Episode 15: Popular Cards to Avoid

money on fire
Thanks for joining me for episode 15 – Popular Cards to Avoid. I’ll talk about why you shouldn’t sign up for popular credit cards including Wells Fargo Propel and Amazon Visa – the rewards really aren’t so impressive!


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Visit my other podcast project at stoicsolutionspodcast.com where you can find practical wisdom for everyday life inspired by the ancient philosophers of Greece and Rome.

Thanks to generous patrons and fans of this podcast who help support my work. Have a great day.

Mentioned in podcast:

Watch me on daily livestreams for the month of March and maybe beyond on Cakeologi’s YouTube channel!

Visit Cakeologi’s website.

Schedule a free 15-minute consultation with full-time business coach and YouTuber Cakeologi who can help you formally establish your business, build business credit, and get premium business credit cards. When you select from various paid services after the free consultation, I will receive credit for referring you. Listen to Cakeologi on episode twelve of my podcast.

Rough transcript:

You’re listening to the Hurdy Gurdy Travel Podcast. I’m your host, Justin Vacula, here to help you travel the world at next to no cost through credit card points, miles, benefits, and rewards. Make money, save money, and take advantage of great deals!

Visit my website at HurdyGurdyTravelPodcast.com where you can read episode transcripts, complete a free credit card questionnaire to receive tailored recommendations, follow me on social media, view helpful resources, listen to past episodes, and contact me.

Thanks for joining me for episode 15 – Popular Cards to Avoid. I’ll talk about why you shouldn’t sign up for popular credit cards including Wells Fargo Propel and Amazon Visa – the rewards really aren’t so impressive!

Some personal and podcast updates: I’m recording on March 21th of 2020 now day five of mostly seclusion hashtag stay at home. With this comes opportunity to use time well striking off to-do list items and also having leisure time. I plan to produce more episodes than usual and, as I mentioned in a previous episode, I’ll be livestreaming daily from YouTube while in seclusion at 8PM Eastern Standard Time with supporter of the show Cakeologi. Join us for laughs, helpful tips, and a chance to have your questions answered live! Visit his YouTube channel at Cakeologi – C-A-K-E-O-L-O-G-I. More information can be found in the show notes. I also updated the design on my website adding a search function, social media buttons, and other new features.

On with today’s topic…

Day after day in various Facebook groups and websites, especially involving people new to credit, I see approvals for cards I wouldn’t suggest or apply for myself including Wells Fargo Propel, Amazon credit cards, Citi Costco Visa, and Chase Freedom Unlimited. People are brought in by what they think is great return from everyday spend, but such cards come with significant opportunity cost and imagined returns aren’t so great as people think.

I’ve said many times on this podcast and elsewhere that focus on category returns or returns on everyday spend is absolutely the wrong focus when considering credit cards because signup bonuses and getting multiple cards will give a far more dramatic return on spend – we’re talking easily more than $500 first year value and often continued returns. It’s an interesting revelation, optimal credit card strategy can seem counter-intuitive at first as you shouldn’t start with a question like, ‘where do I spend the most’ as many do.

Category spend and everyday spend returns will not amount to much unless you’re spending a high amount and with so many cards giving two times points on everyday spend or two percent cashback, even categories giving five percent back won’t make much of a difference. The low spender especially benefits from working on signup bonuses while high spenders, of course, will benefit more from category return – and even then, with so many cards, differences between 2x or 2% cards vs 3x or 4x usually won’t be so great.

Early in the credit card game, cards like Wells Fargo Propel, Chase Amazon Visa can be significant mistakes as they prevent you from getting valuable Chase and Barclay’s cards while also interfering with approvals for banks who are more inquiry sensitive like US Bank and Bank of America. Even those who don’t travel or don’t travel much can get good value from cashing out Chase Ultimate Rewards points at one cent per point, but of course there’s more value in using Chase points transferring to partners like Hyatt, United, and Southwest or even using their travel portal for 1.25 cents per point.

Let’s start with the Wells Fargo Propel card. The current offer, advertised on Wells Fargo’s site is 20,000 bonus points when you spend $1000 in purchases for the first three months – a $200 cash value. The card also provides a low APR and balance transfer rate for 12 months and several 3x categories on dining, gas, streaming services, and travel…and a terrible 1% back on all other spend. A $200 signup bonus, especially early in the credit game, is really poor and, again, the 3% categories will very likely not amount to much especially when comparing to other cards with comparable categories even giving 2% on everyday spend like the American Express Blue Business Plus or Citi DoubleCash.

Low spenders, again, would be better off putting this spend towards signup bonuses getting a much better return than 3% on their money. As a higher spender and someone with many cards, I have other cards giving 4x on dining, 3x on travel, and 2% everywhere. Rideshare, too, is a bad category as discounts on Uber gift cards are common even through online merchants. Simply buy online through various websites using a different credit card preferably working on a signup bonus or high spend goal and upload the Uber gift card to your app – really easy. Bonus points for using a shopping portal for an extra percent or more when you can. A low APR isn’t interesting as so many cards offer a 0% intro APR.

What’s just one card better than Propel? Citi Premier currently has a signup bonus of 60,000 points which are worth $750 towards airfare through the Citi travel portal. Points can even be cashed out at one cent per point for a whopping $600. The card has a $95 annual fee, but you’re still well ahead in year one and will also enjoy categories giving 3x on gas and travel. Year two presents an interesting opportunity as Citi, at least for me, effectively waived the annual fee with a retention offer, so I kept the card with hopes to get another Citi card earning points after the second year with the card. Citi, after all, has a rule of getting only one ThankYou point earning card every 48 months. One can also product change or downgrade the Citi Premier to the Citi DoubleCash for a no annual fee 2% everywhere card. Propel can be better later in the credit card game, much later, especially if paired with other Wells Fargo cards, but I’m not impressed by the card early on and especially not with a 20,000 point signup bonus. Outside Citi, as I’ve suggested before, American Express and Chase have much better options especially with their business cards.

