I NEVER make a purchase without using a credit card, because it is honestly the easiest way
to save money, or make money, depending on how you look at it.
Of course you should always follow the simple rules of paying your card off in full every
month and never using it for purchases you can’t immediately afford.
But with the right combination of cards, you can get substantial discounts on nearly every
purchase you make.
In this video, I’ll be walking you through the 3 credit cards I use to maximize my cash
back, netting about $100 per month in cash back rewards.
Across these cards, I get up to 10% cash back in some cases, with 5% back on most spending
categories and an unlimited 1.5% back on anything else.
All of these can be great cards for beginners, or just great cards to add to your rotation,
and my favorite card is one that I still don’t see anyone talking about.
Let’s get started.
The first card that I keep handy is the Discover It Cash Back card.
This is always my first recommendation for a beginner-friendly credit card because the
rewards are so generous, especially in your first year.
The rewards structure for the card is pretty simple.
Every quarter, or every 3 months, the card has a designated category for 5% cash back.
In 2022, it started with grocery stores and gyms, and in April it’s gas stations and
Target.
That’s followed by restaurants and PayPal in Q3, and then Amazon.com and digital wallets
just in time for the holidays.
You get this 5% rate on up to $1,500 in spending each quarter, which means you can earn $75
in cash back from these categories per quarter, or, $300 per year if you max it out.
Any purchases outside of these categories will earn you a flat 1% cash back.
The best part is, if you’re a new card holder, Discover matches all of your cash back for
the first 12 months.
This means you can technically turn your 5% back into 10% back, and your 1% back becomes
an unlimited 2% back for your first year.
It’s really hard to beat that kind of cash back, and I think it makes this card worth
having even if you only use it for a year.
Plus, there’s no annual fee.
I find that the categories are broad enough that most people should be able to take advantage
of them year-round.
I’ll make this my primary grocery card when the grocery category is active, or my primary
restaurant card when that category is active.
I’ll also go out of my way to do holiday shopping on Amazon to get 5% back during the
final months of the year.
My first year, I actually purchased a couple hundred dollars of prepaid Visa gift cards
on Amazon.
Since my cashback match was active, I technically got 10% back on those purchases, and was then
able to spend those gift cards on my usual expenses like groceries in the following months,
essentially getting a bit of money for free.
I tend to max out my cashback in most quarters, with the exception of gas stations, earning
approximately $25 per month from this card.
I usually cash out with a statement credit, but you can also redeem during checkout with
Amazon or PayPal, redeem via bank transfer or redeem for a gift card.
Overall, the rotating categories are a nice introduction to credit card cash back, and
they’re generous enough to be worthwhile for anyone.
While some people may prefer a fixed rewards category, I find that this actually compliments
my other credit cards pretty well.
If you want to check out the Discover It card, I’ll leave a referral link below that will
get you a $100 bonus in addition to the features I just mentioned.
My second go-to card is the Citi Custom Cash Card.
This is a great card, but I think it’s best used as a complimentary card, and not as your
primary credit card.
The Citi Custom cash card gives you 5% back on your top spending category every month.
This is capped at $500 per month in spending, which translates to $25 per month in cash
back, similar to the Discover card.
Anything after that, or in the non-top spending category, will earn you an unlimited 1% back.
The categories eligible for this 5% rate include restaurants, gas stations, grocery stores,
travel, transit, streaming services, drugstores, home improvement stores, fitness and live
entertainment.
The nice part is that the card will automatically detect the highest spending category to maximize
your cash back, so you don’t have to do a thing other than use the card, and you’ll
earn the highest possible rewards.
It will also recalculate every single month, so if your spending categories fluctuate,
this card has you covered.
And again, there’s no annual fee here.
The drawback is you have to be a little more intentional with how you use the card, or
else most of your cashback opportunities will be wasted.
For example, if you use this card for groceries and restaurants, you’ll only get 5% back
in one category, while the other one will be reduced to 1% back.
This is why I think it works best as a complimentary card - you can use it as a flexible, but focused
spending tool to maximize your cash back in one area, while choosing what that area is.
I wanted a year-round grocery card, and this fits the bill for me.
I spend about $400 per month on groceries, so I nearly maximize my cash back by using
it for that reason alone.
But, I can also switch it up to compliment my Discover card - when my it has has 5% back
on groceries, I use this card for restaurants, which is one of my next highest spending categories.
