4% or More Cash Back Options

I have said this for a while now, with the way things are going (clamping down on churning), cash back credit cards become more valuable.

It may be worthwhile to juggle around with some of the available cash back credit cards out there. Before reading on, I would not that this post is more Gerard towards people with large amounts of monthly purchases. For example, if you spend less than $1,000 per month, at a 5% return, you are getting $50 cash back per month or $600 per year, so it may not feel as worthwhile to switch around your credit card portfolio, to optimize your benefits.

If you are spending over $5,000 a month, that’s $250 cash back per month on a 5% return or $3,000 per year, which is much more significant. In which case I think it is worth it to give this more thought.

That being said, below are some credit card options to consider churning and rotating with.

American Express

American Express SimplyCash Card

• No annual fee
• Earn 5% cash back on gas, grocery and restaurants purchases (up to $250 cash back) for the first 6 months of Card membership as a welcome promotion

American Express SimplyCash Preferred Card

• $79 annual fee
• Earn 5% cash back on purchases for the first 6 months of cardmembership (up to $400 cash back)

One way to optimize the 5% is to use the credit card to purchase gift cards of retailers ahead of time, that you know you will eventually use, to take full advantage of the 5% cash back during the promotional period.

For example, let’s say I know that I plan to buy a computer at Best Buy a year from now, but the AMEX promo expires within 6 months, I would buy a Best Buy gift card at a store that would give me the 5% cash back today, keep the gift cards until I need to use them later in the year.

MasterCard

Once a 5% promotional period finishes, you can jump to another financial institution to take advantage of another promotional period such as:

MBNA Smart Cash Platinum Plus MasterCard

• No annual fee
• Earn 5% cash back (on the first 6 months) on gas and grocery purchases on $400 worth of monthly (calendar month) purchases

I would avoid signing up for multiple credit cards at the same time to avoid overlapping the 5% promotional period. While you have the credit card, you will want to max out all your expenses towards the one credit card before moving on to the next promotion.

Visa

Scotiabank Momentum Infinite Visa

• $99 annual fee (first year fee waived promotions sometimes offered)
• $30 for supplementary cardholders
• Earn 4% cash back for every $1 spent on gas and grocery purchases

CIBC Dividend Visa Infinite Card

• $99 annual fee (first year fee waived promotions sometimes offered)
• Earn 4% cash back on gas and grocery purchases

CIBC Dividend Visa Platinum Card

• $99 annual fee (first year fee waived promotions sometimes offered)
• Earn 4% cash back on gas and grocery purchases

These three credit cards offer a more stable 4% return, because it is the regular cash back return. I would pick one of the credit cards to hold longer term, so they can be the default credit cards while you rotate between the 5% offers.

These credit cards are also the reason why I did not list the Tangerine Money-Back Credit Card, as it only has a promotional period for 4% cash back, rather than a permanent 4% return. So you are better off rotating between the 5% promotions while retaining one of the visas listed in this section on a more permanent basis.

Again, this approach makes more sense if you have high amount of monthly expenses to help justify some of the annual fees. Also, don’t be afraid to ask your financial institution to waive your annual fees, as they should be able to do so if you have high spending on your credit cards or if you are a client with them for other products.