If I did the math right that is a 2% rate of return. Sure they got it off of their spending, but a savings account would have had a better rate.

I just go with a Costco Amex. 3% resteraunts, 2% travel, 1% everything else and otherwise Just don't Care

I have a card that gives me back between %1 and %5 depending on where & what I purchase. I've used it for years for corporate purchases for my employers, who reimburse me fairly quickly so I never carry a balance. I've made close to $2000 one year thanks to purchasing a lot of computer hardware on my card. That's free money to me. I much prefer the cash than things like airline miles since I don't fly often enough and don't want to risk having the airline or credit card company changing their terms on me and losing part or all of them.

I'm curious what all those accounts are doing to their credit rating.

I went with the Amazon card (from Chase) since I buy so much from them. (I'm starting a photography business) It's 1% for everything else and 3% for purchases from them. You get it in the form of an Amazon gift certificate. I also went with Amazon prime to get the free priority shipping. The free shipping makes Amazon prices just about the same as any reputable dealers (of course Amazon prime does cost something). This seemed like the simplest way to take advantage of a CC kickback, for me at least.

@squidbrain: Oh, yeah, and I use the credit card for every purchase I possibly can. I'd use if for my mortgage if I could (they charge a fee for CC payments, sadly). Takes a little more diligence to keep me on budget.

@catcherintheeye: Probably increasing it, sadly.

I have one airline miles card that my wife and I share, and we put everything on it and pay it off at least once a month. The added value we could get by playing CC lotto just isn't worth the time we'd have to invest planning it. I'd rather play with my kid.

Incidentally, my wife is a French expat, and we pay for all medical bills full price and then are reimbursed for it 100% by her company. When my son was born, the $40k out of pocket went on the card, and when we paid it off, it was enough for an off-season ticket for her Mom to come from France visit her grandson. That worked out nice.

Chase Freedom Visa - get 3% on my top 3 purchase categories out of their list
Orchard Bank Mastercard - get 2% on every purchase

combine the two and you get a pretty good average.

I think Amex offers 5% if you spend alot of money, but for those that don't I think my alternative works out well. Does anyone do anything better?

I have one card that gives me 5% back on my gas, 2% on travel and dining, and 1% on everything else. I use it whenever I can, make payments online around 4 times a month, and never carry a balance. It is a cash substitute. When I actually do go to the ATM for cash, it lasts forever.

If I ever need to make a purchase that I don't think I'll pay off within the month, I put it on my other card.

I feel like i'm stealing from my credit card company. I get a point for every dollar I spend and can redeem points for items in a catalog. I started paying my grad school with my credit card and work reimburses me 100% of my tuition. So i'm getting points on bills that I don't even have to pay and am close to 40,000 points. Actually, I do pay but get reimbursed at the end of the semester based upon my grade. Either way, i'm breaking even on that bill. I look at it as the credit card company giving me a graduation gift once i'm done.

Chase perfectcard. 1% cash back on everything (3% on some stuff, but I don't remember). Here's the best part: it is credited directly to your next bill. No minimum points, no redemptions, no nothing. Just right back to you in 30 days. I'm sure I could get more by doing something like these people, but the simplicity here is great.

I use 3 cards. I've got the old Chase Rewards card with 5% cashback on Grocery/Gas/Drugstores. Then I use my AmEx True Earnings for 3% back on Restaurants. I also have a Southwest Card that gives me rapid rewards points, I average around a 2% return on that credit card or even better when I use the card to get an extra half a point for car rentals and such.

I use an Amex with 1% going into a high yield savings account. My time is more valuable than any reward a credit card company can offer, and there is no sense in wasting that time trying to find a better deal.

@bravo369: "I feel like i'm stealing from my credit card company. "
Don't feel like you're stealing from your credit card company. All those points are paid for by the fees the merchant pays (in this case, your school). So you're either stealing from your school, your employer, or no one, depending on your point of view. You aren't stealing from the credit card companies.

I've got an Amazon Chase that my wife and I both use for most things. She also has a Costco Amex that she'll use there to track how much we buy from Costco. We also have Discover cards and a BofA Mastercard. They're gathering dust because the Discover "rewards" is a complete joke and the Mastercard points buy less than the ones from the Amazon card.

Fidelity Visa - 1.5% cash back on everything. I could probably get a bit more using card X for A and card Y for B, but it's really not worth the effort, I find. I usually get back $500-700/year.

