Welcome to the Q4 edition of Maximizing What's in Your Wallet!
As a reminder, this post is for all the credit card deadbeats out there looking to maximize cashback rewards. So, if you never carry a balance on your credit cards, have them set to auto-pay in full every month, and want to make the most of Q4 2011, then read on.
Here's how you should allocate your spending:
Gas – This is a no-brainer. It's the same card year round. It is the PenFed VISA Platinum Gas / Cash Rewards Card. You'll get 5% back all the time on gas purchases. Just make sure you pay at the pump. I used to use this card for a lot more, but the rewards have been really scaled back such that only the 5% gas reward makes sense. However, as a gas card, it's a great choice.
Groceries – I have been very pleased with my new Blue Cash PreferredSM Card from American Express which pays me 6% back on all grocery purchases. It also pays 3% on gas and 1% on everything else, but I only use it at the grocery store. The downside to the card is the card carries a $75 annual fee, but it's worth it.
Restaurants – Either use your Discover® More Card! (up to $300 in total rewards) or Chase Freedom (up to $1,500 in total rewards). Hopefully, you saw my post on Restaurant.com and took advantage of that amazing offer.
Home Improvement – I've got nothing. DIY or use your 2% card.
Department Stores, and Clothing Stores – Either use your Discover® More Card! (up to $300 in total rewards) or Chase Freedom (up to $1,500 in total rewards). There's an extra bonus of 5% if you use your Chase Freedom at Kohl's – that's 10% back!
Hotels and Airlines – Use your 2% card or your favorite hotel card (mine's the Marriott Rewards® Premier Credit Card).
Movies – Chase Freedom has the market cornered this quarter as the only card offering 5% back.
Gifts – For gifts I use the Amazon VISA year round. When you buy through Amazon with the Amazon VISA you get 3% back and the first time you sign up, they give you $40 off your purchase. It's well worth the sign up. I am tempted to use my new Blue Cash PreferredSM Card from American Express to buy Amazon gift cards at a grocery store for the 6% cashback. If I can be more planful about such purchases, I will probably do this.
Charitable Organizations – For charities, again Chase Freedom has the market cornered this quarter as the only card offering 5% back so give liberally to your favorite charity!
Everything Else – Frequent readers know I love my 2% cashback Charles Schwab Invest First VISA card. Unfortunately, as I've chronicled ad nauseum, FIA has discontinued the program as of 10/31. Thus I will be transitioning to a roughly equivalent card in the Fidelity Retirement Rewards AMEX which also offers 2% cashback.
Two final thoughts: Please remember to sign up at Chase and Discover to be eligible for their 5% rewards, and remember this advice is ONLY for people who don't carry a balance…EVER.