Money Blue Book

Despite the popularity of credit cards that offer such rewards as airline miles, the vast majority of cardholders still prefer the simplicity and ease associated with cash back credit card rebates. The most efficient way to maximize your rebate opportunities is still the multi credit card rewards approach. However, despite the greater reward potential with having multiple cards, a sizable number of consumers simply do not want to deal with the hassle of carrying around a wallet bulging with credit cards . If you are one who prefers to have just a single card in your wallet, then definitely take a look at the following two cards – The Chase Freedom Visa Signature and the American Express Blue Cash Card. Depending on the specifics of your card usage habits, you should pick one or the other, as your rebate earnings will differ depending on how much you spend per month and year. As a third alternative, you could even use a hybrid combination of them both for full rebate earning potential.

If You Plan To Spend More Than Approximately $1,500 A Month On Your Credit Card, I Recommend the:

• American Express Blue Cash® – Voted as Kiplinger’s selection for the best cash rebate card, the Amex Blue Cash credit card offers a tiered rebate program, based on your purchases to date. For the first $6,500 you earn in the rebate year, you’ll earn 1% back on purchases for groceries, gas, and drugs, and 0.5% on everything else. However once you spend over $6,500 for the year, you can earn 5% cash back on all your every day purchases at supermarkets, gas stations and drugstores, and 1.5% cash back on all other purchases.

But If You Expect To Charge Less Than $1,500 A Month, I Suggest the:

• Chase Freedom Credit Card – Under the Chase Freedom Visa Signature’s dynamic cash rewards program, you’ll earn 3% cash back (standard 1% plus a bonus 2% rebate) for all eligible purchases made in the top three bonus categories where you spent the most. The bonus categories cover a lot of ground and include: grocery stores, gas stations, drugstores, convenience stores, fast food restaurants, telecommunications, department stores, cable and internet, video rentals movie theaters, commuter passenger transportation (including parking, taxis, and tolls), dry cleaners, pet supply stores and vet services, utilities, beauty shops, and gym memberships.For everything else, you’ll earn 1% cash back. There is also a cap on the bonus rebate amount you can earn per month – $12, which equates to $600 worth of net purchases in the bonus categories. When you reach $600 for the month, the remaining bonus category purchases will only earn the 1% base rebate. There is also an opportunity for a bonus rebate once you accumulate $200 in total rewards. Chase will tack on a $50 bonus rebate on top of your $200 – for a total of $250 (offering an effective rebate rate of 3.75%/1.25%).For a limited time, Chase Freedom is also currently offering an instant $50 sign-up bonus after you make your first purchase.

If You’re Interested In The Nitty Gritty Comparison Calculations That I Based My Recommendations On – Here They Are:

For the American Express Blue Cash Card calculations, I applied the program’s lower rebate rate of (1%/0.5%) until total expenditures crossed the $6,500 expenditure threshold to qualify for the higher rebate rate of (5%/1.5%). During the crossover month I shifted and timed higher rebate potential expenditures to qualify for the higher rate. However, bear in mind that in real practice, your actual cash rebate will vary depending on the timing of when you make certain types of purchases. Clearly for rebate purposes, you would be better off timing most of your higher rate (grocery, gas, drug) purchases until after you’ve crossed the $6,500 level.

To ensure an equivalent comparison for the Chase Freedom Visa Signature, I assumed that the cardholder chose to make groceries, gas, and drugs their 3 bonus higher rate categories. I also applied the effective bonus rate of 3.75%/1.25% on the assumption that the card holder would wait until $200 was accumulated to get the $50 bonus rebate.

• For $500 worth of expenditures per month, comprised of $150 worth of groceries, gas, and drugs – the American Express Blue Cash card earns $39 worth of cash rebates per year. The Chase Freedom Visa earns $96 (not enough for the $50 bonus). The Chase Freedom is clearly the better choice here.

• For $1,000 worth of expenditures per month, comprised of $400 worth of groceries, gas, and drugs – the American Express Blue Cash card earns $211 worth of cash rebates per year. The Chase Freedom Visa earns $270 (with the prorated $50 bonus). The Chase Freedom is still the better choice.

• For $2,000 worth of expenditures per month, comprised of $700 worth of groceries, gas, and drugs – the American Express Blue Cash card earns $526 worth of cash rebates per year. The Chase Freedom Visa earns $480 (with the prorated $50 bonus). The Amex Blue Cash Card finally edges out the Chase Freedom Visa.

• For $3,000 worth of expenditures per month, comprised of $900 worth of groceries, gas, and drugs – the American Express Blue Cash card earns $790 worth of cash rebates per year. The Chase Freedom Visa earns $630 (with the prorated $50 bonus). The Amex Blue Cash Card clearly blows the Chase Freedom Visa away when it comes to rebate performance for high spenders.

This entry was posted on Monday, January 21st, 2008 at 10:00 pm and is filed under Credit Cards, Deals and Offers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.