Typically Black Friday tends to center around bigger chain stores that advertise huge doorbuster sales and major discounts.  This year, there’s an effort to remind people to shop at their smaller, local stores as well.  This weekend, area stores around the country are participating in something known as Small Business Saturday.

The way it works is that you register your American Express card ahead of time and if you use your AmEx card at a local shop this Saturday to buy more than $25 worth of goods you’ll get a $25 statement credit on your card

I think it’s a cool idea but of course the first question I had after hearing about the promotion was how to know which stores qualify for the credit. We’ll be in a pretty small town over Thanksgiving and I wanted to know if there were any nearby stores where I could use my blue cash card on Saturday. I know some small businesses won’t take any kind of credit cards because they don’t want to pay the fees, they’re cash or check only.

Turns out you can go search in your area on their Facebook page to see a list of all the small businesses that are participating. Until recently I’ve stayed away from Facebook but I created a Money Smart Life fan page not long ago and I’m beginning to see the value of being connected and picking up some good money tips from my fans.

Here’s a screen shot of how the small business search works, just enter your zip code and choose the category of business (Dining, Entertainment, Shopping, Travel,etc) and you’ll get a list of participating local businesses.

In an effort to connect with and help spread the word about these local companies, you can also search by zip to find their Facebook pages. If you become a fan of any of these businesses by clicking the “Like” button then you’ll see any upcoming events or promotions in your Facebook feed.

Of course if you never really use Facebook then it doesn’t do much for you, but if you check it regularly you might be able to score some deals or specials at your local shops.

The more I use Facebook, the more I see why some local companies like using it to stay connected with their customers. It’s not like a Groupon where you get offers from random companies you’ve never heard of. Instead, you become a fan of businesses that you frequent or visit occasionally and you get updates on what they’re up to and any promotions they’re offering.

I think it’s a neat way to support local businesses and who can argue with a $25 cashback promotion on the biggest shopping weekend of the year?

Does it make sense to have an undying loyalty to a specific airline, hotel, or travel rewards program? Or is it more beneficial to hunt for the best deal or package on a per trip basis? There are arguments for both sides below. Which one makes the most sense for you?

Travel Rewards Loyalty

For those that are on the road a lot for business or pleasure, travel loyalty programs can really pay off. You can earn free nights and flights just by joining a preferred customer program, staying in the same hotel brands, and flying on the same airlines. For example, the Starwood Preferred and Marriott rewards programs are setup to really reward their most frequent visitors.  If you fly a lot for business both Delta and Southwest offer some of the best frequent flyer programs.

But free nights and flights are just the tip of the iceberg in terms of benefits for using these programs. If your favorite hotel brand or airline teams up with a credit card company to offer a rewards card that gives you points specifically for their brand, you can really rack up a lot of extras.

Many travel rewards credit cards offer a hefty bonus with your first purchase and then a second bonus if you spend a certain amount on the card within a few months of opening the credit card. You will be able to ramp up the number of points you have through your normal, everyday spending on top of the travel points you earn. As your points balance goes up many programs will give you elite or preferred status with their brands. This can give you VIP access, early check-ins, and other perks as you travel.

Travel Deal Hunting

If you rarely travel, then rewards programs are not nearly as beneficial. It can take many years of staying one or two nights at a hotel chain and using your hotel card to earn enough points for a free stay or upgrade. Airline programs are even harder to crack with many free flights starting at 25,000 miles. You might need to charge 8 round-trip flights to your airline card earn a free ticket.

Plus, sometimes programs change or are discontinued and those built up reward points can be wiped out. Instead of trying to remember what your login is for a random travel program, your time is better served just looking for the best travel deal when you need one.

The benefit of not sticking with a certain hotel or airline is that you can just choose the one that’s offering the lowest price when you happen to travel.  A quick search on a site like Kayak, sorted by the lowest price, will show who has the lowest fares.

One good way to save money when hunting for a travel deal is to bundle as many aspects of your trip together as possible. You may not get the absolute best deal than if you spent hours combing for the best deal, but there is easy money to be saved by simply packaging your flight, hotel, and car rental together.

If your travel dates are flexible or you are willing to risk part of your trip, you can use last minute deals to save significant amounts of cash. Hotels in particular do not want to be left holding open rooms when they could get some revenue for an empty room. This strategy does not work as well with flights simply because most last minute flights have very high fares.

Travel Some, Spend a Lot?

The gray area in between the two ends of the spectrum is the person who travels some during the year, but also spends a lot on credit cards. Depending on how much you travel and exactly where you are spending money, a customer rewards program tied with a travel rewards credit card for that program could generate enough points to be worthwhile.

Otherwise you can be better served by utilizing a cash back credit card. That cash can be used for anything you need it to — that might mean for your upcoming travel or simply to put toward another money goal if you don’t have travel plans coming up.

Final Thoughts

Regardless of which direction you decide to take your travel planning, make sure you read the fine print on the preferred customer programs and reward cards. Beware of annual fees that can dig into any meaningful reward you receive. There’s no sense in getting one free night if you pay the equivalent cost in annual fees every year.

What have you found to be the best fit for you, sticking with travel rewards programs or just searching for the best deals when you travel?

Debit and credit card reward programs sometimes come with cash back that offer cold hard cash (or a statement credit) based on how much you spend on your card. As we’ve seen with Ben’s Blue Cash card, the right cash back program can earn you hundreds of dollars per year for your everyday spending.

