I kinda thought there was enough mutual respect around here to assume everyone has figured out what’s best for their own situation…
I’m like you. Except I’ve stopped obsessing over getting 3% on a isolated $60 restaurant purchase instead of 2.5% (now, 5% on Discover with the end of year double is a different story). Most of my expenses are paid using gift cards, which I’ve stocked up on at various times it’s been advantageous. For me the Alliant card is worth it due to…um…“other” stuff. But I also cannot get a card from Citi, Chase, BofA, or Capital One, and my Amex profile is maxed out with cards utilized for those “other” things. So almost none of those “best” options you’ve mentioned are even options.for me…
“Doing the math” isn’t rocket science, you either spend an average of $1650 on the card or you dont. And I know people who do spend that much regularly (a family of 5 can spend half that on just food each month), but insist that having more than one credit card is heresy and thus put everything on their tried-and-true 20 year old 1% card. If you arent playing the 8-card category shuffle, it isnt that unusual for the 2.5% to be beneficial over a fee-free 2%. Of course, if searching out the absolute best options, there will never be one best card. But “most” people dont think that way.
I reread my post and I apologize for sounding disrespectful. I have no doubt that the Alliant card is great for you. But after doing the math, with one big exception, I still stand by my claim that it’s not great for most people.
The big exception for the Alliant card is in its simplicity. If you don’t shuffle between no-AF cards, don’t bother with AF travel cards, and know you’re going to put $1,650/mo on your default card, the Alliant 2.5% card is a great default card and definitely better than the Citi DC. If you want to claim that most people don’t shuffle cards, I will agree with you 100% on that. I’d say the majority of people that asked me years ago how I was able to travel internationally so cheaply with credit card rewards completely lost interest when they found out how many cards I had (and I don’t really have that many). The Alliant card would have been perfect for them and they would have been so much better off with it than whatever they were already using.
Your post in the other Alliant thread summed it up best. For people like you, this is actually a good thing because it draws a line in the sand and you hopefully won’t be bothered if you don’t cross it.
Also, must spend >>$20k a year on it. Since it takes $20k just to break even on the annual fee (At exactly $20k/yr spend there is NO benefit over the straight 2% no AF card). I wouldn’t even consider it unless I were planning to put $40k+ a year on it. Not worth the effort to me for the pennies. Even at $40k spend its still only netting 2.25% cashback. I put everything I can on cards including almost all food being restaurants and I wouldn’t come near $20k a year in organic spend without some large one-time-purchases. Im at around $2600 a month average last year but that’s only because there was a $9k and $8k month from an expensive vacation. It’s under $15k on credit cards if I exclude the extra from those bills.
In reality there is also a third option and maybe even a fourth option. I don’t really shuffle cards around much myself either. Some people have an odd disconnect on level of effort. My Google Fiber internet bill is set up ONE TIME to always go to my Chase Ink, where I get 5X UR (7.5%). This $720 in annual charges generates an extra $40 in a year more than a 2% card, and requires no effort on my part except the ONE time I enter the card number. With a $150 a month multiple line cell phone bill, the same would generate $135 a year, or $99 more than a 2% card. The same people who have an aversion to using more than one card for any reason will often expend an unreasonable amount of time and energy to obtain $40 in many other situations. These numbers are per year, each year. With no effort required whatsoever after punching in the number once initially. No need to carry around an extra card with you everywhere.
Similarly, I strongly dislike the cards with changing quarterly categories. I will not carry them around and put a $5 purchase on it. But (actual examples) … if I make two ~$700 paypal purchases and one $1500 paypal purchase while it’s Chase’s 5UR (7.5%) category, then I’m definitely throwing thise on my Chase Freedom Cards. Minimal effort for an extra $165 vs 2% CB.
The other option is to simply pick a category card that covers most spend and put the “other” on it. CSR would only be in the conversation if including travel, but I’ll use it as an example. I only get 1.5% back on “other”, but I get 4.5% on all dining and travel. Ignoring AFs (they really just set an initial break- even spend threshold), as long as 1/3 of my purchases fall under those broad categories, I still come out ahead throwing everything onto the card rather than a 2.5% card. As long as 1/6 of my charges fall into those very broad categories, I come out ahead throwing everything on the reserve vs throwing all the spend on a 2% card. It can be much more productive to pick a single card with categories that align commonly and just use that as the “single” card rather than a straight % card.
I think that’s exactly where the Alliant 2.5% w/ AF fails to generate enthusiasm for many of us. Outside of signup bonus qualification (~4 cards per year usually), I don’t think I’m spending much that is not at 3% or above.