Between the two, I can get 5% back on big spending categories almost every month of
the year, with another $25 a month or so coming from this particular card.
Again, I usually redeem for a statement credit, but you can also choose a direct deposit to
your bank, redemption on Amazon or redemption for gift cards.
Currently, Citi offers a $200 sign up bonus when you spend $750 in the first 3 months
of card ownership, which is a great incentive to get started - again, I’ll leave a link
below.
My last and favorite card is the M1 Finance Owner’s Rewards card.
I’ve covered this in previous videos because it’s such a unique card, so feel free to
revisit those if you want a deep dive.
This card is unique because it offers you generous cash back when you spend at a company
you also own stock in.
As such, it is a great fit for anyone who is already investing with M1 Finance, but
the rewards are generous enough that it might be worth opening an account just for the card.
You can earn up to $200 in cash back every month, with rates ranging from 1.5% all the
way up to 10% cash back.
You’ll get 10% back on the categories seen here, with some highlights including subscription
services and quite a few retail options.
You’ll get 5% back on everything seen here, with lots of travel options, more retail and
my personal favorites starbucks and chipotle.
Lastly we have a massive 2.5% back category, with tons of online retail, fast food, cellular
networks and superstores.
Any purchases not within these categories will earn you 1.5% cash back, so I also end
up using this card for any purchases that don’t fall within the previous categories
or my other cards, since it’s higher than 1% back.
You can redeem your cash back as cash to pay your statement or transfer to your bank, but
my favorite feature is the ability to redeem it directly in your investment portfolio.
So once a month, my cashback rewards are automatically redeemed and invested into my long-term investment
portfolio, where it’s diversified across my holdings based on my set allocations.
As an investor, I love this card because it helps me passively invest in stocks over time,
and I’ve averaged about $35 per month in cash back since getting it.
But there are a few things to note about this card.
First, I mentioned you have to own stock in the eligible companies to get the cash back
rewards.
But, you only have to own as little as $1 of each of these stocks to be eligible.
So instead of picking and choosing which stocks I wanted to own, I chose to maximize my cash
back eligibility by creating a pie with all 51 eligible stocks in it.
I could’ve manually put $1 into each holding, but I dropped $100 into the pie to automatically
purchase a little bit of every stock.
With this strategy, I can earn the maximum cash back from every supported company.
Furthermore, I set this pie allocation to just 1% of my portfolio, and again, the smallest
purchase increment for stocks is $1.
This means I would have to invest at least $5,100 at one time for that 1% to be enough
to automatically purchase $1 of each of the shares in this pie.
In short, I’m not actually reinvesting into this pie with my cash back rewards or regular
investments, which is how I wanted it because I prefer my index fund and ETF strategy.
You could of course change this if you want to hold any of these companies long term,
but that’s how I chose to do it to maximize my cash back and minimize its impact on my
long-term portfolio.
I dove into this strategy in particular in my video on the M1 Card.
Next, there is a $95 annual fee with the M1 Owner’s Rewards card.
So, you’ll have to gauge whether you’ll make enough with it to make up for that fee,
and if it’s worth owning the stocks involved.
I’m personally an M1 Plus member, which is $125 per year, and that waives the fee
for the card, so I’m going to have it either way.
And with how much I use it, I more than make up for the cost of the membership.
I’ll leave a link below for the M1 Finance Owner’s Reward card, which is currently
offering a $300 bonus if you sign up and spend $4,000 in the first 90 days, offsetting that
fee even further.
So as of now, those are the 3 credit cards I am using on a regular basis, but I’m keeping
my eyes out for one more card.
I’m waiting for a crypto rewards credit card that is actually worth using, as nothing
out there at the moment is very compelling.
After all, it’s no secret that I was super disappointed with the BlockFi Bitcoin rewards
card.
I’m hoping Celsius Network will come through and create a credit card that I can use on
all of my miscellaneous purchases that don’t earn great rewards on my current selection
of cards.
Earning crypto back is even more appealing to me than cash or stocks, so I’ll be looking
out for announcements and will definitely be covering it when any information is available.
In the meantime, if you have any favorite credit cards to recommend, I’d love to hear
from you in the comments.
And for a deep dive into the M1 Finance Owner’s Rewards card, be sure to watch my previous
video for everything you need to know.
I’ll see you in the next one.