Although it sounds great, there are several things that can stand in the way of you maximizing the cashback you earn. If you have a cash rewards card, here are 8 ways to waste your cashback that you definitely want to avoid.

Cash Back Mistakes to Avoid

1. Pay an annual fee
Earning cashback on your credit card is great, but you wipe out a big chunk of your rewards by paying an annual fee. Essentially, having an annual fee means your cashback account starts out in the hole every year.

You have to spend a lot of money just to break even with an annual fee but having a fee doesn’t necessarily rule out a card. Just be sure that you research the card’s cash back program well enough that you feel confident your spending habits will make the fee more than pay for itself. You can find some good credit cards without annual fees in this look at the best cash back credit cards.

These days it’s becoming more common for banks to charge a fee for you to use their debit cards as well.  There are companies that offer cash back debit cards that don’t charge a fee – for example check out Perkstreet Financial.

2. Pay interest
Similar to paying an annual fee, any interest you pay reduces your cashback reward significantly. Interest can be even worse than an annual fee because while the annual fee is a fixed cost, the interest can get higher and higher depending on your balance.  Earning 5% cash back but then paying 20% in interest fees defeats the purpose of earning cash rewards.

3. Pay late fees
Likewise, paying late fees because you sent in a late payment will wipe out a large chunk if not all of your cashback rewards. Set up automatic payments on the card so you don’t pay late fees.   If you’re a long time customer and it’s the first time you’ve been charged a late fee, a phone call to customer service may be able to get that fee waived.

4. Forget big purchases
If you’re buying a bick ticket item and pay cash then you could be missing out on a big chunk of cash back.  Obviously, you have to make sure you pay off the big balance at the end of the month or you’ll end up owing interest.

For example, last summer when Ben remodeled his kitchen in his new house he put the countertop and the appliances on his card.  He had the cash to pay it off right away but going through his Blue Cash Everyday card earned a lot of cashback.

5. Convert dollars to other reward programs
Many credit card companies allow you to swap out your cash back dollars for reward points in other programs. You could turn your cash rewards into hotel card points or airline card miles. While this can be convenient if you’re about to take a trip many times those points are worth less than the cash you earned.

Many points programs give you points at what comes out to less than 1% returns on your spending. If your cash back is earned at a higher rate like 2% or 5%, you are losing out. Additionally, you can spend cash on anything. You can’t control the value of the travel points.

6. Forget to cash out your rewards
This isn’t relevant for cards that automatically send you a check or credit your cash back to your statement.  But for cards that require you to request your cash back, make sure you do it!  If you’re not sure how yours works, be sure to look into it and find out how you can redeem your rewards. 

7. Miss out on top reward categories
Some cashback credit cards, like the Discover More and the Chase Freedom card, offer bonus cashback on certain rotating categories of spending on a monthly or quarterly basis. Extra cash back is great, but some of those same programs ask you to “opt-in” for the bonus rewards every time the category changes. Failure to do so will mean fewer rewards for you.

8. Miss a payment
Not only does missing a payment result in late fees and interest charges, many cards won’t give you credit for cashback you earned during a month that your payment is late.  This could have a particularly big impact on your earnings if it’s a month where you made a lot of big purchases.

Maximizing Cash Back

As you can see from that last point, these are all mistakes that can compound if you make multiple of them at once.  Here are some best practices to follow to help you maximize your cash back:

• Use a card without an annual fee
• Make your payments on time to avoid fees & interest
• Remember your rewards card for really big purchases (if you have the cash)
• Don’t convert your cashback to other rewards points
• Cash out your rewards as soon as possible
• Remember to opt-in for cards with rotating rewards categories

For more detailed information on frequently asked questions and misconceptions about cash back cards you can enter your email address below and I’ll send you the report, “10 Secrets to Maximizing Your CashBack Rewards”:

If you prefer to always fly the same airline then an airline specific card like those from Delta, Continental, and Southwest can be good for racking up free flights the fastest.  Airline branded cards from can also earn you extra perks and can help waive some fees.

On the other hand, travel cards like the CapitalOne Venture card, Discover Miles, or Blue Sky from American Express offer more flexibility since you can use them across airlines.  Another benefit of these types of cards is that they often don’t have blackout dates or travel restrictions.

First we’ll take a look at some airline cards and then we’ll go over some of the travel cards that are airline independent.

Airline Credit Cards

Gold Delta SkyMiles from American Express – Delta actually has three cards, the Gold, Platium, and Reserve.  All three cards earn miles at the same rate, double miles on purchases from Delta and 1 point for every dollar you spend elsewhere.  The Delta Reserve and Platium cards can earn you extra Medallion Qualifying Miles (MQMs) that come with extra benefits and additional SkyMiles.  However, the annual fees for the Reserve and Platinum cards are higher and they require certain annual spending limits to reach those reward levels.

The Gold SkyMiles card does have an annual fee, $95, but its the lowest of the three and it’s waived for the first year.  It typically features a new card promotion where you earn bonus SkyMiles with your first purchase. 

As I referred to earlier, airline specific cards do come with additional benefits, the Gold Delta SkyMiles card will get you your first bag checked for free.  The Delta cards also have a feature that you mostly only find in airline independent cards, the ability to use your miles with no blackout dates.  Use the “Pay With Miles” feature and you can apply your miles towards a plane ticket without restrictions.

