What's In Your Wallet?
Take Cash, Leave Miles
Take Cash, Leave Miles
BY FRED ABATEMARCO --
Basta! said I in speak-to-myself Italian. Enough. I've had it with airline miles.
I've been trying to get out for years as miles became nearly impossible for me to use. But when I had my Basta! moment about this time last year, I was truly done. I switched from credit cards earning miles to credit cards earning cash back and I haven't looked back.
If I can do it, so can you. You'll be better for it--and I'm offering my own records to prove it.
My tale of mileage woes surely isn't much different from yours. My wife and I were on a gerbil treadmill, amassing mostly American Airlines AAdvantage miles with every credit card purchase to supplement our business and leisure flying.
But what we mostly earned was frustration even though our award objectives were modest. We had always been happy to claim a pair of roundtrip business class tickets to Europe once a year. That did not seem too much to ask of American, which was getting all of our flying and charging volume.
With AAdvantage, however, that became a Herculean challenge. Mileage requirements were high. Dates American offered for rewards were never accommodating--and always seemed to involve some off-putting combination of connecting flights, inconvenient airports or absurd travel times.
One example: The last time I used miles to get us both to Rome and back for New Year's Eve, 2019, it cost 110,000 American Airline miles per ticket. Yet we were shunted to British Airways, required to connect through London/Heathrow and forced to return via Milan/Malpensa. We paid about $1,000 a ticket in fees, too. And, oh, yes, we had to buy rail tickets to get us from Rome to Milan and shell out for a night at an airport hotel to make the early-morning Malpensa departure.
I decided it was time to do things differently, to switch my credit card spending to a cashback regimen. Over the years, I'd opened an American Express Blue card (1 percent cashback) and a Citi Double Cash card (2 percent cashback). But I wasn't maximizing even those paltry amounts in deference to our use of various AAdvantage cards. Using a little back-of-the-envelope calculations, however, I started editing my wallet more strategically.
I upped our Amex game by trading the free cashback card for the Blue Cash Preferred. It became the go-to card for groceries thanks to its 6 percent cashback benefit on that category. It also offers 6 percent back on streaming services and 3 percent on transportation. So it also became the default option for our monthly Netflix and Hulu fees, as well as Uber rides, parking, tolls and train tickets. This card carries a $95 annual fee, but Amex waived the first year's fee and offered a free additional card for my wife.
Then I added the Capital One Savor Rewards card for its very generous 4 percent cashback offer on dining and entertainment charges. This became my card for all opera, theater, movie and restaurant charges. The annual fee is $95, but the first year was waived and included an additional card for my wife. The Savor card also has no foreign-exchange fees, so you can use it at home and overseas when you dine or entertain.
As a long-time Costco shopper at the Goldstar Executive level, I also added the no-annual-fee Costco Anywhere card from Citi. It offers 2 percent cash back on Costco purchases; 4 percent back on gasoline purchases (up to $7,000 annually); and 3 percent on travel costs such as airfares, hotels and car rental. I'm using it as my go-to card for domestic gasoline and for travel-related purchases.
Finally, I designated my existing Citi Double Cash card for all other purchases. That effectively meant I'd earn a minimum of 2 percent on any credit card purchases--and up to 6 percent on select charges.
By May, 2019, I was all set with these new cards and new spending strategy. I wrote up a cheat sheet for my wife (and for myself) so we knew which card to use for which type of purchase. A year later, it is rote. The only exception to our suite of cashback vehicles is the Citi AAdvantage Executive card that grants access to Admirals Club lounges.
As you can see by the chart, my cashback play has worked out rather well. I earned a return of $3,125 on spending of around $120,000 from May to December last year. That works out to a 2019 payback of 2.6 percent.
My major spending in 2019 was on the Citi Double Cash card, which earned $1,750. So far in 2020 I've earned another $500. The Capitol One Savor card yielded a 2019 return a tad shy of the full 4 percent. That translated to $600 last year for dining and entertainment. From the Amex Blue Preferred, I earned $495 cashback for a return of about 5.9 percent. Although it was the least used, the Costco card yielded $280 in 2019--and $170 more so far this year.
What have I done with my paybacks? Last year I purchased a pair of Norwegian Air nonstop Premium roundtrips to Amsterdam and, earlier this year, just before the pandemic, I bought a pair of roundtrip Premium nonstops to Paris. As both Ralph Raffio and Joe Brancatelli have detailed, the Norwegian Premium cabin isn't a full-fledged business class, but I found it perfectly comfortable for the price we paid. And when my trip last year was suddenly cut short, I found Norwegian's one-way ticketing and change polices infinitely more flexible than major carriers. I'm certainly not looking back longingly at British Airways, the terrible travel times and the Heathrow connections.
Looking forward, I'm happy to be out of the miles game and in the cashback business. That is especially true in these days when I don't expect to be getting on a plane again for quite some time. It also would be true as well if the world was still, how shall I say, Normale!
ABOUT FRED ABATEMARCO
Fred Abatemarco is a career journalist who has been associate editor at Newsweek, editor-in-chief of Personal Computing and editor-in-chief and president of Popular Science. JoeSentMe members know him best as the creator of the Back FROM the World and FishTales blogs.
I've been trying to get out for years as miles became nearly impossible for me to use. But when I had my Basta! moment about this time last year, I was truly done. I switched from credit cards earning miles to credit cards earning cash back and I haven't looked back.
If I can do it, so can you. You'll be better for it--and I'm offering my own records to prove it.
