.64/1,000 miles).

So I take back my earlier advice and admit that perhaps I was just a little bit, ummmm, wrong.

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  1. where do u buy VRs in NYC?

  2. Not worth the hassle factor for $60. I dont want to keep track of 10 different cards. And (not as important but…) what if I have to take something back that I bought on one of those cards, or if I have to use the Visa warranty?

  3. Not sure I understand bluecat. I thought everyone loads VRs to bluebird and sucks the cash out. sooo no problems with buying crap..
    Good advice Jared, and I think there is a secondary reason to this as well. In addition to the financial point, it is also a lower hassle option. You do not need to worry about meeting minimum spend or think about the progress of reaching it.
    Just buy some VRs and send the money to you bank account. easy and you made money.

  4. Some of us cant get VR’s. Would you still say the same thing in that case? And what if you don’t have the 1.5 earning card and only 1 point per dollar cards?

    • If you’re earning 1 point per dollar and can’t get get VRs then i think your best options are to buy the Chase gift cards (if its a Chase card). Or to do Amazon Payments (very conservatively) if it’s not a Chase card.

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