Southwest Airlines Rapid Rewards – Southwest airlines gave their rewards program a major makeover earlier this year and offers two airline rewards cards, the Rapid Rewards Plus and the Rapid Rewards Premier.  Both the Rapid Rewards Plus and Premier cards earn the same amount of points – double points for spending with Southwest or it’s partner programs, one point for for each dollar spent elsewhere.

Both cards earn points instead of miles, part of the Rapid Rewards overhaul was a switch from miles to points. One of the goals of the change was to make it easier to earn Rapid Rewards points by adding more partners into the network (giving you more places to earn double points).  Southwest has also seen the light and updated their program so that your points don’t expire.  They do have some requirements though, you either have to fly or spend with one of their partners every 2 years to keep your points safe.

The main difference between the Rapid Rewards Premier and Plus cards is the amount of bonus points you can earn.  You earn points every year you’re a member, the Premier card earns twice as many as the Plus card.  There is downside, the annual fee for Premier card is higher, $99, compared to $69 for the Rapid Rewards Plus.  Both cards give you enough bonus points with your first purchase to earn a free round trip flight on Southwest.

Travel Credit Cards

Miles by Discover – One of the great things about the Miles by Discover credit card is that it is one of the few airline rewards cards that doesn’t come with an annual fee. You can use your travel rewards on a variety of airlines and you’re not limited to booking your flights on a certain website.  Another benefit of the Discover Miles card is that you can earn and use your miles for multiple travel expenses – air, hotel, and car rental.

Many of the airline specific cards earn you double points when spending with them and 1 point or mile per dollar spent other places.  The Miles card earns you double points on any travel or dining purchases, regardless of what company it’s with.  Another benefit of this card is that you earn bonus points every month you use it for a purchase.

The drawback of the flexibility of the Miles card is that your miles may not add up to free flights as quickly as they would with an airline specific card.  You earn a $100 credit on your Miles card for every 10K miles you accumulate.  If you always use the same airline then a card like the Southwest Rapid Rewards or Delta Gold SkyMiles might be best, but if your travel varies then the Discover Miles card is a good option.

CapitalOne Venture – The benefit of the Venture card is that you earn 2 miles for every dollar you spend on anything.  Above we looked at how Discover Miles earns double miles on all travel spending, which is better than the airline cards.  In comparison, the Venture card earns 2 miles for every dollar, not just travel, which is even better. 

Unfortunately, the Venture card doesn’t share the zero annual fee policy of the Miles card.  You pay $59 a year as Venture cardmember, however, the fee is waived for the first year.  I’ve seen the Venture card offer bonus miles for opening a card in the past but it seems they don’t offer new card members a sign up bonus as often as many of the other airline and travel cards.

After you book your travel using the Venture card you call in or go to their website to redeem your existing miles, they’ll give you a credit on your next statement.  The redemption policy is comparable to Discover Miles, every 10K miles earns you a $100 credit.

Blue Sky from American Express – Like the Miles card, the Blue Sky card doesn’t charge an annual fee.  Unlike the Miles card, the standard Blue Sky card doesn’t offer double points on travel purchases.  However there is a Preferred version of the card ($75 annual fee) that earns 2 points for dining, hotel, and car rental.

The Blue Sky card does have a nice feature that other cards don’t offer, the Blue Savings program.  The “Blue” family of cards, Blue Cash and Blue Sky, have a partner network of companies that offer you a discount if you buy with a Blue card.  There are hotels (Marriott, Renaissance) and rental car companies (Alamo, Enterprise, Hertz) in the program.  So if you pay for your hotel or rental car with the Blue Sky you get a discount (5–20%) and you earn miles.

There are bonus miles for opening a Blue Sky card if you open the Preferred version but none for the standard version of the card.

Airline Card Considerations

If you’re not a frequent traveler and you only fly during the peak seasons (like Thanksgiving and the Christmas holidays) then an airline credit card might not be the best choice.  Ticket prices tend to go up during those times, offsetting the value of miles earned.  There’s also a higher likelihood that your flight will fall under restrictions during peak times and you might not be able to take full advantage of your frequent flier miles.

If that’s the case, you might look into a cash back credit card where you can maximize your earnings throughout the year and then use some of that cash back to help pay for your airline ticket.

On the other hand, if you are able to find a card with a big enough sign up bonus to earn you a free flight – and you can get the annual fee waived – then an airline card could still come in handy.

We’ve talked before about how to choose the best credit card for you and how to decide which is the best reward cards but we kind of lumped all the travel rewards cards together in one category.  Today we’re going to look at some of the top hotel rewards cards and tomorrow we’ll drill down and take a look at some good airline credit cards.

Three Great Hotel Credit Cards

Three of the best hotel credit cards include hospitality chains all over the world. These credit cards include:

Marriott Rewards Visa Signature Card: Use this card, from Chase, to earn points toward free hotel stays. There are thousands of Marriott hotels around the world, from the Fairfield Inn to the Courtyard to the Renaissance to others. My parents stayed free on a recent trip to the U.K., thanks to their Marriott Rewards card.

You earn three points for every dollar you spend at Marriott, and one point on other purchases. Get a free night’s stay just for being approved, and earn more after your first purchase. Annual fee: $30. You can “upgrade” to the Premier version for more perks, but the annual fee is upgraded to $65.

Starwood Preferred Guest Credit Card: American Express offers this credit card that helps you earn Starpoints, good toward free nights at any of the Starwood hotels.  There are a range of hotels in the Starwood family like St. Regis, Sheraton and Le Meridien.

