Which Credit Card Reward Should I Pick?
My $10,000 balance transfer from my Discover Miles Card was safely converted to cash and is now sitting in HSBC earning 4.80% interest. I also made one purchase to get the free 5,000 Miles. I’m happy to say that it all went smoothly. No balance transfers fee were charged, and the 0% APR indeed covered both balance transfers and my purchases as promised, so no interest was charged. I even got my 5,000 bonus Miles immediately after the first statement cycle closed. It’s nice not to have to badger a company for a bonus.
I also received their rewards catalog for their ‘Miles’ redemptions. Ugh, the selection is bad. Converting back to cash-back, it was in the neighborhood of .6-1% back. I can do so much better with my current 2-5% cashback cards. Still, I’m not wasting these points!
As with many credit cards with Points or pseudo-Miles programs, their rewards are supposed to entice you to redeem your points for something you like but don’t realize how poor the value is. Example: 20 GB iPod for 47,000 Miles. Even a 30 GB iPod is only $299 at Apple.com. Even with a simple 1% cashback card, you’d get $470 back - enough for the bigger iPod + $170 in your pocket. To top it off, their gift card selection is funky in that they only offer specific denominations for each store.
Stil, I have 5,028 points to burn. I made an Excel spreadsheet of the rewards I could actually see myself getting. (4,700 points for a football? No thanks.) I also computed the cents/Mile to measure value.
The $100 Airline Credit was my initial goal, but you have to use their travel agent and book 21 days in advance. If they book Southwest, maybe. $100 at Ruth’s Chris Steakhouse would be neat since I’ve never eaten there, but I’d need to charge another $7,700 on this card to get there.
Hmmm… Should I just take the $25 cash even though the value sucks? Or get the movie tickets? Right now I’m leaning toward the $50 Old Navy card, even though I haven’t shopped there in years.
Find more in Credit Cards | 2/8/06, 12:36am | Trackback
February 8th, 2006 at 6:28 am
I would take the movie tickets, but that is just me.
I know this is only tangentially related to the choice of your reward, but I have a question about the balance transfers.
My fianc?e has $18,000+ in school loans which accrue $100+ a month in interest. I have been considering paying the loan off with one credit card (earning cash back) and then using a 0% balance transfer to pay off the first card’s balance.
What is the likelihood I can get close to $18,000 in a balance transfer? I would probably use the Citi Simplicity card?s transfer deal. If the card I plan to use to pay off the loan has a $10,000 credit limit, can I transfer more than $10,000 to that account through a balance transfer?
I know that this means I will have to pay the whole loan off in 12 months or get another balance transfer. Does this seem like a reasonable thing to do?
Thanks, I really enjoy the site.
February 8th, 2006 at 6:39 am
I think this Chase Visa is the best card out there.
No Annual Fee, 5%/1% cash back, and its a Visa.
February 8th, 2006 at 8:31 am
I use the Chase Visa above but it caps rewards at $300 annually so I also use this Citi Card link
February 8th, 2006 at 9:07 am
OK, I think I was confused on how balance transfers worked. If I had a balance of $8,000 on my Chase card, I would transfer that balance to the card with the 0% balance transfer rate, right?
So if I have a Citi card that has a 0% balance transfer offer and I get approved to transfer $15,000, can I transfer the balance from my Chase card multiple times (e.g. $7,500 on two different occasions) to get to the $15,000 limit or does it have to be all at once?
Thanks.
February 8th, 2006 at 9:09 am
Take the money and run. Any additional spending is not even 1 cent on the dollar. So why bother. It’s a bonus. The real money made is in the 0% balance transfer.
February 8th, 2006 at 10:36 am
Matt - Lots of stuff thrown out here. First, unless your loan company takes credit cards you most likely won’t be earning cashback for a balance transfer (some do this). School loans, I don’t know, what interest rate are they at? Most people aren’t in a hurry to pay those off because you can usually consolidate to get a good rate, you can take your time paying them off, and isn’t the interest tax-deductible? Anywho.
For your second question, it depends on the credit card you get. Some allow unlimited balance transfers with no fee during the intro period. I think the Citi cards in my 0% links above do this.
mc - I think you are right. If I spend another $2,000 to get the $50 Old Navy card, I’m only getting $25 more “value” and giving up $20-$40 in cashback rewards. Cash is again king.
February 8th, 2006 at 11:19 am
Wait a minute - your choice is $25 cash or $50 Old Navy card? No brainer - of course you have to take the Old Navy card (as long as you were planning on going to Old Navy). Or am I missing something?
I cash all my business AmEx points into Home Depot cards, since we are remodeling our house. I was tempted to get something “cool” from their catlog but it was a rip off compared to buying the toy outright.
February 8th, 2006 at 11:23 am
I too have a couple of these cash back cards which I use regularly. The problem I have with them is that the way they tally the cach-back on a particular statement does not ever match with my tally.
I have tried to address this concern in my blog at http://wanderingindianmonk.blo.....from.html. Please check this out!
February 8th, 2006 at 11:25 am
Jonathan,
Thanks for the response. Her loan company does take credit cards. The loan is for about $18,700 and last month the interest was around $94, which I believe is 6%. I don’t have any school loans, so maybe 6% is low, or maybe it is high and we should get them consolidated.
The interest being tax deductible, assuming we are at the 25% tax rate, would reduce the rate effectively to 4.5%. That is roughly what I would get if I put the money in an HSBC savings account this year (assuming 4.8% goes back to 4.25%).
My brother suggested paying part of it off with a 0% BT. I will have to investigate things further. Thanks for the help.
February 8th, 2006 at 12:38 pm
Is there any balance trasfer fee on this card? Could not find the information anywhere in Application terms and conditions.
Thanks!
February 8th, 2006 at 12:51 pm
Nope, no balance transfer fee on this specific card. I called them twice to confirm before I did it, and my first statement closed with no balance transfer fee either. Very rare for a Discover card to have no BT fees, which is why I did it.
February 8th, 2006 at 2:09 pm
Ruth Christ is yummy.. but also slightly expensive.
just spend the 5,000 points on something u can right now? I’ll just take the $25 cash even though its value is crappy.
February 8th, 2006 at 2:20 pm
Johnathan, have you had any trouble getting the full %5 back at certain grocery stores? Ralphs (a California grocers) and Trader Joe’s seem to give only %1.
Thanks for the great site. Woulda never known about HSBCDirect’s good rates otherwise.
February 8th, 2006 at 4:30 pm
If you look at this T&C found in Discover Card’s website, scroll down to about the middle of the page and look for the paragraph beginning with “Introductory/Special APRs:”, you’ll find the very last sentence of the paragraph reads:
If you make a balance transfer with this application, there is no balance transfer transaction fee.
It also mentions the 5,000 bonus miles toward the end and an offer expiration of 4/1/06 but I’m not sure if this is considered the same offer as the one posted by Jonathan.
February 8th, 2006 at 5:03 pm
I used your link way back when and got no fees either. i forgot to make a purchase to get the miles though, got to get on that.
February 15th, 2006 at 9:23 am
The Gift Cards are not worth their face ammount, because you could buy them for 70%-85% of face value on ebay with free shipping.