My tale of mileage woes surely isn't much different from yours. My wife and I were on a gerbil treadmill, amassing mostly American Airlines AAdvantage miles with every credit card purchase to supplement our business and leisure flying.
But what we mostly earned was frustration even though our award objectives were modest. We had always been happy to claim a pair of roundtrip business class tickets to Europe once a year. That did not seem too much to ask of American, which was getting all of our flying and charging volume.
|
FRED'S FLIP: DUMPING MILES FOR CASH BACK |
||||
|
CARD |
FEE* |
CASHBACK CATEGORY** |
SPEND |
PAYBACK |
|
Citi Double Cash |
$0 |
2% on all purchases |
$86,000 |
$1,750 |
|
Capital One |
$95 |
4% on dining and entertainment |
$16,500 |
$600 |
|
Amex Blue |
$95 |
6% on
groceries+ and streaming, 3% on transit |
$8,300 |
$495 |
|
Costco |
$0 |
4% on
gasoline++, |
$9,500 |
$280 |
|
TOTAL |
|
|
$120,300 |
$3,125 |
|
KEY: Fred's
spend on cashback cards from May-December, 2019. * Annual fee. ** Other
cashback categories may be available. + Up to $6,000 annually in purchases,
then 1%. |
||||
With AAdvantage, however, that became a Herculean challenge. Mileage requirements were high. Dates American offered for rewards were never accommodating--and always seemed to involve some off-putting combination of connecting flights, inconvenient airports or absurd travel times.
One example: The last time I used miles to get us both to Rome and back for New Year's Eve, 2019, it cost 110,000 American Airline miles per ticket. Yet we were shunted to British Airways, required to connect through London/Heathrow and forced to return via Milan/Malpensa. We paid about $1,000 a ticket in fees, too. And, oh, yes, we had to buy rail tickets to get us from Rome to Milan and shell out for a night at an airport hotel to make the early-morning Malpensa departure.
I decided it was time to do things differently, to switch my credit card spending to a cashback regimen. Over the years, I'd opened an American Express Blue card (1 percent cashback) and a Citi Double Cash card (2 percent cashback). But I wasn't maximizing even those paltry amounts in deference to our use of various AAdvantage cards. Using a little back-of-the-envelope calculations, however, I started editing my wallet more strategically.
I upped our Amex game by trading the free cashback card for the Blue Cash Preferred. It became the go-to card for groceries thanks to its 6 percent cashback benefit on that category. It also offers 6 percent back on streaming services and 3 percent on transportation. So it also became the default option for our monthly Netflix and Hulu fees, as well as Uber rides, parking, tolls and train tickets. This card carries a $95 annual fee, but Amex waived the first year's fee and offered a free additional card for my wife.
Then I added the Capital One Savor Rewards card for its very generous 4 percent cashback offer on dining and entertainment charges. This became my card for all opera, theater, movie and restaurant charges. The annual fee is $95, but the first year was waived and included an additional card for my wife. The Savor card also has no foreign-exchange fees, so you can use it at home and overseas when you dine or entertain.
As a long-time Costco shopper at the Goldstar Executive level, I also added the no-annual-fee Costco Anywhere card from Citi. It offers 2 percent cash back on Costco purchases; 4 percent back on gasoline purchases (up to $7,000 annually); and 3 percent on travel costs such as airfares, hotels and car rental. I'm using it as my go-to card for domestic gasoline and for travel-related purchases.
Finally, I designated my existing Citi Double Cash card for all other purchases. That effectively meant I'd earn a minimum of 2 percent on any credit card purchases--and up to 6 percent on select charges.
By May, 2019, I was all set with these new cards and new spending strategy. I wrote up a cheat sheet for my wife (and for myself) so we knew which card to use for which type of purchase. A year later, it is rote. The only exception to our suite of cashback vehicles is the Citi AAdvantage Executive card that grants access to Admirals Club lounges.
As you can see by the chart, my cashback play has worked out rather well. I earned a return of $3,125 on spending of around $120,000 from May to December last year. That works out to a 2019 payback of 2.6 percent.
My major spending in 2019 was on the Citi Double Cash card, which earned $1,750. So far in 2020 I've earned another $500. The Capitol One Savor card yielded a 2019 return a tad shy of the full 4 percent. That translated to $600 last year for dining and entertainment. From the Amex Blue Preferred, I earned $495 cashback for a return of about 5.9 percent. Although it was the least used, the Costco card yielded $280 in 2019--and $170 more so far this year.
What have I done with my paybacks? Last year I purchased a pair of Norwegian Air nonstop Premium roundtrips to Amsterdam and, earlier this year, just before the pandemic, I bought a pair of roundtrip Premium nonstops to Paris. As both Ralph Raffio and Joe Brancatelli have detailed, the Norwegian Premium cabin isn't a full-fledged business class, but I found it perfectly comfortable for the price we paid. And when my trip last year was suddenly cut short, I found Norwegian's one-way ticketing and change polices infinitely more flexible than major carriers. I'm certainly not looking back longingly at British Airways, the terrible travel times and the Heathrow connections.
Looking forward, I'm happy to be out of the miles game and in the cashback business. That is especially true in these days when I don't expect to be getting on a plane again for quite some time. It also would be true as well if the world was still, how shall I say, Normale!
ABOUT FRED ABATEMARCO
Fred Abatemarco is a career journalist who has been associate editor at Newsweek, editor-in-chief of Personal Computing and editor-in-chief and president of Popular Science. JoeSentMe members know him best as the creator of the Back FROM the World and FishTales blogs.