The tiered system allows you to increase your benefits as you use the card, so frequent travelers can really benefit from the rewards program. There are additional promotions you can take advantage of with this credit card, including a third night free when you book two nights in a row. There are no blackout dates associated with this program and Starwood allows you to transfer your points to around 30 airline companies if you want to use your rewards to help with a flight as well. You’ll pay an annual fee of $65 for the Starwood Preferred Guest card.

Hilton HHonors Visa Signature Card: If you prefer Hilton properties around the world, this card from Citi might be just the thing. You get six points for every dollar spent at a Hilton property, as well as three points for supermarket, drugstores and gas stations. Other purchases provide you with double points.

It is worth noting that you need a higher point count to earn a free stay with the HHonors card than with other cards. You do get enough points for a free stay if you spend $1,000 in the first four months. The Citi card does have an advantage over the other two: No annual fee. There is also an AmEx version (that does have an annual fee).

Choosing Your Hotel Rewards Credit Card

When deciding on your hotel rewards credit card, it is best to consider your needs. Marriott works great for my parents, and for me, because we stay at Marriott properties frequently.

Choosing a Hotel
When I was in training a few months ago I started chatting with the instructor about his travels and where he stays.  He flies all over the country, teaching courses in a different city every week.  Being curious about travel rewards, I asked him how he flew and where he stayed. 

He uses airlines in the Star Alliance (United, US Air, Continental) because they have the best flight options from where he lives to the places he flies most frequently.  Most every city he teaches in has a Marriott, or one of the variations like Fairfield Inn or Courtyard, so he always stays there.  The Marriott card is great for him because of how he uses it.  However, if you prefer other hotel properties, you might consider a different card.

Credit Card Terms 
In addition to the hotel chain your prefer or vist most frequently you should also consider such items as interest rate, annual fee and other fees. Pay attention to foreign transaction fees if you frequently travel abroad.

Also, make sure you understand blackout dates, and redemption policies. You want a card that is convenient for you, and makes it easy for you to redeem your free stays when you want to.

Credit Card Usage
Consider your spending habits as well. If you are a frequent traveler, and stay at hotels, using a hotel card that helps you earn large amounts of points quickly can be beneficial. However, if you do a lot of other shopping, and only use your points occasionally, you might want a card that offers extra points for regular, every day purchases.

Happy travels! Stay tuned for tomorrow’s post on some airline credit cards you should check out.

Something else that can be tricky is that the credit card offers usually change over time.  It’s not typically in a matter of days but they can change relatively quickly – just a week after I wrote about comparing the credit card bonus offers available several of them had changed.

Comparing Card Offers

I put together the table below that shows the bonus amount, minimum required spend, and annual fee of all the current cash bonus offers.  You can click any of the columns to sort the offers – so you can check out the ones with the highest cash bonus values, then sort again to find the lowest annual fees. As you compare credit card offers you can click the card image for all the details about the card or you can click any of the fields for more info about the bonus offers. If you’re reading this in a reader or email you’ll need to visit the site to see the charts.

Changing Card Offers

As an example of the changing terms I mentioned earlier, the Chase Freedom card cash bonus offer updated its terms for the minimum spend and the timeframe you have to earn the bonus after opening a card.  The dollar amount of the offer stayed the same but the minimum spend amount required was cut by a third.  Although the amount of time you had to hit the bonus limit was cut in half, the amount you had to spend per month was cut by about $100.

The Discover Open Road card actually got rid of the cash bonus you could earn but it doubled the value of a gift certificate you get when you open the card.

The third card with changes, the Southwest Airlines Rapid Rewards actually offered a rewards points bonus and a cash bonus.  It’s a good example of how offers have multiple criteria you should examine. 

As part of the changes the cash bonus was removed and the annual fee went up by $30. However, the total amount of the rewards points bonus more than doubled.  If you looked at only the removal of the cash bonus or the increase in fee you might think the offer became less attractive.  However, if take into consideration the big jump in bonus rewards points and you’re looking to buy a plane ticket then maybe the offer improved.

The chart on this page is only for cash bonus offers but I’ll put together more charts in the future that compare rewards points bonuses and airline miles offers.

Credit card bonuses seem to be popping up all over the place, every time I open a credit card offer in the mail or visit a site online it seems like I read about a new cash bonus for opening a card. If you’re thinking about applying for a credit card, it can be hard to keep track of the offers and compare the bonuses since they seem to be constantly changing.

[Hover and click charts for details] The interactive charts you see in this article should help you compare the various features of the credit cards that are running introductory offers for signing up.  Each slice of a pie chart represents a credit card, to keep it readable each one just show the numbers  - like the amount of the cash bonus, annual fees, etc.  If you hover over a card slice you’ll see the name of the card and you can click on any of them to show more detail about the offer and more information about that card.

You can compare the cards with a chart for cash bonuses, rewards points bonus, miles bonus, required bonus spend, bonus spend months, 0% balance transfer intro periods, and annual fees.  You’ll notice some of the charts have more slices than others, if a credit card doesn’t meet the criteria for a particular chart then it won’t appear. For example, not all cards have annual fees so only some cards appear in that chart. (If you’re reading this in a reader you’ll have to visit the site to see the charts).

The first chart looks at the cash bonus you earn from signing up for a new card. Some cards offer points instead of cash for becoming a new member, if they list the cash equivalent of the points I’ve included them in this chart as well. Some of these cards give you a credit on your statement, others give you credit towards a gift card, and others give you cash towards a travel purchase so pay attention to how you’re paid the cash bonus.

