Middle Age Miles

Can You Beat This? A Simple Cash-Back Credit Card Strategy

This article is part of Middle Age Miles’ series, “How to Get Started” with Credit Cards, Points and Miles.

One of the themes we’ll repeatedly emphasize at Middle Age Miles is to get the best value out of your normal spending, by putting your spend on credit cards that generate the most rewards.

In this article, we’re going to examine a very basic two-card strategy that generates good returns on your spend, in the form of cash-back rewards.  This strategy is very important, for at least two reasons:

(1) Many people crave simplicity.  They don’t want to spend the time or effort needed to maximize rewards or to decide which credit card to use for which expenses.  This strategy gives these people a very simple and straightforward approach to get good return on their spend.  If you fall into this group, get the two cards we recommend here, split your spend as we describe, and read all of our travel articles so you can use your cash back to help you enjoy some fun destinations!

(2) We need a benchmark for our other credit card points-and-miles accumulation strategies.  We need to be able to beat this simple cash-back strategy, or else it’s simply not worth it to spend time and effort on points and miles.  The truth of the matter is that a good points-and-miles strategy can far outpace even the very good cash-back strategy we discuss here.

Along these lines – I know people who have a Citi American Airlines Platinum MasterCard and use it for every charge they make.  This is very hard for me to understand.  [That said, this can be a valuable card to pick up the sign-up bonus, and perhaps even to hold longer term for certain card benefits if you fly on AA a decent amount but not enough to reach elite status.]  We value AA miles at 1.25 cents per mile – and it can be challenging and time-consuming to redeem AA miles for even that value.  There are not very many available redemptions of AA miles that generate more than 2 cents per mile, which is what it would take to beat a Citi Double Cash Card’s 2% cash-back return.  At a minimum, AA redemptions take some effort, and cash back is a lot more flexible than AA miles.  As a good friend of mine often says, “most places still accept cash!”  Thus, the person that puts all of his or her spend on a Citi AA Platinum card would be far better off to get a Citi Double Cash Back Card instead, put all spending on that card, and collect 2% cash back that they can spend anywhere.

Our Two-Card Cash-Back Strategy

With those thoughts in mind, we present a simple two-card cash-back strategy, using the Barclays Uber Visa card and the Citi Double Cash Back Card.

The Barclays Uber Visa Card

The Barclays Uber Visa card is a essentially a cash-back card.  It earns points that can be redeemed for statement credit at 1 cent per point.  The card’s earning structure and bonus categories are:

  • 4% on dining (including Uber Eats)
  • 3% on airfare, hotels and vacation home rentals (including travel agencies)
  • 2% on Uber, online shopping, and video/music streaming services
  • 1% on everything else

Although we’re concentrating on points-earning in this article, the Barclays Uber Visa card has several other helpful features and benefits:

  • It has no annual fee
  • It has no foreign transaction fees
  • At the time of this article in August 2018, it has a sign-up bonus of $100 after spending $500 in the first 90 days
  • It has a benefit of up to $600 in mobile phone protection if you use the card to pay your mobile phone bill
  • It has chip+PIN functionality, which can be especially helpful when traveling abroad for things like paying for train or bus tickets at a kiosk

Barclays can be a little tricky in terms of approving cards.  But if you have a clean credit report and a good credit score, you will probably be approved for the Barclays Uber Visa card.

The Citi Double Cash Card

The Citi Double Cash Card has an incredibly simple earning structure that essentially amounts to a straight 2% cash back on all purchases – you get 1% cash back on your purchases, and you get an additional 1% cash back when you pay for those purchases.

The Citi Double Cash Card has no annual fee.  In addition, at the time of this article in August 2018, it has a sign-up bonus of $150 after spending $500 within the first 3 months of account opening.  [This card doesn’t always have a sign-up bonus, so now is a particularly good time to get this card if it fits with your earning strategy.]  This card does have foreign transaction fees, so you won’t want to use it when traveling abroad.

Citi is generally lenient in terms of approving cards.  If you have a decent credit report and score, you should be approved for the Citi Double Cash Card.

Our Basic Cash-Back Strategy Spend Matrix

Now that we know how these two cards work, we can create our spend matrix – how we will use each of these cards if they’re the only two cards we have.  This one’s about as simple as it gets:

As you can see, we’re going to earn at least 2% cash back on all of our spend, using this strategy – save for the cell phone bill and some foreign transactions, where we’ll get other valuable benefits from using the Barclays Uber card.  And I’ll venture to guess that dining out makes up a decent portion of many people’s credit card spend, so I think it’s fair to say that this simple strategy will push our overall earning rate a bit over 2%.

