Some people think that there is not enough money in cash reward cards to go to all the trouble of managing them. Of course, I do not see it that way at all.* Check this out.
I just placed a $2692 order for 16 new windows. I made sure to charge that purchase on my Discover cashback credit card, which is running a special 5% cashback promotion on home improvement store purchases.* By doing so, I got a $135 credit in cashback dollars from Discover. And I will leverage those cashback dollars** to get anywhere from $168 to $270 in good-as-cash gift cards to use on goods and services I would buy anyway.
To score all that free money, all I had to do was (1) know that Discover was running that special promotion, (2) sign up for the promotion, and (3) make sure I carried that card in my wallet when I went to buy the windows. It just took a little credit card management on my part to capture a big cashback payout. It is worth the effort. Here is more on that.
In the first place, cashback card management is just another fun round of the Frugal Game*** that I love to play to save money without really giving up anything.
Second of all, it is not chump change I am getting here. My annual baseline living costs are around $18,000**** and I figure about $8000 of that is credit card billable. At a conservative 2.5% average cash back on that $8000, that is 200 cashback dollars. Factor in a modest 25% average redemption leverage** and my found money goes up to $250 a year. But that is just from my baseline living expenses. I also spend another discretionary***** $10,000 a year for fun stuff. And all of that is credit card billable. So add another $300 to my yearly found money from putting in a little effort into the management of my cash reward credit cards. That means that in total I am adding $550 a year to my discretionary fund for just taking an hour or less every 3 months to check a few credit card websites and rotate a couple of credit cards in and out of my wallet. I am getting over $100 an hour for my effort.
No, I do not pay more in order to get cashback rewards. For example, I bought those 16 windows at a big box home improvement discount store. I timed the purchase to get a 15% special sale discount that saved me $475 over and above the store's already discounted price. And I used a $25 store coupon to push down my cost even further. So the 5% cashback I got from Discover was on top of the $500 I would have saved without using the card.
And, yes, I will pay off that window purchase charge when the credit card statement comes in. Which is what I do with all the purchases I charge on cashback cards. It is all good.
The takeaway: Doing cashback credit cards is worth it to me in principle because I never leave money on the table. That would not be very frugal.
* Raking In Credit Card Cashback:
** Leveraging Up CashBack Rewards:
*** Playing the Frugal Game is Fun!
**** My $18K Annual Baseline Budget:
***** A Discretionary Fund, Not a Discretionary Budget: