“That would be locking the horse after the stable door is gone, a very foolish thing to do.”
-Jack Aubrey, Far Side of the World
The year was 1812. When Captain Jack Aubrey of Her Majesty’s Royal Navy sailed to the Pacific Ocean to protect British whalers, a journey of months through raging storms and a sea at war, he had nothing but a head full of broken idioms and the supplies on his ship to get him through safely. If a rope broke or a sail split, he and his crew had to fix it with whatever supplies and creativity they had on hand.
With the best will in the world, you’ll probably never be able to captain a frigate during the Napoleonic wars, but with a little creativity like Lucky Captain Jack, you can start saving up to (and beyond) 5% on purchases, just by using a free credit card.
In my last post, I wrote about how you can earn 5% savings accounts. This time I want to write about how you can save 5%: enter the 5% cash back credit cards. I have two: Chase Freedom, and Discover. Both work basically the same way, but I want to focus here on the Chase Freedom card because it is the slightly more powerful card. You have three months to earn 5% cash back on specific categories. After three months, the categories change. You can keep earning cash back on other purchases, but you will only get 1% cash back. That’s why I want to give you five tips on to save 5% on as many purchases as possible.
January-March: Gas Stations; Internet-Phone-Cable; Chase Pay-Android Pay, Apple Pay, Samsung Pay
April-June: Paypal; Chase Pay; Grocery Stores
July-September: Gas Stations; Lyft; Walgreens
October-December: Department Stores; Wholesale Clubs; Chase Pay
Chase also just released the first quarter for 2019:
January-March 2019: Gas Stations; Tolls; Drugstores
Chase allows you to earn up to $75 dollars in rewards points per quarter. In other words, you would have to spend $1500 on one of these categories in three months to max out. If you are able to max out the categories each year, you would save yourself $300 each year! Personally, the only quarter I’ve ever maxed out (so far!) was the July-September quarter back when it was restaurants. (Oops!)
There is one important caveat here I want to highlight before I get to the tips. Keep things on an even keel. You have to absolutely avoid spending money on these categories just to earn points. Don’t think about it like you need to spend $1,500 on this card every quarter. Instead, think about like, you want to find as many creative ways of putting all your normal expenses on this card. Otherwise you will end up spending more money very quickly than you can ever earn back.
- So my first tip is, only spend on these categories what you would use normally.
- Activate the bonus categories and then use the card! You can’t earn the bonus categories unless activate before each quarter. This isn’t hard since Chase will send you an email and you just click the link. It’s also a useful reminder to use the card!
- Only use the card for the bonus categories. Unless this is the only credit card you have, chances are you can get more than 1% cash back using a different credit card.
- Get a Samsung Phone and use Chase Pay. I know, a bunch of iPhone users just closed the window, but bear with me. If you look at 2018’s bonus categories you may notice one consistent thing: for 9 months of the year, “Chase Pay” was a bonus category to earn 5% cash back. Now, most retailers don’t accept Chase Pay, which is a pretty niche payment form (unless you go to Starbucks, Shell, or Best Buy all the time). But, fortunately, Chase Pay has partnered with Samsung Pay, which is accepted many places. All you have to do is download the Chase Pay and Samsung Pay apps to your Samsung phone, and load the Chase Freedom Card to each virtual wallet. Then you can use “Chase Pay” at any grocery store, gas station, or general retail outlet. You just have to open up Chase Pay, and then select “Pay with Samsung Pay” in the app. All of a sudden, you will have unlocked a way to earn 5% cash back at a wide variety of places, for 9 months of the year!
- Buy gift certificates. If you don’t have a Samsung phone, or that last step sounds like too much work, you can also buy gift certificates. For example, say you only spent $500 on groceries during the three month grocery bonus period. You know you are going to buy more groceries the rest of the year. So just max out (or buy as much as you are comfortable with) of gift certificates to your grocery store and use them the rest of the year. The only caveat with this is that you need enough cash to pay off your credit card bill right away if you do this. The last thing you want to do is put $1000 on your credit card bill buying gift certificates and then make monthly payments and pay interest on your credit card (which runs well into double digit interest rates), because that will quickly wipe out any savings you would get form the bonus category in just one month.
The reason I love earning the 5% bonus with my Chase Freedom card, is that when I do, I’m actually earning over 6% back! You may remember from my post: Chase’s Three Musketeers–how you can transfer any Chase points you earn between cards, and then actually redeem those points with one of the Sapphire Cards. So I transfer the points I have with Chase Freedom, at 5 points a dollar, to my Chase Sapphire Preferred card, then redeem them for travel through Chase, thus earning a 25% bonus, I am actually earning 6.25% back on every dollar I spend. If you have the Chase Reserve card, this deal is even better since the redemption bonus jumps to 50%, meaning you are earning 7.5% cash back on every dollar spent on these bonuses.
I would be remiss if I left out my Discover card. My Discover card also offers this rotating 5% cash back program and works basically the same way, with the same spending limits per quarter. Because I cannot get a travel redemption bonus, the card is slightly less powerful than the Chase Freedom, but still, 5% back is not bad! Discover has released their full 2019 rewards bonus calendar so you can take a look and see if it would be helpful for you.
January — March: Groceries
April — June: Gas Stations; Uber; Lyft
July – September: Restaurants
October – December: Amazon
Unfortunately, Chase does not release it’s full calendar, they only release the next quarter, so you can’t really compare to see how often Discover and Chase overlap. But because these cards are both free, having them both won’t do you any harm! Just remember, activate your bonus rewards, find creative ways to fit your existing expenses into the bonus categories, and reap your rewards.
If you are interested, here is a referral link to the Discover card:
And don’t forgot about the Amazon Prime card. If you are an Amazon Prime member, you can apply for the Amazon visa card (it’s free) and earn 5% cash back on all Amazon purchases!