Credit Cards for Your Wallet - Q2 2012

Disclaimer - The Discover offers are no longer valid.

Related Links

Best Credit Cards

Credit Card Sign Up Offers

Credit Cards for Groceries 

Credit Cards For Gas 

Extra Credit Cards 

Sign up for Discover and Chase Freedom 5% Categories

These are the Credit and Debit cards that should be in your wallet from April until June.  The Discover card will also have 5% on groceries in May, but not in April or June.

American Express Blue Preferred – 6% cash-back at groceries.  There is a $75 annual fee so it is only for those who spend a lot of money on groceries.

   -$150 sign up bonus for spending $1,000 in the first 3 months

Discover - 5% cash-back on restaurants and movie theaters from April until June, but during the month of May, you can get 5% cash back on groceries as well.
   -Sign up for Discover Credit Card.
   - Why I use Discover over Chase Freedom

Chase Freedom – 5% cash-back on groceries and movie theaters and 1% cash-back backup everywhere else when American Express is not accepted. You get extra cash-back on up to $1,500 in that category ($75 maximum per quarter) so keep that in mind.

    -$100 sign up bonus for spending $500 in 90 days

Bank of America Cash Rewards - 3.3% cash back on gas and 1.1% on everything else (when Amex isn't accepted) with a Bank of America Checking Account (3% and 1% without their checking account).

     -$100 sign up bonus for spending $500 in the first 90 days 

Fidelity American Express Investment Rewards – 2% cash-back everywhere else.

   - This card is always in my wallet

Charles Schwab Check Card – Free ATMs eat every ATM in the world

   - This card is always in my wallet

Credit and Debit Cards in my Wallet for Quarter 1 2012

Disclaimer - The Discover offers are no longer valid.

Related Links

Best Credit Cards

Credit Card Sign Up Offers

Credit Cards for Groceries 

Credit Cards For Gas 

Extra Credit Cards 

These are the Credit and Debit cards in my wallet until the end of March

American Express Blue Preferred – 6% cash-back at groceries.  There is an annual fee so it is only for those who spend a lot of money on groceries.

   -$150 sign up bonus for spending $1,000 in the first 3 months

Discover Card- 6.225% cash-back on gas for the whole quarter and Amazon for the month of January.  You only get the extra cash-back on up $1,500 in that category ($75 maximum per quarter) so keep that in mind.

    -Discover it™

Chase Freedom – 5% cash-back on gas when Discover is not accepted and Amazon and 1% cash-back backup everywhere else when American Express is not accepted.You only get the extra cash-back on up $1,500 in that category ($75 maximum per quarter) so keep that in mind.

     -$100 sign up bonus for spending $500 in 90 days

Fidelity American Express Investment Rewards – 2% cash-back everywhere else.

   - This card is always in my wallet

Charles Schwab Check Card – Free ATMs eat every ATM in the world

   - This card is always in my wallet

 

Yearend Summary of Credit Card Cashback Rewards

Disclaimer - The Discover offers are no longer valid.

I thought it would interesting to take a look at how well my wife and I were able to use our credit cards this past year.  Hopefully everyone can see how it is easy to at least get 2% from every purchase and, if you are willing to do a little bit of work, ever more than 2%.  Hopefully, it can also give me motivation to beat these statistics for next year.

My goal is that for every purchase I aim to get at least get 2% back.  This is because I use the Fidelity American Express card which gives 2% on every purchase, so if the purchase doesn't fall into a special category, at least I can use the Fidelity card and get the standard 2% back.