What kind of return are you getting on your spend now?  1.25% or so, using the AA Platinum card?  0% using a debit card or cash?  The Uber-Double Cash combo looks pretty strong.

Wow, That Sounds Great — How Can We Beat This with a Points-and-Miles Strategy?

When I mention the two-card Uber-Double Cash strategy, people are often amazed (non-points-and-miles people, that is).  It seems like an incredibly valuable and hard-to-beat combination.  And it is indeed incredibly valuable.  But with a little knowledge, we can beat it.

Believe it or not, we can actually substantially beat the Uber-Double Cash combo with a strategic points-and-miles approach.  Many articles on Middle Age Miles will be devoted to points-and-miles strategies, so be on the lookout for insights and tips.  For starters, though, here are the tools we’re going to be using to maximize our return through credit card spend, points, and miles:

(1) Sign-up bonuses.  Most points-and-miles cards have generous sign-up bonuses that can greatly increase our points/miles-per-dollar return on our first few thousand dollars of spend on a new card.  We’ve written some pre-launch articles that discuss sign-up bonuses, such as Persistence Pays – Approved for the US Bank Altitude Reserve Card!, which talks about this card’s bonus of 50,000 points worth $750 for the first $4,500 in spend (at least a 18.2% return on the first $4,500!).

(2) Category bonuses on spend.  Most points-and-miles cards give bonus points for spend in certain categories (just like the Barclays Uber gives bonus points for dining/airfare/hotels).  To give some examples, the Amex Personal Platinum gives 5x Membership Rewards (MR) points per dollar on airfare purchased from an airline.  If we value MR points at 1.6 cents each, that’s an 8% return on airfare spend.  The Chase Ink Cash business card gives 5x Ultimate Rewards (UR) points per dollar on purchases from office supply stores and phone/cell/internet/cable bills.  At 1.5 cents per UR, that’s a return of 7.5% on spend in those categories.  Moreover, because office supply stores sell gift cards for other merchants, we can further leverage this category, like by purchasing Amazon gift cards at Office Depot/Office Max.  We will publish Middle Age Miles’ complete Spend Matrix soon, and when we do, we’ll link to it here.  You’ll see that we leverage many different category bonuses on spend to get maximum value.  Your strategy can be as complex as ours, or much simpler.

(3) Retention offers/bonuses, special bonus offers, and upgrade bonuses.  When our existing cards come up for renewal, we often call to see if the card issuer is offering a retention bonus.  Sometimes these can be incredibly valuable, such as when we received an extra 2x Citi ThankYou Points (TYPs) on up to $17,500 spend on our Citi AT&T Access More card.   This pushed our earning rate up to 3x TYPs (3.75% at our baseline TYP value) on unbonused spend and up to 5x TYPs for online retail & travel purchases (6.25%).  We have also received special bonus offers, such as 5x points on grocery purchases up to a certain limit.  In addition, some existing cards, particularly from Amex, may receive upgrade offers.  We recently accepted an offer to upgrade an Amex Hilton Ascend card to an Aspire card, which came with a bonus of 100,000 Hilton Honors points once we hit $4,000 in spend within 90 days.

(4) Other card offers and spend threshold benefits.  Our points-and-miles cards also sometimes enjoy special targeted offers, most notably Amex Offers.  In one recent example, we received an offer for a $60 statement credit if we spent $300 at SPG hotels. Although this didn’t directly earn points for us, it was savings directly attributable to our points-and-miles card strategy.  We have also received benefits for hitting certain spend thresholds on a points-and-miles card, like a free weekend night certificate at any Hilton-family property after hitting $15,000 spend in a calendar year on our Amex Hilton Ascend card.  We recently used a Hilton free weekend night certificate at the Waldorf Astoria Beverly Hills, when the going rate was over $700.  To quantify this a bit more – if you conservatively value the free night certificate at $250, then our $15,000 in spend on the Ascend card earned at least a 3.1% return (that is, at least 3x Hilton Honors points on each dollar of unbonused spend, baseline value of 0.5 cents per point, equals 1.5%; plus $250 in value for $15,000 in spend equals 1.6%; for a total of 3.1%).

As you can see, we have a lot of tools at our disposal to increase the value we receive for our spend.  And that’s a big part of the focus of Middle Age Miles.  We’ll provide tips and insights, we’ll give you our data points on maximizing return on spend, we’ll run experiments to determine what techniques work best, and we’ll report back to you.  All of this is to help you achieve your travel dreams and get great value while you do it!


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