Skip the Points – Maximize Cash Back Card Rewards

Get the Most Rewards With Cash Back Instead of Points

Time to deep dive! Let’s dig into my annual spending and how you can optimize your return with cash back credit card rewards. Get the maximum rewards by eschewing miles and points in favor of real dollars.

So much of the time we spend and pay bills on cash, debit, and direct ACH. Paying what we owe and getting nothing back except for the validation that our finances are handled. When we venture into the world of credit cards, we get side-tracked by the stories of free travel, first class seats, and luxury suites. We don’t stop to consider that there may be a better alternative.

The better way –

Here is my annual spending for 2017 (excluding rent/mortgage).

Cash Back vs Points Values


  • Point values are at $0.021 per point (based on The Points Guy’s valuation). This is one of the higher valuations and a popular program.
  • Cash back is discussed below is rounded from the above screen shot. The cash back can be accelerated by leveraging a series of 5% cash back category cards, but we’ll establish a foundation program here.
I spent almost $5000 on Groceries last year
  • An AMEX Blue Cash card will get me 3% cash back, NETing $150 cash back throughout the year.
  • That $150 could have been $300 if I had been using an AMEX Blue Cash Preferred card. (With a 6% earn rate on up to $6000 per year of groceries.) However, the Preferred carries a $95 annual fee which means I would have only earned an incremental $55 on my spending by carrying the annual fee card.
  • One quarter of the year, my 5% cards gave me grocery stores as a category. This means $1250 of my spend was not on my AMEX Blue Cash and thus I would have missed $75 of the Blue Cash Preferred benefit, ultimately resulting in a negative return of $20 despite the doubled cash back return of 6%. Blue Cash Preferred may be worth it if you’re not holding a 5% rotating card.
  • By leveraging the AMEX Blue Cash at 3% for 3/4 of the year and Discover IT or Chase Freedom for the other 1/4 of the year at 5%, I can earn a total cash back of $175 (3.5%) on groceries purchases. That’s versus $105 of point value.
I spent over $4275 on Amazon last year
  • The Amazon Prime Visa gives 5% back on anything you buy on Amazon (but don’t try to use it for your business and buying Sponsored Products or AMS ads, you won’t earn 5% back on those). With this Visa, my spending last year was eligible to earn over $213.75 back.
  • Q4 2017 and Q4 2018, Discover It gives Amazon as a bonus spend for 5% cash back. That doesn’t sound like anything special compared to the Amazon Prime Visa, but at the end of your first year, Discover will pay you double your cash-back earn through the year. That makes Discover a prime option for your holiday spending this year.
  • As last year was my first year with Discover and we’ll estimate 40% of my annual Amazon spend was during holiday, that means I earned $171 from Discover, $128.25 from the Amazon Prime card, for a total cash back of $299.25 (7%) on Amazon purchases. Much better than $89.78 in point value.
I spent $6000 on restaurants last year
  • The Barclay Uber Visa card pays out 4% cash back on Restaurants and UberEATS purchases. Based on that, my $6000 of restaurant spend is worth $240 in cash back with no annual fee.
  • You might consider the new Savor card which pays 4% as well, but with a $95 annual fee you lose out on a lot of NET benefit. And don’t confuse the SavorOne card either, which has no annual fee but pays out only 3% (a good alternative only if you’re not approved for the Barclay Uber Visa).
  • That cash back also gets increased by factoring in 5% rewards from Discover IT (or Chase Freedom) where we can get a quarterly benefit. It’s only an extra 1%, but that brings the yearly restaurant value for the Uber Visa to $180 and the value for the Discover IT to $75 for a total cash back of $255 (4.25%) on restaurant purchases. That’s over double the value of points at $126.
  • Factor in other cash back programs such as Groupon+, Dosh, and iDine and you can really earn on those meals out.
I spent $1200 on gas for my car last year
  • Fuel is expensive, but the Citi Costco Visa provides 4% cash back rewards on gassing up your car. That’s $48 back in your wallet. Bonus benefit is that there is no annual fee with your Costco membership.
  • If you’re not a Costco member, the next best every day fuel bonus is going to come on a 2% rewards card, knocking the benefit down to $24 a year.
