There are hundreds of different credit cards on the market to earn cash back rewards for everyday savings.
However, how do you maximize cash back with a small amount of spending?
Here’s a strategy to consider when optimizing purchases in the right categories on each credit card (restaurants, grocery stores, gas, AIR MILES partners, etc.):
This strategy is not exhaustive! Come and share your cash back strategies in the Milesopedia Facebook community!
When you start venturing into the world of credit cards rewards, you quickly realize that the most lucrative strategy is in applying for credit cards to get welcome bonuses.
For beginners, we recommend starting with one or two credit cards, and then spacing out applications by at least 6 to 9 months. Then, once you become more comfortable with credit card management, you can increase the number of credit cards applications and move them closer together over time.
The credit cards suggested in the first round of the strategy provide rewards points primarily for travelers. However, these points are indirectly a form of cash back, depending on how you look at the strategy.
Here is the valuation that we obtain after the welcome bonuses following the three application:
TD First Class Travel® Visa Infinite* Card
HSBC World Elite® Mastercard®
This strategy accumulates $1,520 in net value ($1,725 – $205) on $14,001 in expenses, for a return of 10.8%.
In this second part of the strategy, the suggested credit cards give welcome rewards and cash back bonuses directly:
This strategy yields $744 in net worth on $6,500 in expenses, a return of 11.43%.
So, with these two rounds of credit cards, an individual’s annual spending of $14, 000 could generate $2,039 in cash back. That’s a yield of 14.5%.
For a variety of reasons, many people prefer the strategy of arming themselves with a good wallet that has one cash-back credit card, to be kept for the long term with little annual fee to pay.
The credit cards that give the highest cash back rates and good insurance are often not free. Since the changes to the American Express CobaltTM Card, it has become one of the best cash back credit cards in Canada.
Second, as a strategy, I recommend that you seek out credit cards to cover expenses where American Express is not accepted, or categories that aren’t boosted.
*Gift cards for these businesses can be purchased at grocery or convenience stores for 5% cash back.
Here are some numbers to illustrate the return of this strategy:
With this portfolio, an individual’s annual expenses of $14,000 could generate $354.62 in cash back after subtracting the annual fees ($558.5 – $155.88 – $49) or 2.53%.
This strategy yields a significantly lower return when welcome bonuses are removed from the equation. However, an average of 2.53% cash back is still excellent.
When you have few credit cards, the best strategy is to make sure you go out and optimize each category of purchase to get the most optimal cash back possible. Therefore, the gift card strategy is essential to master in a cash back perspective.
In addition, there are many online American Express promotional offers to help offset the annual fee for the American Express CobaltTM Card.
With the generous credits from American Express, the real return in this strategy is around 4% to 5% cash back.
Savings are here:
