angel.x.martinez

I have been waiting for a good cash back card to supplement my Costco Amex (True Earnings) for Every Day Spending since Penfed lowered EDP to 1% from 1.25%, the Fidelity & Schwab cards are good options but I'm trying to stay away from Chase & FIA, not exactly consumer friendly from what I've heard.

Current:

Costco Amex (3% Gas, 2% Travel, 3% Dining, 1% Everything Else)
Penfed Visa (5% Gas, 2% Supermarkets, 1% Everything Else)
Amex Plat (Bonus Mall Spending & Everything Else)

I have other cards but they don't offer any benefits other than being back-ups, and I have been looking for a utility card, so far Hilton Amex is the only viable option, 6 pts per dollar.

Does anyone have a better combo?

mia

Discussion in progress:

http://www.flyertalk.com/forum/other...next-best.html

mia

Cashback is a flawed rewards paradigm because there is no arbitrage. Money is worth the same to the card issuer as it is to the cardholder. No card issuer can rebate 2% and be profitable unless they attract customers who will generate finance charges or other fees. Schwab tried this with the predictable result.

Airline miles and hotel points are fundamentally different because they represent capacity which would otherwise remain unsold. This allows the card issuer to buy at wholesale prices and award to consumers who must pay retail prices. The difference between the cost and the redemption value of miles/points allows the card issuer to reward the cardholder with far more than 2% even though their cost is less.

Cashback is the best choice for those who do not wish to travel or who are interested primarily in domestic economy class flights on competitive routes. Otherwise, I think miles provide more value. It doesn't make sense (to me) to dilute the value of your rewards through dispersal. You will end up with some Membership Rewards points, some airline miles, some HHonors points and a trivial amount of cash. I predict you will obtain more satisfaction by coordinating your earnings such that they can be combined to obtain expensive awards.

Naturally, this unsolicited opinion is worth just about what you paid for it .

angel.x.martinez

IMHO, it was a solicited opinion, with a detailed analysis.

I don't want to have a "buffet" like spread of miles or points, so I have been staying away from all AOR activities everyone else has been involved in for sign-up bonuses on credit cards, when it can affect my credit and I would most definitely turn around and cancel within twelve months.

virmaior

had not realized they dropped it until you posted...

now, the only difference between this and chase freedom is that they don't lock my money up temporarily.

angel.x.martinez

I like the statement credits.

virmaior

me too. it's far less annoying than having to do everything in $20 increments as with the Chase Freedom.

But Chase Freedom seems to be running a continuous 6% cash back scheme for public transportation and I live in New Jersey and take the rails to NY.

I'm in the market for a new card as well these days. Best things I am seeing are hotel cards, but I actually don't stay in that many hotels.

angel.x.martinez

I am currently considering Discover as an option. Although very hesitant.

FreFly

I agree with much of the above except I do not think that cashback is fundamentally flawed. It just is not for everyone. The disadvantage of points/miles is that they may be difficult to use (blackout periods, non-refundable reservations, and other restrictions); program changes and devaluation make it more difficult to get the most out of your points/miles; using points/miles is often more time-consuming.

Rewards program choice depends on the usage patters as well as on how much time the user is willing to invest into getting the best value.

An interesting question is which cashback cards are profitable and therefore are more likely to stay unchanged for a long time. For example, is 2% Fidelity Amex profitable (because Amex changes the merchants more) or is it going to disappear soon, like the Schwab card?

myadvice

Saw an ad recently in the paper: Use promotional code "DADQ" - and get $75 cash back after $500 purchases within 3 months. Valid for new cardmembers only. Offer is good through June 18, 2010

virmaior

I think what mia is saying is that they are flawed for the issuer insofar as the issuer is trying to create the impression of more reward than you actually get.

mia

Fidelity must share the transaction fee revenue stream with American Express (which operates the transaction processing network) and with FIA (which issues and administers the card on behalf of Fidelity). When American Express launched The Plum Card they offered 2% for payment within ten days of the closing date. They didn't have to share with anyone, but today the card offers only 1.5%.

The card can continue to pay 2% only if Fidelity can use the card to attract profitable investment accounts, or if Fidelity cardholders will generate sufficient finance charges or fees. Otherwise, I think you will see an annual fee, or an annual threshold amount which must be exceeded to earn 2% (see American Express Blue Cash for an example), or an annual cap on earnings (see most Citi ThankYou cards), or the card offered only to Fidelity investment account holders who meet certain criteria (see Ameriprise).

mia

I don't think the value of miles is an illusion, and I have the redemptions to prove it . Perhaps an example will help.

Cash back: You spend $100,000. The card issuer sends you 2%. You have $2,000.

Mileage: You spend $100,000. The card issuer buys 100,000 miles for, say, $1,500. You have 100,000 miles which can be redeemed for a business class ticket from USA to Europe worth, say, $3,000.

The card issuer spends less, but gives you an award worth more. There is no possibility of doing this with a cash back program, the card issuer cannot give you more cash without spending more.

angel.x.martinez

Good example

g50

Also watch for the travelocity amex in June. If the program stays the same as the current MC then 100,000 spend will get you a $4,000 business ticket that earns miles etc.
I have my fingers crossed.