Next, the Amazon Chase Visa is popular but, like the Propel card, is unimpressive. The Chase version of the card is far weaker than the American Express version because it appears on your personal credit report preventing and delaying you from getting other more valuable cards especially with Chase. Its signup bonus is very weak at only $150 in March of 2020, even lower, it seems, for people who don’t have Amazon Prime. Prime members get 5% back in the form of Amazon credits following Amazon and Whole Foods purchases. The card also gives 2% back at restaurants, drugstores, and gas stations – nothing special here. How much do you expect to spend on Amazon in one year? Even with 5% back on $500 spend a month, you get $300 for a $450 gain in the first year, but there are other considerations.

First, I reflect on a time where I shopped much more on Amazon through their Subscribe and Save and Amazon Fresh services, but today I almost never order groceries through Amazon because I find much better deals elsewhere namely through grocery reward programs gaining points through gift card spend. Even then, for those who do not buy many gift cards at grocery store, you’re locked into Amazon and may have better opportunities elsewhere. In recent weeks, I had an American Express offer to save 10% on all purchases at Lowe’s up to $1000 in spend. It is a trivial matter taking very little time to buy $1000 in Amazon gift cards at Lowe’s taking a slight detour on a usual drive as Lowe’s locations are common. I also had a Chase offer to save at Staples, another Amazon gift card seller, CVS, and Walgreens. December of 2019 also had a deal – a 10% rebate on a now seemingly discontinued Happy brand gift card usable at Lowe’s, of course, which allows one to buy Amazon gift cards. Walgreens, too, often has gift card deals which pair with other offers. This doesn’t take much effort or research, either, simply follow Doctor of Credit dot com and Gift Card Galore dot com for these common deals. This is just the tip of the iceberg on Amazon savings far exceeding 5%!

The Citi Costco Visa is extraordinarily lackluster with no signup bonus, 2% back at Costco, 3% back on dining and travel, and 4% back on gas. This card is easily outclassed by Wells Fargo Propel and that’s quite interesting since Wells Fargo Propel is really lacking as I described. The 4% gas category isn’t too far away from 3% on Propel or 3x on Premier or 2% on various other cards and, once again, likely won’t amount to much for most spenders. Citi could do much better offering a better return on Costco spend and offering something like a $100 store certificate, something! If you have a strong credit profile, you can do much better than this Costco card. For those new to credit or rebuilding, I’ll talk in a future episode about starter cards and rebuilding.

Finally, the overrated Chase Freedom Unlimited: currently a $200 cashback signup bonus or 20,000 points when combined with other Chase cards, 0% intro APR for 12 months (much better than other cards I mentioned in this episode), and 1.5% cashback on all spend or 1.5 times points on all spend. I find the Chase Freedom to be a much better choice for people who have credit scores in the high 600s to low 700s and want to establish a relationship with Chase while also getting a decent card. Freedom comes with rotating 5x categories which will likely offer more than 1.5x for low spenders.

For those with credit scores in the mid 700s or better, well, they’ll likely get much more value from the Chase Sapphire Preferred, World of Hyatt card, Southwest cards, and Chase Ink business cards. Those who really want the 1.5x on all spend can get this from the Chase Ink Unlimited which comes with a much higher signup bonus and doesn’t take up a 5/24 slot. Either way, the 1.5x won’t amount to much for low spenders.

As always, I’m here to help you find good credit cards and get a big return for your spend rather than marginal returns on everyday spend or categories which doesn’t amount to much. Convenience and apathy often comes with a significant cost. I’m here to inspire you to make the little effort to maximize returns – not to save just a few dollars, but to gain dramatic returns from credit card rewards deploying a strategic plan. Even if you’re not in the game of managing 20 cards like me, you can do far better than cards like Wells Fargo Propel with even one new card every two years, but of course I’d suggest a more aggressive approach! Start small with just one new card and build over time, it doesn’t have to be an all-or-nothing high speed approach and, as Cakeologi says, there’s no overnight sensation with winning the credit card lottery to get hundreds of thousands in credit lines and benefits in a short time.

Thanks for listening and stay tuned for more content!

Visit my website at HurdyGurdyTravelPodcast.com where you can read episode transcripts, complete a free credit card questionnaire to receive tailored recommendations, view helpful resources, listen to past episodes, and contact me.

Support my work through Patreon, PayPal, the Cash App, and referral links by visiting the donate tab on my website. Subscribe on YouTube at Hurdy Gurdy Travel Podcast; like my Hurdy Gurdy Travel Podcast Facebook page; follow HGtravelpodcast on Twitter; and follow Justin Vacula on Instagram.

Schedule a free 15-minute consultation with full-time business coach and YouTuber Cakeologi who can help you formally establish your business, build business credit, and get premium business credit cards. When you select from various paid services after the free consultation, I will receive credit for referring you. Listen to Cakeologi on episode twelve of my podcast.

Visit my other podcast at stoicsolutionspodcast.com where you can find practical wisdom for everyday life inspired by the ancient philosophers of Greece and Rome.

Thanks to generous patrons and fans of this podcast who help support my work. Have a great day.

 

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