I'm Now Earning 3%+ On All/Most Purchases

Finance
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I signed up for Chase Sapphire Reserve (CSR) and I realized I am now getting 3%+ on every one of my purchases with just a handful of credit cards

Airfare 3% CSR
Office Supplies 5% Old Chase Ink
Hotels 3% CSR
Rental Cars 3% CSR
Gas 5% PenFed Gas Card
Groceries 3% AMEX Blue Cash
Telecom (Cable Internet, Phone) 5% Old Chase Ink
Restaurants 3% CSR

And then for all non-category spend, I am using various Gift Debit Cards that I buy using either 5% Office Supply Chase card, or this quarter Chase Freedom I bought $1500 worth of gift debit cards from a store that accepts Apple Pay. There are fees on those cards, but even with the fee, the Chase Freedom-bought cards give 4% off, and I only buy Office Supply Gift Cards when Staples or Office Max runs a promotion reducing the fees. They only do that every 2 to 3 months, but it’s more than enough to cover my non-special category spend outlined above.

As long as I am spending $500 or less per month on non-category spend, then I’ll always seem to have enough gift debit cards that I got at 3%+ discount, to cover that spend. And on months where a large one time expense occurs (like a $2.5k dental crown last week), I’ll use a new credit card that I get that has minimum spend requirements, so the effective bonus is usually 10%+ on that spend. I don’t get many new credit cards for bonuses, but I also don’t have many large one time surprise expenses outside of the category spend either.

The CSR has a $450 annual fee, but I’m planning to deduct that off my taxes since I travel for work, and given SE Tax, Federal Tax, and State Tax, I’m in the 50% bracket, so the $450 fee becomes $225 net cost to me. And given the $300 annual travel credit, which I was able to use in the first week, then keeping the card is a net benefit of $75 to me, after tax savings, ignoring every other benefit of the card. I had to wait to get the card until recently since of 5/24 but now that I have it, it seems like my 2% card is getting almost no use.

I know this sounds like a blog post, and it’s not really new information, but I wanted to share my excitement to realize I’ve effectively retired my 2% card.

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Ugh… that travel credit should then be business income, and the card should cost you $75, not be a net benefit.

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Congrats! Well thought out! Quick question - how do you find out about the Office Max/Staples card deals? I haven’t seen any yet but just got my 5x office card so I haven’t been closely monitoring.

Any idea what the limits are (like specific “limit 1 per person”) and are they available online?

Thx!

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I was looking at this recently and got the Uber card (no fees) instead of CSR ($150 annual fee after the travel credit) - airfare/hotel/rental = 3% and restaurants = 4%

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Good on you TripleB. I’ve gotten lazy in my “old” age and just swipe the same Amex card for everything. However, I do it primarily for purchase protection, return protection, and extended warranty.

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And an alternative for those that are super lazy and have or can acquire USAA membership – 2.5% on everything no limit:

https://mobile.usaa.com/inet/wc/credit_card_limitless_cashback_rewards_terms

Edit: And of course, all Amazon spend is on their 5% CB card.

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True, but a cost of $75 is better than a cost of $150 ($450 fee - $300 credit).

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This is a great post for people looking for this and willing to deal with gift cards. I am not willing to deal with gift cards, so aside from that part of this post, I’m right there with you.

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I am not an accountant but I think that’s debatable. There’s no 1099 issued for the travel credit.

As far as I’m concerned, it’s classified as a rebate by the IRS, much like 2% cash back CC rewards, and not subject to tax.

On further thought, if I have $100k of business travel expenses over the year and earn 2% back, am I only entitled to expense $98k since that’s all I paid?

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I go to Doctor of Credit blog. Part of me doesn’t want to recommend him because of the horrendous “subscribe to my newsletter” popup that you get each and every single time you load the page. Even if you subscribed, if you’re using private browsing mode.

But he does do a great job in posting deals, throughout the day, so I have to give him credit for that even though personally I dislike the way he coded the site.

DOC always posts Staples/OM deals, usually a week in advance.

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I am a CPA, and there is some debate on this issue. The most conservative way to treat it is this:

Miles and points are not taxable and don’t have to be treated like a reduced expense, even if you take them as cash back.
Cash back earned in aggregate is not taxable and not required to reduce expenses either.
However, rebates are supposed to be treated as a reduction of the expense. Since the $300 travel credit applies directly to a specific purchase and isn’t $300 worth of points, miles, cash back earned onto the card’s cashback/point bonus account, it should be treated as a reduction of the expense.

Therefore, when you book that $1000 business expense plane ticket and it triggers the $300 travel credit, your travel expense is only $700.

Mind you, this is the conservative approach. Could you get away with expensing the full $1000? Most likely yes.

6 Likes
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I’m also around 5% average on all regular ongoing purchases now (valuing UR at 1.5 cents).

This does not include my Citi Price Rewind purchases. Adding those in for last year (over $1000 extra cash back), I’m over 10% average.

If I add in new CC bonuses last year (as rebates on their required spend), it’d be even higher average. I’m also not including the gift card shuffles. I still do those once in a while when I can’t resist but in retrospect I nearly always hate it and I recognize it’s likely a bad time/effort investment trade for me at this point.

I usually err well on the conservative side when making quick estimates like these. I am not counting planned income tax overpayment/refund or utility payments / etc as those would lower the average rates but I’d otherwise pay them ACH to avoid the fees, they’re not really regular credit spend.

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No longer available for new applications as of several months ago.

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Gotcha! Thanks… Yeah, I agree! I’ve subbed to their newsletter and the pop-ups can be annoying. I’ll keep an eye out for the postings - somehow I must have just missed it. With all the subscriptions/blogs that I like to keep my eye on, it gets overwhelming.

Thx!!

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Now I just need a 3% deal on paying taxes…

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Oh, that sucks. I wonder why…

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I never see this popup.

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Yes. The IRS has an explicit opinion on this. If you use a 2% card for all business expenses you have to reduce your deductions by 2%.

Of course, as with all things tax, I’m guessing the number of people who do this are near zero.

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Easy, just use that credit for personal expenses. Problem solved.