Here is the breakdown from my different Cards

Charles Schwab/Bank of America Cash Rewards - 2.06%
Fidelity American Express - 2.00%
Chase Freedom - 2.32%
Discover it™ - 3.58%
Toys R Us - 5%
Target - 5%
Banana Republic - 71.59% - explanation below
Brooks Brothers - 91.76% - explanation below

Overall - 3.04%

My analysis:


This past year 

Charles Schwab -  used to be my 2% card because it was a Visa but that program was discontinued and changed to the Bank of America Cash Rewards Card.
Chase Freedom was my backup card when AMEX wasn't accepted and also had 5% rotating categories.
Discover - same as Chase Freedom, except all the rewards can be multiplied by 1.25 if you take rewards in gift cards instead of cash.
Toys R US/Target - Toys R Us gives 4% back for the credit card and 1% back for the keychain card.  Target gives 5% off every purchase.  So these numbers are self explanatory.
Banana Republic - this looks like a lot, but it is mostly a one time thing.  I only spent about $90 there and I was able to get 15% off my purchase for signing up for a card and I got $50 in various rewards for giving them my email, signing up for paperless statements, etc.  I will be getting a $15 rewards for my birthday every year.
Brooks Brothers - this is not a one time thing, but it is very minor.  They give me a $20 gift certificate for my birthday.  I bought stuff for $21 (there were other small purchases throughout the year as well) that I need anyway so that is why the percentage is so high.

What to Change for Next Year
My wife and I did a very good job this year, but there are a couple of things that will hopefully change for next year.
The majority of my purchases were with the Schwab and Fidelity cards, which will not change.
Schwab changed to the Bank Of America Cash Rewards Card.  At first, I was upset because I lost a 2% Visa, now I have a replacement and the Bank of America fills in a void for me with gas.  It gives 3% on gas and an extra 10% if you redeem into a Bank of America Checking Account (which I have, of course) so I really get 3.3% back on gas.  This will help my percentages.
Chase/Discover - Both have added gas to 2 of their quarterly categories, which means that you can get 5% on gas for 6 months of the year and 3.3% the rest of the year with the BOfA card.  The biggest change will be from Discover.  I originally used Discover as a backup for the AMEX until I found out that Discover only gives 0.25% on non 5% purchases, while Chase gives 1%.

Trading Stocks

Lowest Fees

Just 2 Trade - $2.50 a trade.  I've never used it so I can't tell you anything about it.

Optionshouse.com - $3.95 a trade.  Probably as good as you will find.  Difficult to use and navigate but if all you want to do is trade, they can save you a lot of money.  Plus you get a bonus for signing up!  Also, if you move your brokerage account to them from someone else they will cover up to $100 of the transfer fee your old brokerage house will charge.  Most other brokerage houses will give you some sort of bonus as well.

Zecco - $4.95 a trade.  A little less difficult to use than optionshouse but still not great.

Scottrade - $7 a trade.  Never used it.

Charles Schwab - $8.95 a trade.  Very simple navigation.  In addition, you can get their ATM card and never pay an ATM fee again.  They will reimburse you no matter how high the fee is and no matter how many times you use it.

Merrill Lynch

If you have a whole bunch of money that you don't mind sitting around in a low interest savings account ($25,000 or more), you should use Merrill Lynch.  They will give you 30 free trades a month if you have $25,000 in a Bank of America non-investment account or a $25,000 cash balance in your investment account.

One thing to keep in mind with the smaller brokerage companies:  Many do not participate in DRIPs (Dividend ReInvestment Program) the way the larger brokerage companies.  For instance, let's say you have 5 shares of a company that is $200 a share ($1,000) and it is paying a 2% quarterly dividend and you have signed up for the DRIP program.  If this is invested with Charles Schwab, you will get $20 reinvested back into the stock for free and you will end up with 5.1 shares after one quarter.  If it is invested with optionshouse, however, they will not reinvest the money unless it is equal to a full share.  In our example you would end up with 5 shares and $20 dollars after one quarter.

Best Checking Accounts

Charles Schwab Checking Account

Benefits

1)  No ATM fees - You never have to think about planning your ATM runs.  Schwab has almost no ATMs so they refund any ATM fees you may incur at other ATMs.  It doesn't matter how close you are to a Schwab branch or how many ATM withdrawals you have a month.