@squidbrain: I switched from the Amazon card to the chase rewards. I get cash back in cash, 1% on everything, 3% on specific categories. Since I use those categories more than I buy at amazon (their prices have gone up in the past few years, they're rarely ever a good deal compared to other retailers). If you're nearly at the redemption point, may be worth it to switch just after you redeemed

Just using Discover, I have racked up well over $1k this year in cash back. When the 'Bonus' hits a $100 or so, I roll it out of Discover and directly into a Roth account, which so far is racking up double-digit gains (although not this week, ugh!).

Using free money to make more free money rocks.

I am actually surprised that the IRS hasn't caught onto this... technically shouldn't we all be counting cash back as ordinary income (or is it a dividend?)... and shouldn't CC companies file a W2 or 1099 for anything over $600 total for the year?

@Murph1908: That sounds like the BP Visa card through Chase which is one of the best deals I've been able to find. Knowing I'm going to get 5% of my money back is at least a slight consolation to paying $3+ per gallon for gas.

I like to pay for everything I possibly can with my rewards cards. It's free money I would be leaving on the table if I didn't. I don't think I really spend more than I otherwise would because of it and I certainly don't ever carry a balance. Every so often I get a $100 check in the mail and it's 100% profit. It almost seems too good to be true some times.

Many years ago you could buy short term treasuries directly with a CC and not pay a fee for it. You'd buy a 4week bill, ride the grace period and reapay your CC with the proceeds from the maturity of the bill. Sadly that loophole has been closed many years but I know several guys that were able to get the Amex Black card by doing this and pick up a free 3-4% per year on top of that.

@savvy999: They are aware of it but so far they are not taxing it. You're right though that kind of surprises me since any year now they're going to start an oxygen breathing tax.

I think the Chengs will eventually end up overspending....

@bohemian: Apples and oranges--rate of return doesn't apply here in the conventional sense.

Presumably they spent the $48K on stuff they needed and would have otherwise bought for cash. If they didn't--then that's a whole 'nother issue. (See "Don't buy stuff you don't need or can't afford.")

If anyone out there thinks these rebate programs are waste of time, fine--let's take them out of the equation for an example. By using credit cards and paying them off in full every month, the true rate of return they're getting on their money in their savings (clearly they aren't hurting for cash) is higher, since they're essentially earning interest on money that's not theirs.

I use a GMAC Equity Rewards card that automatically pays down the principal on my mortgage. Even with my modest credit card use, I stand to cut more than two years off the mortgage and save tens of thousands of dollars over the life of the loan. You can keep your 1% cash back.

They're leaving money on the table and making it much more difficult than it needs to be. They earned 2.2% with 20 cards and could have earned well over that with two cards.

Details: [consumerist.com]

I used a credit card for convenience. I usually pay it twice a month, down to zero. Ergo, if I use a credit card with rewards instead of a credit card without rewards, than I automatically come out ahead.

Mine's an airline credit card. I checked yesterday to see if I could use my miles for Christmas vacation, and I *could*. Plenty of seats and opportunities. Unfortunately I ended up with a different airline because I couldn't shorten an 18 hour leg (yeah! 18 hours) at *any* price with them due to their hubs and schedules.

I use two cards (an AmEx Blue Cash and the same Discover that the Chengs have) to play the rewards game. (And a third USAA Mastercard for places that only accept MC and Visa.)

I don't find that I spend more than I would otherwise - I keep anal track of my purchases in my budget, and treat purchases made with cash and those made with credit cards identically. And I pay off all my cards every month.

I'll probably make about $375 this year in rewards. Much of that is from travel that is reimbursed through my work.

I still use the card I got in college because it has 3% cash back on everything. I try to only use it for purchases that go into the hundreds of dollars range.

Perfect $1000 can go to their dental fund...

@Critcol: 3% cash back on everything.

Methinks you're leaving out something, like an annual fee, ridiculously low maximum annual rebate, or rebate only if you carry a balance (which makes the rebate totally meaningless). How about ID'ing the card?

Not interested in chasing the best rewards; got a rewards card because we pay off in full every month and you might as well get something from it. Don't pay too much attention to it, though -- usually around New Year's I start to think, "Hey, maybe I should cash out those points and put it in a money market."

Hello, I'm a sewer rat. I have been following a trail of cheese crumbs that someone who is a HELL of a lot smarter than me has been leaving along their kitchen floor. Tastes great ! (more filling,too !)...What could possibly happen ?

I'm not very bright (after all,I am a sewer rat),so the better the cheese tastes and the more full I become,the more I desire this tasty cheese. Funny though, yesterday, the schmoe that owns this dump left a square piece of wood in the middle of the floor and this piece of wood has a huge spring in the middle-But here's the kicker- There is also a GIANT piece of cheese up there on that block. I think I'll just mosey on up there and get that cheese.Damn ! It's hard to wrestle off this piece of metal.What's that sound / It's that giant spring! OH SH.....

