amex-cash-back-sitting-there

It’s been a long time since I’ve looked at the credit card market. While I was never once the type to churn a bunch of credit cards, for a period of time during the college years – I was one of those guys that dabbled in 0% balance transfer cards. Thinking back, my time spent probably would have been more productive if I had applied it towards school or business – but alas, you have a different mindset when you’re in your late teens or early 20’s.

These days, because my credit cards are all essentially all on auto pilots, I hardly ever log-on to check the account unless I spot in my email an Amex offer I should add to the card, or a Chase reminder that a new 5% spending cycle is about to commence. After logging into American Express due to one such prompt, I was surprised when I was faced with a $1,600 cash-back balance.

Uhhh that’s a lot of cash back just sitting there.

Cash Back That’s No Longer “Cash”

Thinking I just found a big wad of cash under the proverbial sofa, I quickly went to claim my new found fortune.

Bad news: Blue Cash from American Express no longer lets you request a cash-back checks. All “cash-back” are now requested via a statement credit method only. And thus this $1,600 will simply  get stuffed back into the next billing cycle.

Of course, the idea is the same. There’s an extra $1,600 laying around that I didn’t factor into our budget. But there’s something different about having that cold hard cash (or uh, check) in you hands. Since my current balance with this credit card is zero, I’m not quite sure if American Express will wait for the balance to start incurring and then debit/credit accordingly. If I’m lucky, perhaps American Express will just refund the excessive credit in the account to me in the form of a check.

Points That Aren’t Worth Redeeming for Cash

Finding the “random” $1,600 got me thinking. Do I have a bunch of other points sitting at some other accounts doing absolutely nothing?

You betcha:

chase-combine-points

Over at Chase Freedom, I have a combined points of 41,985. That’s good for $419 in cash back! (Of course, redeeming Chase Freedom points for cash is apparently the stupid thing to do these days. They are apparently valued at less than a penny per point, whereas if you transfer to miles, they are worth around 1.6 cents per point).

There’s great guide here from Well Traveled Mile on transfer ratio, which card transfers to which partner airlines and all that jazz. Warning: it can be confusing as heck if you don’t care to dive into the world of rewards travel credit card. The essential gist is that if you simply request cash-back, you are losing out on maximizing your credit card points value.

When its Time for a New Credit Card

Its probably clear at this point that our household primarily use an American Express card and a Chase Freedom card for our spending needs. But with these points and cash back just sitting there building up without being utilized or maximized – I realized that it was probably a good time to shop for a new credit card. I don’t think we want to juggle 5 different cards in our wallet, but the Blue Cash has long lost its luster, and the Chase Freedom has plenty more competitors these days.

Here’s when you should look for a new credit card:

  • It’s been more two years since you last cashed out, used, or looked at your credit card rewards
  • Your spending pattern has increased significantly
  • Your spending pattern is catering more to a specific category: (e.g., dining, traveling, etc.)
  • Your card has been downgraded/converted from its original program

During the time frame since I’ve opened the Blue Cash card (probably 13 years ago?) – the card has consistently reduced its program benefits through the years. While I was grandfathered in for a period of time, it seems about 3-4 years ago American Express has significantly cut back on the cash-back % the card was offering. At a time, you can easily reach the 1.25% cash-back threshold, and these days there are now caps and limits to the cash-back.

For the Chase Freedom, the points are okay and the rotating 5% category is now an industry norm (there is a similar Discover product these days) – and the increased points/cash-back are nice – but with our spending pattern and threshold, we can easily earn more rewards if we simply shop for a card that fits our spending more closely.

Travel Card Probably a Good Idea

Now that our daughter is 4 years-old, we’re expecting more travel in the foreseeable future as we try to squeeze in a few family trip per year. Heck, we were probably traveling way too much with the toddler/baby in tow in the past few years. My daughter has already taken over half a dozen international flights in the past few years – and these were travels out of necessity – so they’re never as fun as traveling for leisure.

Because of this, I have been looking into travel cards a bit more – and it seems the de facto travel card to get these days is the Chase Sapphire Preferred (or Reserved if you’re baller enough). Everywhere you look, it is one of the top pick recommendations as the card can generously transfer earned points to many airline programs at generous ratio. While the card comes with fees, as long as you do the math – you should be able to easily reap many more benefits out of the card than the fees that comes with the card.

There’s a bit more work involved when you opt for a travel card, but like free food – a free trip or airline ticket is the next best thing.

Where to Look for New Credit Cards

So, where should you go hunting for a new card? There are a myriad amount of tools these days. A quick Google search will bring up walls of tools, comparison site, blogs, etc. (its good money to refer customers to the credit card company, after all). If you prefer, and this is often my preference – I enjoy reading about usage scenario straight from actual cardholders. A search on reddit’s personal finance subreddit will show you many opinion and helpful viewpoints.

Most of the sites and tools you’ll find online will be plenty helpful, but I would strongly suggest avoiding signing up for a credit card immediately from a written blog post, or tools with “editor picks” that may have ranking influenced by credit card commission payouts. Depending on the article you’re reading, some of the benefits/perks for the card written about may be long gone – and while card issuers are a lot more strict on partner sites promoting credit cards, people are only human and mistakes do happen.

Before you shop for a new card, sites such as Credit Karma and Credit Sesame are always helpful in determining where your credit stands before you apply. Many of the best reward cards are fairly stringent and credit score/history requirements are quite high.

Interestingly enough, FICO Score also appears to be free and in abundance these days, as its now offered as a free benefit to many major credit card, checking, or savings account. So you can always go that route too, to see where your score situates.