Many of the cards that have a bonus but no annual fee require a minimum amount of spending in a certain period of time in order to qualify for the reward. To compare those across cards I’ve included a chart that shows the amount of spending required and another with the number of months you have to make your purchases. As I mentioned, if you don’t see a card on a particular pie chart that means it has a value of zero for the feature we’re comparing it on. So in the case of the minimum amount of spending required, it’s good if a card’s not on the chart – that means you get the bonus regardless of purchases.

Having a set amount of time to make your initial purchases could be no problem or could make it tough for you to earn the bonus, depending on what’s going on in your life right now. For example, last year we spent a big chunk of money in one months time remodeling our house, so a card that required I spend a certain amount in a month would have made sense. So if you have some big purchases coming up you might want to hold off on applying for a card until right before you buy so you get your minimum spend within the window. Just leave enough time to get approved and have the card shipped to you.

One method used by Discover for some cards is to give you a certain number of bonus points each month you use the card, up to a certain number of months.  I kind of like that approach because you don’t have to put a bunch of purchases on a card all at once.  In cases like those, in order to come up with the “bonus spend required” I assumed that you’d be putting at least $5 a month on your card for the duration of the bonus period. Here’s the chart that compares the number of months you have to spend your minimum in order to qualify for the credit card bonus.

Credit card rewards can be tricky to figure out when you’re dealing in points because every credit card company has their own rewards program and pays out their rewards points a little differently. You have the Chase Ultimate Rewards program, Citi ThankYou Rewards, American Express Membership Rewards, etc. 

You’re also comparing hotel programs, some airline programs, travel programs, and general rewards programs.  So if it’s an airline credit card like SouthWest Rapid Rewards a given number of points will equal a free flight, whereas a travel rewards card like Chase Sapphire has different options. After seeing all the CapitalOne commercials a few months ago I visited their site and saw a chart where they compare their Venture card with many of the other top travel cards.  I imagine most credit card companies have a comparison of some sort on their sites but it’s still tough to compare apples and oranges.

So although comparing the number of points isn’t as exact as comparing cash bonuses, I guess it gives you a general idea about which cards offer the highest points bonuses and which have below average amounts.  If you see some that catch your eye, you can drill down into the details of those two or three and see how they compare.

With airline cards you have two main choices 1) go with a card specific to a carrier like Delta, Southwest, United, Continental, etc – or 2) use an airline rewards card that lets you redeem your points across multiple airlines. 

If you’re a fan of a certain airline then the decision is pretty easy, as long as they have a decent rewards program.  It also makes a difference how much you fly.  Many of the airline specific credit cards pay the highest rewards when you use the card to buy one of their tickets.  If you frequent the airline then you might get the most rewards for your dollar with the carrier specific card. 

On the flip side, some of these carrier cards only offer 1 mile for every dollar spent on non-ticket purchases.  Right now you can earn double that on airline independent cards so if you put a lot of purchases on your card that aren’t flights then you might earn more miles and have the flexibility of choosing the airline when you do decide to fly.

Either way, check out this chart that shows the current airline credit card promotions to see what they offer.  Of course, the bonus miles don’t make or break the card so you don’t want to choose solely based on how many miles you get for signing up.

Some cards will also include a 0% balance transfer promotion that lets you pay no interest on balances you transfer over to the new card from an existing card. It seems as though Citibank and Discover usually have the most 0% interest offers, keep your eye on them if you’re interested in transferring a balance.

One of the main factors to consider for the 0% interest offers is the amount of time the promotional interest rate lasts. We all know that paying interest on a big balance can put a dent in your checking account, so getting a break from interest payments lets you put your money towards the balance. The longer you’re not paying interest on the balance the faster you can pay off the card. Here’s a chart that shows the number of months that various 0% balance transfer offers last.

Some of the credit cards that offer bonuses don’t have an annual fee but others do.  This next chart takes a look at the annual fees charged by the rewards cards that we’ve been covering, if it’s not listed in the chart then it doesn’t have a fee.

It’s not always the case but typically cards that charge a fee try to offer more benefits to make the fee worthwhile. Depending on what the card offers and how you use it, paying a fee every year might or might not make sense. For whatever reason, it seems like the travel and airline cards seem to be more likely to have an annual fee.

One thing I’ve noticed with airline rewards cards is that their annual fee tends to be lower when the card first launches. After the card’s been around for a while the annual fee seems to go up, so if you’re going for an airline rewards card then it might make sense to sign up for one soon after they’re launched. 

One common thing that’s nice about many of the cards with fees is that they’ll waive the fee for the first year you have the card. Obviously the benefit of this approach is that you get to try out the card and see how you can use it for rewards before committing to pay anything – basically a rewards free trial. Not every card will waive the first year fee so be sure to check the details of a card if you’re thinking about applying.

The rewards program for the Blue Cash card was one of the best cashback cards, in my opinion, and has recently gotten a little better. This has actually been one of the biggest years for our cash back payout, up to $560 so far, and now I don’t have to wait to redeem it.
Blue Cash Rewards

You’ve probably heard me mention before that I didn’t like having to wait a year to get the cash back we earned with our Blue Cash card. Two days ago I got a reminder email from American Express with the subject “Now get Blue Cash rewards when you want them” along with a link to their new rewards site.

As a side note on online security, I don’t click links in emails these days, instead I go directly to the site after reading the email. So I went out the American Express site to check out the enhanced rewards program. It had actually been a long time since I’d logged into my American Express account directly since our statement is always paid through online bill pay – long enough I couldn’t even remember my login.

After resetting my password and getting logged in I noticed the rewards program wasn’t the only thing that had changed.  The site design was a little different and I noticed a few more options in my account.  First I’ll go over the changes to the reward program and if I think they helped make the card better.

Rewards Program Changes

The card now offers more than just a cash back program, to reflect the change American Express now calls your earnings “Blue Cash Reward Dollars”.  Once you’ve accumulated 25 or more reward dollars you can redeem them – Hurray!

I’ve had my card for almost ten years now so I’m pretty used to seeing the rewards show up once a year as a statement credit.  I like that I don’t have to wait to cash them in but if you’re like me and accustomed to them being automatic, you’ll have to remember to request redemption.

Additional Rewards

Perhaps in an effort to offer the same flexibility as other cards from Citibank, Discover, Capital One, and Chase – AmEx now lets you use your reward dollars for other things, such as gift cards or merchandise.

I use this card for the cashback but I browsed through the gift cards to see what they had. I was hoping maybe they’d have an offer like the Discover More card where you can actually buy a gift card for less than face value – something I talked about when I compared Blue Cash vs Discover More.

For example, with Discover’s reward program, you can an buy a $50 Panera gift card for only $45. That’s like an extra 10% bonus cash back but unfortunately the American Express program didn’t have any deals like that.

They were more flexible than Discover, you only need $25 Blue Cash Reward Dollars to redeem for a gift card vs the $45 you have to accumulate for Discover.  The gift cards were all for restaurants and stores that you’ve probably heard of, and they did have tons of products you could buy with your rewards dollars.

However, like I said, I use this card for earning the cash rebate so I’ll probably just stick with that.

Earning Rewards

The way you earn cash back has also changed along with the rewards progrm.  The card no longer has a minimum amount you have to spend before earning cashback on everyday items, so American Express has renamed it the Blue Cash Everyday card.  It used to be that all everyday purchases earned the same amount of cash back but now they’ve split Supermarkets into it’s own earning category, paying the highest cashback.  They also removed pharmacies from the everyday spending cateogry and replaced it with department stores.

When you login to your account online it shows you the cash back percentages that you’re currently earning.  If you don’t get your statements online and they come in the mail instead, your printed bill also has a section that breaks out your earnings by cashback percentage.  You can actually access all your old statements online back to 2004, I went to checkout the ones from last year because I wanted to see what month our annual credit for the rebate used to show up.

One thing I saw on the statement that I hadn’t noticed before is that if you pay over $400 for a single purchase of gas you don’t earn the 2% back – but rather 1% back instead.  That’s a lot of money to fill up your tank but if you ever get close to spending that much in one transaction, don’t fill up all the way.  Just stop, pay the bill, and then start a second purchase so you still earn 2%.

Cash Back Levels

Obviously the biggest advantage of the card from an earnings perspective is the 3% back on groceries and 2% on gas and department store purchases.  You earn a 1% cash rebate on all other purchases.

As you can see in this glance at our account, our grocery spending has been the highest so it’s nice that supermarkets pay the most in cash back.  We also put all of our gas purchases on this card so we can earn the higher cash back.

One thing to note is that you don’t earn the 3% back on groceries or 3% back on gas at warehouse stores like Sam’s Club or Costco.  If you’re a Costco member, you can get the TrueEarnings card to earn higher cash back when shopping there.

Redeeming Cash Back Rewards

As I mentioned, the redemption of rewards is where the big changes come in.  As you can see from one of our statements from last year (below), the rebate used to show up as one big credit on your account every 12 months.

The good thing about the old setup was that one a month a year our bill was a lot lower than normal. Of course the bad thing was those rewards weren’t doing anything for me all year long. 

Now you can login and request your cash rebate as long as you have at least $25 accumulated.  So if a credit makes your bill $25 less than it would have been, that $25 you saved can be earning interest all year long.  The thing to watch out for is spending more money than you would have simply because you’ve earned cash back.

The graphic below shows how you request your statement credit once you’re logged into the American Express website.

You choose the amount of the credit you want to request and the quantity and click “Add to Cart”. 

The different redemption amounts American Express offers are $25, $50, $75, $100, $200, and $500.  You can mix and match the different amounts – for example, to request our $560 earned so far I could request a credit for $500 and 1 for $50.

The remaining $10.39 would stay in the account until I’d earned enough to redeem another $25.  The reason AmEx introduced the whole cart experience is that you can also turn in your rewards dollars for gift cards and merchandise.  However, I’m sticking with the cash back optin so I don’t worry about shipping or fees rewards.

Blue Cash Bonuses

American Express has been working on these upgrades to the rewards program for a while.  I remember when I got the first letter about the changes but as the date drew near they sent out another notice that the new program would be postponed. 

I’m glad they took their time to work out the kinks and get it right because I think the new program is definitely an improvement.  Based on the bonuses that they’re offering, American Express must also think that we’ll like the changes.  If you own and use the Blue Cash card, AmEx will give you a $25 credit if you refer a friend to the card and they’re approved.  I guess they figure with these recent enhancements they’re likely to get more recommendations.

In the past you would have had to wait a whole year to claim those $25 in bonuses but now you can get them right away.  If you want to check out the card and the bonuses just click here.

Of course if you carry a balance on your credit card, don’t bother with cash back cards. You should instead try to lower your interest rates and pay off your debt, as I covered yesterday in my review of David Bach’s new book. 

He outlines a process you can use for getting those lower rates but when all you’re comparing is the interest rates it does make it simpler to choose a card. For example he writes in one of his case studies about going with a 0% interest offer that has the lowest balance transfer fees.

However, if you don’t carry a balance and you’re not concerned with low interest cards then choosing the right card is a little more involved.  As I mentioned yesterday, I’ve thankfully never had to deal with carrying a balance so I look at criteria other than just the APR.  I recently did some comparisons of several cash back cards and thought I’d go over those as an example.

I’m not necessarily going over them in order of importance – I’ll list what criteria I look at and you can choose which are the most important to you.

• Earning Rewards
• Redeeming Rewards
• Card Fees
• Interest Rates
• Reward Limits
• Promotions
• Payment Policies 
• Card Programs
• Customer Service
• Other Features

Earning Rewards

The key here is to choose a card that best suits your spending patterns.  For example, I look at things like your amount of annual spending and specific types of things you buy when comparing the Blue Cash vs Discover More cards.  Look at the types of spending behavior that various cash back cards reward and narrow it down to the one or two that best match how you spend money.

This is easier to do if you already use a credit card and are looking for a replacement because you can look at the previous year’s data online.  If you’ve never used a credit card before then you’ll have to look back through your check register and old bank statements to see your spending patterns.

Redeeming Rewards

The least amount of hassle to get your money back the fastest is what I look for in this category – I like to use my cash back earnings to help offset my expenses.  However, if you’re more interested in using your cash rebates to get deals on purchases of new stuff then your criteria will be a little different.

Going back to the Blue Cash vs More comparison again, one card lets you get your money back sooner but the other can earn you additional discounts on purchases in addition to your cash back.  So how you plan on using your rewards makes a difference in which card you might want.

Card Fees & Interest Rates

Obviously paying no fee is better than having the cost of an annual fee.  When you’re looking at travel rewards cards there are cases where the benefits of the card can outweigh the fee but cash back cards are usually a different story.  I can’t think of a cash back card with an annual fee that’s worth paying, if you know of one be sure to speak up in the comments.

I already touched on this at the beginning of the post so I won’t spend a lot of your time on it but if you’re carrying a balance then I don’t think a cash back card is right for you.  You should research low interest cards and focus on paying down your debt, no cash rebate will make up for your interest payments.

There are a few cards like the Citi Platinum Select that feature lower interest rates plus a form of cash back but in general you should just stick with a card that gets you the lowest interest rate possible.

Reward Limits

Since you’re chasing the highest cash back rates available, you want to make sure that as much of your spending earns at the top rebate rate as possible.  The trouble with reward caps is that they can get in the way of this, often times without you realizing it.  You’re usually not notified once you’ve hit an earnings limit, the cash back structure typically just reverts back to the minimum payout for the remainder of the period the cap applies to.

For example, when I looked at Discover More vs Chase Freedom they both let you earn 5% cash back but also had some earnings caps on that higher rate to take into account.  The limits on earnings don’t mean they’re not good cash rewards cards, you just have to compare their bonus rebate caps and the timeframes they cover and see how they fit into how you spend.

Card Promotions

If you’re opening card after card simply to earn the account opening bonus then you’re probably going to negatively impact your credit score – I wouldn’t recommend that.  However, if you’re comparing cards and have two that are similar in most criteria and one pays a significantly higher bonus than the other, I don’t think it’s a bad thing to let the bonus help you decide.  For example, as I shared in my look at the American Express Gold card, I got a free plane ticket when I signed up for the card a few years back.

One thing to be aware of is that the really good credit card promotions are usually reserved for new customers.  So if you do have two similar cards to choose between that are both are offering bonuses – if you’ve previously used one of the cards you might not qualify and that might help make your decision a little easier.

Payment Policies

These are things like the number of days you have to pay off your card, late fees that are charged, how interest is calculated on a balance, and how late or missed payments impact any rewards you might have earned.

Even if you typically pay off your balance each month it’s smart to read up on these because there might be a month where you get busy or something happens and you forget to pay or are late.  It’s good to know what it will cost you in the event something like that happens.

Customer Service

I don’t know what your experience has been but I’ve never had bad customer service when dealing with a credit card company.  Unlike every other company I deal with that has you navigating phone menus and waiting on hold for minutes, the credit card companies always seem to have you talking to a person in under a minute.

One night before leaving on a trip I called American Express at 2:30 in the morning to ask about rental car insurance on my card and the lady was probably the most polite and helpful phone rep I’d talked to in a year.

Of course courtesy and response time aren’t as important as whether the company is willing to work with you. Going back to my discussion of payment policies and late payments, it’s something that happened to me before.  I’d had my Blue Cash card for years and always paid in full and on time but one month I was a few days late.  When I called in to see what I could do about the late fee and interest charges I’d incurred they were willing to work with me since I was a long time customer with a good track record. 

If you have a history of good customer service with a particular company then that’s something to consider.  You can’t always rely on past experience – for example if you’re thinking about getting a card from Capital One but have always had a Discover card it’s tough to compare since you’ve never had any dealings with Capital One.  The best approach in a situation like that is to ask a few people you know who have used the company.