  • For 6 months of this year, the Chase Freedom has been running gas as a 5% bonus category (3 months overlapping with Discover IT at 5% back on gas), resulting in $300 on Chase Freedom, $300 on Discover IT (with first year double bonus), for a bonus category reward of $45 and $24 on the Costco Visa. That’s a total credit card cash back of $69 on gas purchases of around 430 gallons. That’s much better than $25.2 worth of points.
  • Factor in other programs detailed here and you can drive that cash back up. Get another $12 (1%) with SPENT, $48 (430 gal at my current average of $0.11 p/gal) with GetUpside (use referral code 4ZVVQ and we both get a bonus), and knock $21.50 off with savings from the Shell Fuel Rewards program for a total value of $150.50 (12.5%) with the Costco Visa or $126.50 without.
Chase Freedom Five Percent Cash Back Categories
Chase Freedom 2018 5% Cash Back Bonus Categories
I spent $4000 on travel last year
  • The Barclay Uber Visa and the Citi Costco Visa both provide a 3% cash back benefit on airfare, hotels, and travel. That’s a benefit of $120 versus a point value of $84.
  • That makes the Barclay almost the perfect travel card between saving on your bookings and restaurants while you’re out. You’ve got your primary travel spend categories covered with high-rate of return cards.
  • Travel doesn’t tend to hit the bonus categories on the Discover IT or Chase Freedom cards. So that’s a total cash back of $120 on travel purchases from credit cards without any category boost.
  • You can increase the cash back bonus by booking through TopCashBack. Earn up to 15% from Expedia (plus Expedia Rewards points), up to 15% from Hotels.com (plus free night rewards), and up to 10% from Choice Hotels among many other partner sites. Last year I made over $280 from TopCashBack for a total cash back of $400 (or 10%) on travel purchases.
I spent $11,400 on everything else
  • My household expenses (not including mortgage/rent) was $7000. This includes a brand new air conditioner ($2500). Household utilities around ($3000). And I had a whole lot of projects around the house (including about another $1500 handed over to Home Depot). These are not, unfortunately, reward-rich items.
  • Miscellaneous entertainment ate up $2000. This is going out to see movies, cable TV & Internet at home, Netflix, Amazon Prime, Museum tickets, etc. Again, not a reward-rich category.
  • Finally, there’s about $2400 that goes to clothes and misc. shopping. I had to buy several new suits which drove up the expense in this category.
  • Between all of that $11,400, there’s a little bit of bonus cash such as 1% at Home Depot from SPENT, but it mostly comes down to having a solid foundation 2% cash back card such as either the Citi Double Cash or the Fidelity Rewards Visa Signature. Each has their advantage or disadvantage, check them both out and pick the one that’s right for you. $11,400 spend at 2% and the $1500 at Home Depot getting 1% from SPENT works out to a total cash back of $243 (2.13%) for misc spending versus $239.40 in point value.

Summing up the cash back –

A single year of cash back in my example here (not even including sign up bonuses) can easily be over $1500 in real money compared to $669 in points. Points which can be devalued or changed at any time at the discretion of the program owner. Look historically and you’ll find miles keep being harder to redeem and requiring more miles every year for the same redemption.

At $1500 a year of cash back, invested every year into a 7% returning brokerage account, you’ll have $124,421.84 in 30 years. You would only have invested $45,000 over 30 years and points would only be worth $17,269.71 (assuming no devaluation). Starting early with a solid cash back strategy can make you close to $80k (or an average of over $2600 per year).

Even if you can’t picture 30 years into the future, after only 5 years you will have invested $7500 and earned another $1126 in compounding. After 10 years, those numbers jump further to $15,000 invested and $5724 earned. Starting sooner in life will literally earn you thousands of dollars in passive income by investing cash back from money you’re spending anyway.

Don’t waste your time on rewards, leverage cash back to make a better future.

Disclosure –

I may earn a commission or referral bonus off of links from this site, but that does not influence which sites or apps that I link to. These are applications that I am signed up for and use. The affiliate links are there to help this blog start paying for itself.


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