Points and miles can enable ordinary people to visit extraordinary places. As people who love to travel, we try to make the most of our online purchases. In this post we outline our current approach for maximizing points and miles when shopping online. The following are five credit cards we use for shopping online.
Always use a shopping portal – Before getting into specific cards, whatever card we use, we try to use a shopping portal. In an earlier post we wrote up some thoughts on online shopping portals, and also our current strategy for portal use. Shopping portals are an easy way to boost your cashback or points balance.
Now, with no further ado, here are four cards or type of cards that factor in to our online shopping.
Card #1 – The Bank of America Cash Rewards Card for 5.25% for the first $2500 in quarterly spending.
The Bank of America Cash Rewards Card allows users to select a category in which they earn 3% cashback on the first $2500 in quarterly category spend. Customers with Bank of America Platinum Honors status earn additional bonus points which bump their earning rate to 5.25% on the first $2500 in quarterly category spend. We selected online shopping as our bonus category, and so this is a go-to card for online shopping.
Card #2 – The Rakuten Visa Card for 3x Membership Reward points via the Rakuten Portal
The Rakuten Visa card earns 3x in membership reward points for online purchases made using the Rakuten portal. This 3x is in addition to points earned by shopping through the portal itself. For example, if Best Buy is paying out 2x for shopping via the Rakuten Portal, and we shop through the portal using our Rakuten Visa. We will earn a total of 5 points for every dollar spent at Best Buy. Two Membership Reward points will be earned for shopping through the Rakuten portal, and in addition, 3 Membership Rewards Points will be earned for paying with the Rakuten Visa. We did an entire post on using the Rakuten Portal to earn membership reward points.
Is 5.25% in cash, better than 3x Membership Reward Points?
Before we get to the other cards, let’s do a quick time out. Which is better, 5.25% in cash, or 3x Membership Reward Points? There are several factors to consider.
What value do we place on Membership Reward Points? To choose Membership Rewards points over 5.25% cash, we would need to value Membership reward points at greater than 1.75 cents a piece. And we do find specific use cases in which we gain more than 1.75 cents a piece in value, but not always. So all things being equal, we would normally lean toward putting our first $2500 on the Bank of America Cash Rewards Card.
How Much of Our Shopping Is at Amazon? Getting 3x via the Rakuten Visa requires that the store is represented in the Rakuten portal. Amazon has pretty sparse representation in the portal universe. Because of their limited portal participation, we don’t normally see cashback options for Amazon purchases. Amazon shopping is a one place that the Bank of America comes in handy. The Bank of America Card doesn’t require a portal, we always get 5.25% back when shopping at Amazon.
We might say yes to both 5.25% and 3x Membership Reward Points – Bank of America pays out 5.25% on the first $2500 of online shopping. In some quarters our online shopping is in excess of $2500. In those cases we can pivot to earning 3x on the Rakuten Visa for everything over $2500, with a prioritization of putting Amazon purchases on the Bank of America Cash Rewards Card.
Okay, back to an overview of the cards…
Card #3 – Any card which earns store specific, or industry specific bonus points
Our first two cards are the Bank of America Cash Rewards Card and Rakuten Visa. What other cards would we prioritize for Online shopping? Any card which earns store specific or industry specific bonus points. These bonus points may be in rotating categories or fixed categories.
Rotating Categories – Some credit cards offer bonus points in rotating categories that change each quarter. Chase Freedom, Citi Dividend and Discover IT cards are a few examples. Last quarter (4th quarter 2019) the Discover It card earned 5% at Amazon.
Fixed Categories – Some credit cards offer bonus points on fixed categories, and earn them throughout the entire year. For example, the Amex Platinum card earns 5x Membership Reward Points for travel. When booking a hotel or flight online, a shopper can earn 5x points for any purchase which American Express will categorize as travel. The Chase Ink Business Cash Card earns 5% back on the first $25,000 spent at office supply stores.
Selected Categories – Some cards allow the user to select a category in which to earn bonus points. The previously mentioned Bank of America Cash Rewards card is an example. We selected “Online Shopping” but a user could instead select: Dining, travel, drug stores, or home improvement.
Card #4 – Any card for which were working towards a welcome offer
The fourth category of card that plays a part in paying for online shopping is… any card for which we’re actively working toward a welcome offer. On a point per dollar basis, it’s hard to beat the points earned on a welcome bonus. We recently completed the spending requirement for a Citi Premier card. The welcome bonus was 65,000 Citi Thank You Points in exchange for spending $4000 in the first 90 days as a cardholder. 65,000 points divided by $4000 works out to 16.25 Thank You points for each dollar spent.
Card #5 – Any Card For Which We’re Working Towards a Targeted Spending Offer
Credit card companies will sometimes send out targeted offers in which bonus points can be earned during a limited time period, for focused spend. For example, a bank may offer an additional 2x points on the next $2500 of spend at an electronics or computer store. Depending on the terms of the offer, and upcoming purchases, it may move the card to top of our wallet for online spending.
Our Cards Constantly Change
Depending on current offers, welcome bonuses, limited time opportunities, and spending categories, we will rotate through different cards over the course of the year. It’s a ongoing process of evaluating opportunities. We hope this post will get you thinking about which cards you should use when shopping online
Which cards do you prioritize for online shopping?
We outlined five cards we use for online giving. Do you shop online? Which cards do you currently use?