2) You can get some interest on the money in the checking account, albeit a very small percentage (0.2%).

3) Unlimited Checks for free.

4)  If you have a smart phone, you can take a picture of your checks and deposit them electronically.

5) No fees, no minimums for the checking account (there is a minimum for Schwab Brokerage account - keep reading).

Disadvantages:

1)  You have no physical bank to go to.  If you have a problem you have to go online or call them up.  I personally think this is an advantage.  You can just mail all your deposits (or email them with a smartphone).  I have never had a problem that I couldn't solve quickly over the phone.

2)  Their savings account is not as competitive as Discover bank (1.1%).

3) You need a Schwab Brokerage Account which has a $1,000 minimum.  If you are someone who ends up paying ATM fees, this is a no brainer. I read online that they wave the $1,000 minimum if you have the checking account.  I don't know if this is true but it is worth a try.

My Recommendation:

Open both a Schwab Checking account and a Discover savings account.  Keep enough money in the checking account for any emergencies and any left over money keep in the Discover account so that you can take advantage of the higher rate.  You can transfer the money electronically between the two of them but it may take a few business days so you have to make sure there is enough in your Schwab for any possible expenses.



Consumers Credit Union


Update: rewards checking seems to be a thing of the past :(

Consumers Credit Union is offering one of the best rates available on their Rewards Checking.  They are currently offering 4.09% on their rewards checking on up to balancing of up to $10,000.  Also, if you qualify for the great rate they will also refund any ATM fees

There are some drawbacks:  Read all the rules on this page before you apply for it.

1)  You need to use your debit card 12 times a month (works like a credit card - you don't need to use a pin).  If you pay for most of your bills with a credit card this is usually very possible to do.  The problem is that you can't use your regular credit card for those purchases so won't get your regular rewards but even if you are normally getting 2% back, this is still a better deal unless you are spending $20,000 a year or more on your credit card.

2) You need to have direct deposit into that account.  If you can't have direct deposit, you can still have automatic bill pay from the account every month or make an online transfer once a month and that will qualify.

3) You need to log on to their online banking once a month.

4) You need to enroll in e-statements.

5) It costs $5 to join (comes with a savings Account)- not a big deal if you are getting a good rate.

6) Not FDIC Insured because it is a credit union.  Instead they are insured by National Credit Union Share Insurance Fund which is also backed up by the US government so it is the same thing as FDIC insurance.

Checking Account - Charles Schwab

I recommend the Charles Schwab Checking Account

Benefits

1)  No ATM fees - You never have to think about planning your ATM runs.  Schwab has almost no ATMs so they refund any ATM fees you may incur at other ATMs.  It doesn't matter how close you are to a Schwab branch or how many ATM withdrawals you have a month.

2) You can get some interest on the money in the checking account, albeit a very small percentage (0.2%).

3) Unlimited Checks for free.

4)  If you have a smart phone, you can take a picture of your checks and deposit them electronically.

5) No fees, no minimums for the checking account (there is a minimum for Schwab Brokerage account - keep reading).

Disadvantages:


1)  You have no physical bank to go to.  If you have a problem you have to go online or call them up.  I personally think this is an advantage.  You can just mail all your deposits (or email them with a smartphone).  I have never had a problem that I couldn't solve quickly over the phone.

2)  Their savings account is not as competitive as Discover bank (1.1%).

3) You need a Schwab Brokerage Account which has a $1,000 minimum.  If you are someone who ends up paying ATM fees, this is a no brainer. I read online that they wave the $1,000 minimum if you have the checking account.  I don't know if this is true but it may be because they say there are no account minimums.


My Recommendation:


Open both a Schwab Checking account and a Discover savings account.  Keep enough money in the checking account for any emergencies and any left over money keep in the Discover account so that you can take advantage of the higher rate.  You can transfer the money electronically between the two of them but it may take a few business days so you have to make sure there is enough in your Schwab for any possible expenses.