There are enough 5% rotating categories to buy gift cards of the appropriate type. For us, good examples are home improvement, warehouses clubs, groceries, gas, travel, etc… where you can simply max out on gift cards when that category is at 5% and use them the rest of the year. If you need more, you can use something like Amex BCP at grocery stores selling gift cards. 3% online BOA is another good baseline. For travel, even outside of milking signup bonuses, many options offer redemptions where valuations are above 3%. So based on our usual spending, there’d be no way to make up a $100 AF for just getting 2.5% on whatever is not covered by other cards. Our double cash purchases last year were just under $3k and some of it is just DH being lazy to use the right other card at times.
But for those willing to leave money on the table for sake of simplicity, it’s true that the $1667/month credit card spend is not that hard to meet. Either way, I’m glad the option is offered to keep the competition up.
Now it’s just “not great”, instead of the initial “isn’t better”?
I agree, even when spending $4k/month, that extra .5% is only going to net you an additional $20. That’s far from great, for all but the highest-volume users (and now, even they can only net an extra $500/year, which is pretty low for an absolute maximum cap).
It really is about the simplicity. (Or, in my case, being banned from other options ).
I feel you on this. Sadly, my wife doesn’t get as excited about saving the extra 1% or 3% by using the right card if it means having to remember what card to use each quarter. A ton of our Citi DC spend last year was her using it when she should have used Chase Freedom, Discover It, or Chase Ink.
Yes, after the first couple years of trying, we ‘compromised’ for her just using 2 cards. Our old Penfed card for gas purchases and Citi DC. Any more than 2 for her doesn’t seem to work. I’m just lucky she still is semi-ok with opening/closing cards in her name for signup bonuses and occasionally calling to cancel, along with all my other bank account bonus shenanigans!
I hand her a check for $300 to endorse and say “see what 15 minutes of your time earned?” She never seems quite as thrilled as I am…
I understand that many people like to keep the spending simple so they use Alliant or CSR etc. but I still like the idea of opening new cards with good sign up bonuses every year and using the new cards for big spend like estimated taxes, insurances and even property taxes (if possible with some benefit). Routine stuff can go to whatever card I am using (lately CSR)
Just got a letter in the mail regarding the new changes to the Alliant 2.5% credit card. I had no idea reward were going to be capped at 250$ /month (10k spending per month)
Are there any other cards to consider besides Citi DC or is there anything that has higher than 2% right now? I run about 25k monthly so the the 10k cap really puts a damper on things.
I generally agree. Aside from Discover It Miles at 3%, but limited to one year only at that level, and the (now limited) Alliant Visa Signature deal, I’m unaware of other deals which break through the 2% rewards barrier. I do acknowledge that Alliant Visa Signature also offers 3% during your first year, but on a limited basis. It also imposes a stiff $99 annual fee following that introductory first year.
If other participants here believe we are wrong regarding the 2% barrier, I hope they will post.
The 2% current limit is basically tied to the interchange fees. On VISA/Mastercard, those end up averaging 2.4% (depending on amount and MCC). So at 2% cashback, issuer bank still makes a bit on transactions. But at 2.5% they end up losing a bit on transactions. Alliant compensates this with their annual fee but they probably set that annual fee assuming moderate spending. The problem for them is that only big spenders bother with their card. With the $10k/month limit, if they lose 0.1% on average, that’s a $120 loss, about compensated by the $99 annual fee. So they just decided to cap their losses. I doubt any other bank will take the hit for an extended amount of time so yeah 2% it is. You can still milk the $10k/month at 2.5% though, it’s not a bad deal at all.
you can get an AMEX BLue cashPreferred for 6% at grocery stores only 3% at gas stations.
BUT with a 95.00 fee not waived. But the SUB of 250 (I think) negates that. WOW SUB of 300.00 now. Just google Amex bcp bonus. You can buy some Visa 500 cards at grocery stores with the food and the card has a cap of 6k year at groceries only. You can go to 7/11 for 500.00 Visa gift cards. Most 7/11 code as gas for the 3% but do a small purchase first to check if your does. So effective return is 360.00 - 95.00 = 255.00 plus the SUB.
Proceed with caution . . . or perhaps better, not at all
Just received an offer with respect to my Citi DC card. They were trumpeting a limited time 2.5% reward.
Full disclosure: I do not trust Citi so I did not fully investigate this offer. I do not want or intend to mislead anyone else. You need to do your own homework, and if I’m wrong please feel free to tell me so.
But it appeared to me obtaining the enhanced reward might require opening a new Citi banking account of some sort. At that point I ceased reading and just got out pronto. Have zero interest in opening any banking accounts whatsoever with Citi.
Of course I acknowledge a 2.5% reward deal, even a temporary one, is great provided no strings be attached. Look before you leap.
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