JD: Let me introduce a new contributor to the blog, Expat Boy. Expat Boy is a friend from college who has been living and working in Africa for the past two years. From time to time, he will post on a wide range of topics from the trials and tribulations living abroad to why he loves cash!
Cash is king and nothing gives you more of it than the Capital One Cash-Back card. With 1% back on all purchases plus a 50% cash-back bonus on the anniversary of the account’s opening, an effective return rate of 1.5% across the board is simply unbeatable. Many reward cards offer gimmicks of 3x points here or 5% cash-back there, but the categories are restrictive and not surprisingly, market analysts have found that offering selectively higher %’s of rewards actually fuels unnecessary spending.
As Cash-Back Boy so eloquently already stated, this is not the place to argue for modesty as this readership is geared toward aggressively chasing down the best and biggest point deals possible. I admittedly opened a United Airlines card a few years ago, getting 50,000 bonus points. I participated in the United Mileage Plus, chasing down double point deals at local eateries, buying Netflix for the additional 5,000 bonus points, and ordering other items online to maximize my points balance. Suffice to say I have a hefty Mileage Plus miles balance, much of which I can attribute to overspending on my own part.
When looking at rewards, I try to maximize the cash value of what I’m getting. Admittedly many posts have outlined some amazing deals which really are dollar for dollar well worth the spending to gain the reward. $250 in spending for enough points to fly business class to Tokyo, yes, that computes. But be careful, callous disregard for budgeting in favor of an unsustainable rate of spending always ends the same way, credit card balances. I never quite understood why people adamantly seek out a rewards or cash-back card only to end up carrying a balance on it. Sure, you got your 1.5% cash back on that $1,500 TV purchase, and then ended up paying 14.5%+ in interest charges. Your effective reward was a loss of $20.25.
Cash back is not for everyone. The ‘gun slinging’ thrill of chasing down mega point deals can be lucrative and rewarding. But, if you’re a bit more boring like me, a steady 1.5% return across the board with no ceiling or special rules pushing for more purchasing on your part, can build wealth over time. Cash is king, and nothing beats it.
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