Credit card rewards can help you get the most out of your spending. However, there are some restrictions and best practices that you should follow in order to stay within the bounds of responsible credit card spending.
One great www.fivebackgift.com
way to earn additional rewards is to buy gift cards with your credit card. Here are some tips to help you make the most of your gift card purchases!
1. Earn 5% Back on Every Purchase
Not too long ago, the idea of earning 5% back on nearly every credit card purchase would have sounded preposterous and produced a healthy fit of chortles from credit card enthusiasts. But these days, there are four cards that allow you to earn at least 5% back on the things you buy everyday, from groceries and gas to clothing and tech.
The Citi Custom Cash (r) card lets you choose your 5% spending category each billing cycle, up to $500 spent; the Chase Freedom Flex(sm) and Discover it(r) cards let you pick from rotating quarterly categories that change each month, up to $1,500 in purchases; and the Amazon Prime Visa Card lets you earn unlimited 5% back at Whole Foods, plus 2% back at restaurants, grocery stores and local transit and commuting and 1% on all other purchases.
When you make a purchase with one of these cards, the extra cash back is automatically deposited in your card balance. If you spend less than the limit, the remaining amount is redirected to your statement balance. Generally, this redirected balance will earn the same cash back percentage as other card purchases.
In addition to 5% back on every purchase, some of these cards also offer 0% financing offers for up to 24 months on qualifying purchases. These can be a great way to make a big-ticket item more affordable by breaking up the cost into equal monthly payments and then paying it off before the promotional period ends.
A new gift card available at OfficeMax / Office Depot stores has an intriguing offer. The Five Back card can be loaded with up to $200, and its marketing materials boast that it offers 5% back on all purchases. But there are some important caveats and limitations to this offer.
2. Earn 1% Back on Every Purchase
Many credit cards offer rewards on certain categories of spending, such as dining and gas. If you want to rack up rewards for a purchase that doesn’t fall into those categories, buy a gift card to the merchant instead. For example, if you’re planning to spend $500 on an appliance at Best Buy and your card earns three points per dollar on that category, buy a gift card for Best Buy to reduce your out-of-pocket expense by $250.
Then, use the gift card to buy your appliance. That’s a smart way to maximize your rewards. It also helps avoid paying cash or using a debit card, which isn’t good for your credit score.
Gift card purchases are generally considered “open-loop” transactions and count toward a credit card’s rewards earnings, but there are some exceptions. For example, some card issuers don’t allow you to earn reward points on gift cards purchased at their own stores. And, trying to manufacture spending by buying large amounts of gift cards is often seen as abuse by card issuers and can cause them to terminate your account.
When shopping for a premium rewards credit card, look for one that allows you to make a lot of open-loop purchases and has no spending caps in the choice and grocery store and wholesale club categories. For instance, the Ink Business Cash card lets you earn 3% and 2% cash back on up to $2,500 in combined purchases each quarter in those categories, then unlimited 1% thereafter. The card even lets you change the category to match seasonal spending, such as apparel for holiday gifts or furnishings when you’re preparing for a big summer road trip.
3. Earn 2% Back on Every Purchase
While gift cards are usually purchased to give as gifts, you can also make purchases with them on credit — and earn rewards. Just make sure to know how your card issuer codes the purchase, since some may consider it a cash advance and incur fees.
Most credit cards allow you to use gift cards on your account in the same way you would purchase any other item. That means you can earn rewards as long as you don’t go over your limit or spend more than your available balance. However, if you’re buying gift cards to earn rewards on a specific category like grocery stores or online shopping, the credit card’s rules can differ. For example, some cards may treat the purchase as a cash advance and apply an elevated category rewards rate.
This can be a problem if you’re using gift cards to manufacture spending to earn a bonus or avoid paying interest. For instance, if you’re buying thousands of dollars in gift cards at grocery stores to maximize category rewards earning, the card issuer may flag the behavior as abuse and cancel your account. This is particularly true if you’re buying gift cards to buy things you don’t need.
For a straightforward approach to earning rewards on everything, you might want to consider a flat-rate card like the Bank of America Customized Cash Rewards (rates and fees) or the American Express Blue Business Card (rates and fees). Both offer a solid 2% back on all spending, no matter where or what you buy.
4. Earn 3% Back on Every Purchase
Many retailers sell gift cards, including the big chains like Target and Walmart, local grocery stores and even online at websites specializing in reselling them. And if you buy the right credit card, you can earn rewards on purchases made with the card.
The Five Back Visa Card from Blackhawk Network is one option. When you buy the gift card, you pay a fee of $6.95 plus the dollar value of the card, and you get 5% of every purchase loaded onto the card after it's used at merchants featured on the Five Back website. That means that if you use the gift card at CVS, for example, you can get $1 back on your $20 purchase. You can also redeem the bonus cash for a statement credit or a check, though that might take up to a week.
Another potential option is the Bank of America Customized Cash Rewards Card. This card lets you choose the premium rewards category you want to focus on and you can switch it once per quarter. It offers 3% cash back at a list of merchants that includes drugstores, online shopping and home improvement stores, as well as 2% at grocery stores and wholesale clubs. It has a $2,500 cap on combined spending at the 3% and 2% earning tiers.
Both options have fees associated with them that reduce the amount of cash back you can earn. But if you're planning to make a significant purchase using the card, the rewards may offset the extra cost. Whether it makes sense to buy these types of gift cards, though, depends on your individual needs and spending habits, and the options vary by retailer.
5. Earn 4% Back on Every Purchase
If you're a fan of earning cash back on every purchase, the Five Back Visa Card could be your best bet. This prepaid Visa gift card earns 5% back on all purchases and is available for purchase at CVS and other retailers. The card also lets you reload funds online at Amazon, which can make it even more useful for your everyday spending.
You'll get 5% back directly on the card at retailers listed on the Blackhawk Network website when you use it as debit (which is typically faster at checkout). You can also pay with it like credit, but if you do so, you'll only earn 1% back since CVS will only let you have 6 forms of tender per transaction.
Another great way to maximize this card's benefits is to use it for purchases that you normally wouldn't earn rewards on, either through the retailer's own gift cards or through online shopping portals that offer a bonus when you redeem your earned rewards. For instance, the Ink Business Cash has a great selection of retail gift cards for merchants that don't often earn rewards with other credit cards, including Nordstroms and Bass Pro Shop, which you can then load onto your Five Back card and enjoy the extra cash back you'll receive.
Keep in mind that there may be restrictions on buying gift cards with your credit card, both from the retailer and your credit card issuer, so it's important to know what these are before you try to manufacture credit card spending with this strategy. Also, any purchases you make with your Five Back Visa Card are subject to the same rules as any other purchases made on that card.