Lesson here - Don' be a sewer rat- Leave these programs in the trash (Or Shredder) where they belong.

@Snarkysnake:

Or, keep eating all the great piece of cheese, and avoid the one with the big spring over it.

Cash back and interest-free loans - credit cards are great.

@savvy999:

It's not taxable, since it's a rebate on your purchases. If Best Buy sells a TV on sale for $300, down from the $500 regular price, you don't have to pay taxes on the $200 price cut. Same thing here.

@JustAGuy2:

If, however, you were using the cash back card to pay for something that you're deducting from your taxable income (i.e. tuition, medical expenses, etc.), then the rebate would be taxable.

Spending $47,800 to get back less than 2.5% is ludicrous. That has got to be the biggest joke I've ever heard. Why would you be proud of that?

no thanks. i have a life.

@hexychick: @forever_knight: Very well said.

2.2% 'return' on $47,800 spent. Even assuming that the majority of that is necessities, I'm pretty sure that spent in cash, they could have shaved much more than 2.2% out of their budget.

Terrible 'returns' + the risk of 20 cards to be juggled and paid off, on-time each and every month + spreadsheet time = stupid. To safely double one's money, fold it once and put it in your pocket.

@hexychick: In theory, they were going to spend the money with or without the rebate. So they try to maximize the rebate. Getting 2.5% back is better than getting 0% back.

I put just about all my spending on a card out of convenience and pay it off every month. I use an Amex Blue Cash card and it automatically puts the rebate in my account once a year. It takes zero additional effort on my part and once a year I get a nice chunk of change back. The fact I am getting a rebate has not changed my spending habits.

If you pay off your balance every month you might as well take the cash rebate.

@JustAGuy2: I don't deduct business expenses (don't meet the 2% floor), but if I did... you're saying that any cash back/rebates earned on those charged, deducted expenses would be taxable?

Now that's a loophole that I'm sure many self-employed/ small-business-owners drive through!

The whole marketing concept behind 'corporate' CCs is the wink-wink that you'll charge all of your office supplies and business travel on the card, while racking up miles & cashback & points for yourself.

If they use the credit cards as loaned money, transferring the amount of purchases into a high yield savings account, they could easily double the amount earned from "playing" the credit card game. Playing for the rewards isn't worth it anymore- playing for the interest is...

I got a GM Card for the reward incentive towards a new GM car because I like cars. But I've never used the rewards because I keep buying used cars. The monthly reward amounts expire after they reach a couple years old so they never build up anywhere near enough to convert me to a new car buyer, let alone one from GM.

You're welcome, Consumerist.

You people are crazy. Either that, or really, really, really disciplined. If the latter, then congrats - you've earned it.

I just can't wrap my brain around earning a few percentage points while some schmuck goes into bankruptcy because they overspent.

Ah, but ain't that America.

@savvy999:

Yup, it would be taxable. Think of it this way (using crazy percentages to make the point clearer). You're going to buy $100k in supplies for your business each year, and deduct them as business expenses. If your card gave you 25% cash back, you'd get $25k back. In effect, therefore, you've only paid $75k for the supplies, so you should only be able to deduct $75k, not the full $100k, from your taxes.

In practice, people do drive large trucks, planes, cruise ships, etc. through this loophole.

Here's a Consumerist piece that reports on a couple trying to make the most of their credit card rewards. The key facts: They have 20 different credit cards. They keep four cards in their wallet and a sticky note to tell them which card to use for which purchases.

@chubba-baby: Please explain. Can you give an example with numbers?

@Myron: Let me take a shot at chubba-baby's numbers. In the case of high-chargers like the Chengs, they've spent $48K over 10 months so far this year.

So assuming they're floating an average balance of $4,800 throughout the year, the additional interest they're drawing on money that's not theirs in a 5% high-yield account over the course of a year is $240. (Taxable.)

Just be responsible with how you spend. I use my cards to pay my bills, earning reward points and cash back for just doing what I would already do anyway. No reason not to I say.

Many retail cards offer no interest for some things, you can play that game easily enough and avoid any interest if need be. Don't charge too much, it can be more than you handle and charging too much to a card can hurt your credit.

@melmoitzen: I'm sorry. I'm just not getting the mechanics of it. They charge items to their card and pay the balance each month. When is there an opportunity to put money in a high yield account? Are you talking about the float between when their paycheck is deposited and when they make a credit card balance?