Card Programs

One thing I looked at when comparing Blue Cash vs Chase Freedom is that both cards were eligible for a program specific to that card.  All the “Blue” AmEx cards were part of the “Blue Savings” program that gives you discounts on your purchases with certain partner merchants.  The Freedom card, along with a few others from Chase, can participate in the Chase Blueprint program. 

What Chase Blueprint does for you is let you arrange your payments to help you pay off your balance and lower what you pay in interest.  So Blue Savings is a way to save more on top of your cash back and Blueprint helps you pay off your debt.  They’re different types of programs, which one is more attractive obviously depends on your personal situation but the main point is to investigate what they offer when comparing cards.

Other Features

Some cards have unique feature that make them stand out a little and those can be tough to compare.  If only one company or card offers a feature, how do you figure that into your comparison?  The best way I know how is to try and determine what that feature could be worth in dollars and cents.

For example, with my Blue Cash card I get one free credit score a year through Experian.  The value of that is pretty easy to evaluate since I know what a credit score costs on average.  They also offer periodic discounts & deals, like a recent 35% off TurboTax software – again easy to figure out the dollar value.

Choosing a Card

Obviously choosing a cash back card isn’t the most important financial decision you’ll make in your life.  Since they say most people spend more time planning their vacations then they do their retirement, I’m not too worried that anyone will over analyze this decision.  I’ve gone over a number of points to consider when comparing cards; don’t feel like you have to study each one of these.  Use the ones you want and ignore the rest, good luck choosing the right card!

I’ve never personally dealt with carrying around debt on my credit card but said I’d be willing to check out his advice when Bach’s team asked me to review that part of his book.  The previous chapters talked about organizing and prioritizing your debt  – at this point in the book, the emphasis is on reducing the amount of interest you’re paying on your card or cards.

Finding the Best Interest Rates

The approach he suggests is one of negotiation, and in any negotiation it always helps to enter into it with as much information as possible.  The main idea is that you’re likely paying more interest than you could be so you should compare yourself against people around the country to see how much room there is to negotiate.

The book gives you a worksheet to track the balance and rates on each card and the progress of your negotiations.  Bach suggests finding out right away what rate new customers are paying on the same card that you have.   Then he breaks down the different interest rate categories based on your FICO score :

1. Super-Prime
2. Prime
3. Sub-Prime
4. Punitive
5. Promotional

His chart shows you which category you’d fall under and what interest rate you should expect to pay – based on your credit score.  Obviously if there’s a big gap that can be a talking point when you call up the credit card company.

Your Credit Score

If you don’t know your credit score, Bach recommends trying out a program from Equifax called DebtWise.  In an earlier chapter he explains how he came across the tool and worked with Equifax to add features that basically took the system he’s been teaching for paying off credit card debt and automates all the steps. 

Anyone who buys his “Debt Free for Life” book gets a DebtWise free trial for one month – I’ve never used the service but I agree that free is good.  Similar to other free credit score options available, if you remain a customer after the trial the service has a monthly fee.

Negotiating Your Debt

Once you know your credit score, what interest rate your score should qualify you for, and the interest rate being given to new customers you have enough information to begin negotiating.  Bach gives you several strategies for overcoming common obstacles when negotiating your interest rates.

There’s not a lot that Bach writes about that you couldn’t eventually figure out on your own but his tips can definitely save you time – and when you’re paying high interest rates time is money.   Bach’s big advantage is that he’s worked with thousands of people to get out of debt in his career so he’s seen what tends to work and what doesn’t.

In my opinion, the best feature of the book are all the examples he gives of former clients and what did, or didn’t work for them. Since I tend to learn better through examples and stories, I think these are the most useful parts of his book. I remember reading about Bach’s Latte Factor concept in his book “Smart Couples Finish Rich” right after my wife and I were married.  Some of the tales he shared of his former clients still stick with me to this day – so pay attention to those sections and learn from the experiences of others so you don’t make the same mistakes yourself.

One of his stories in this book explains how a client went through all his steps and was able to lower their interest rate.  However, it wasn’t as low as they’d like so she ended up signing up for a balance transfer card that gave her 0% interest on her balance for 6 months while she worked on paying it off.  I think this is a good example of how there’s no one right way to accomplish your finance goals – and sometimes you have to try several different things to find the best one for you.

Forbearance & Debt Management Plans

If negotiation doesn’t get your rate lowered and you’re really struggling because you lost your job, were injured, or are just earning less – then you can talk to your credit card company about restructuring your debt.  These are cases where companies are willing to work with you because your ability to pay back the money you owe has been dealt a major blow. 

Since this sometimes involves drastically lowering your interest rates and minimum payments, the credit card company does their homework to make sure you really have suffered a hardship and aren’t just trying to get out of money you agreed to pay.

The book explains how Forbearance and Debt Management Plans work and things you should be aware of before deciding to take that approach (such as frozen credit and damage to your credit score).  He also discusses alternatives to these strategies, such as credit counseling, and devotes a chapter later in the book to the topic.

Improving Your Credit

When it comes to your credit score, the saying “the rich get richer” seems to apply to the whole system.  People who have high debt to income ratios and a long history of good credit can borrow money at the lowest interest rates.  Of course, these are the people who probably have the least need to borrow money – in contrast to consumers with bad credit and high debt levels who are more likely to run into desparate times and need access to credit.

Once you’re in debt it can be tough to improve your credit score in order to borrow at lower rates. Next week I’ll cover another chapter in Bach’s book that explains how your credit score works and different ways you can raise it.