One day in July, 1991, a letter arrived for Harry, addressed to the Cupboard Under the Stairs. Uncle Vernon snatched it before Harry could read the very first letter anyone had ever sent to him. The next day, another letter arrived. Dudley got to that one first. On the third day, three more letters came, delivered into Uncle Vernon’s lap. On the fourth day, twelve letters arrived, shoved into cracks around the front door (Uncle Vernon had nailed the mail slot shut). On the fifth day, twenty-four letters arrived, rolled up in the 24 eggs delivered to the house. On the sixth day, a Sunday, hundreds of letters came whizzing out of the chimney. Hogwarts really wanted Harry Potter to attend. And I, at age ten, couldn’t wait until my letter from Hogwarts came. But it never did. I guess I wasn’t magic enough, or maybe they didn’t have an American exchange program.
I never learned to catch a Snitch, or turn a desk into a pig (the way Professor McGonagall did on Harry’s first day at Hogwarts), but I did learn something about another type of magic. The magic of credit card rewards programs. But before I get into the specifics, there is one golden rule you need before you can make use of the magic of credit cards: pay off your balance(s) in full every month. If you cannot do this, then this post is not for you.
I recently overhauled my wallet to maximize my rewards. I used to have one credit card for everything, which gave me two miles per dollar spent. Life was simple. But I wanted more. Fortunately, deciding on and getting a new credit card is way easier than making a horcrux. First I broke down my expenses. And I realized there were just a few categories of expenses that I spent the vast majority of my money on (besides rent): groceries, restaurants and bars, and travel. And after a little bit of research, I discovered there were credit cards aimed at exactly these types of expenses.
I have a grocery card. It’s my American Express Blue Cash Everyday, which gives me 3% cash back. That’s 30$ for every $1000 I would have spent on groceries anyway. It also gives me 2% cash back on gas. The best part, is that it is free, with no yearly fee. Incidentally, if you spend more than $3,200 on groceries a year, it makes sense for you to upgrade to the American Express Blue Cash Preferred, which comes with a $95 a year fee, but also gives you 6% cash back on groceries. If you are curious about this math, feel free to ask in the comments and I’ll break it down for you!
Restaurants and Bars and Travel
I have one card for travel and restaurants, my Chase Sapphire Preferred Card, which gives me 2.5% cash back for travel when I spend on restaurants and travel.¹ I also use this card in conjunction with two other Chase cards to rack up travel miles. I’ll write more about how I do that in a later post. We don’t have portkeys to get around, but this card is the next best thing.
As you see, I managed to cover my primary expenses I originally came up with in just two cards. But more magic is there for those willing to seek it. I have two cards that give me 5% back on revolving categories, my Chase Freedom, and a Discover Card. In the spring I was getting 5% back on groceries with the Chase, and over the summer, 5% back on restaurants. This fall with Discover I get 5% cash back on Amazon and other online retail outlets. These cards allow me to pick up rewards points at an exceptional rate. And lastly, I have a third Chase card, my Chase Ultimate Freedom, which, when used in conjunction with my Chase Sapphire Preferred Card, gets me just under 2% cash back on the “everything else” sort of expenses of life.
The point is, just think about how many extra butterbeers Sirius could have bought if he had bought Harry’s Firebolt and got 5% cash back (just kidding, we all know if he had used a credit card the Ministry could have tracked him down and an innocent man would have ended up in jail.) The real point is, if you play the rewards game, and find the right cards for you, you can use credit cards to your advantage and save big. I earned over $759 back with just a little reorganizing (this number does not even include the signing bonuses and referrals I got for signing up for new cards and referring them to friends!) Just take a moment to think about what you spend most of your money on, and find the card for it. (Buy a lot on Amazon and have Amazon Prime? Get an Amazon Card!) And it isn’t really that hard to carry around three cards with you and make the split-second decision which one to use every time you make a purchase. It’s a heck of a lot easier than counting cash (or a sack full of golden Galleons)!
¹ Just to clarify, several of these cards, like the Chase cards, give you “Ultimate Rewards” or “miles” instead of cash back percentages. I refer to all these types in this post as a percentage of cash back for simplicities sake. For these cards I talk about here, each “ultimate reward point” or “mile” is equal to 1% cash-back (or $.01) when redeemed. The only exception is that points with the Chase Sapphire Card are word $.0125. See my post on Chase’s Three Musketeers for more information on that.