I recently got a mail from Consumer Reports (well, not too sure if you could consider this junk mail). There were a couple of large post cards. One offered 2 gifts (free off course) - the Consumer Reports Money Adviser, which contains tips about retirement planning etc. The other was the Ultimate Money Guide. Along with this, they also gave a “sample free content” of one of the issues of the Consumer Reports Money Adviser. In that report were some cash back credit cards that they recommend. Hence, I’m going to put my two cents worth on that given (I think) I know more about credit cards than most people.

Here is the list. I do not think they listed it by preference but rather by alphabetical order. So here goes :

1. Blue Cash from American Express - They are definitely bang on this one. And they rightly stated that it pays (after $6,500 in annual spending) 5% rebates on supermarket, gas stations, and drugstores, and 1.5% rebates on everything else. What they failed to mention, and they should have is that before your spending exceeds the $6,500 threshold, you are only paid 1% and 0.5% respectively. Hence, those who do not charge a lot will not find this card suitable.

2. Capital One No Hassle Cash Rewards - To be honest, I’m not too sure why they included this card here. It pays 1% cash back on everything you spend on the card. And at the end of the year, you will be a 1.25% bonus. Well, that’s definitely better most cash rebate cards but, this is probably the least attractive card listed here and I think they could have very well left out this card.

3. Chase Freedom - Well, I definitely agree that this card should be on the list. In the table on the newsletter, consumer reports wrote “Can choose between cash back points. When rewards reaches $200, you’ll get extra $50 back”. While this is technically correct (as an introductory offer), it fails to precisely explain the cash rebate formula and policy of the card. There are 15 expense category that are eligible to earn 3% rebates for this card (including gasoline, supermarket etc). However, only your top 3 spending in a month for any of the 15 items will earn the 3% rebates. These items include :

grocery stores (that are not affiliated with or departments of superstores, warehouse clubs or discount stores), gas & convenience stores, quick service payment/fast food restaurants, telecommunications, cable/satellite TV/Internet Service Providers, video rentals, department stores, dry cleaners, drugstores, movie theatres, local and suburban commuter passenger transportation (including ferries, bridges, tolls, parking garages, taxis/limos), pet supply stores and veterinary services, utilities, beauty shops (salons and spas), or gym/recreation memberships.

There is also another catch that Consumer Reports did not mention. And that is there is a cap on the rebates you can earn on these 3% items (and the cap is $600 in monthly spending).

4. Citi Dividend Platinum Select Card - This card lets you earn 2% rebates on supermarket, drugstore, gas station and utilities spending and 1% on all other stuff. They also cap the rebates to $300 a year. The rebates are lower than the Chase Freedom Card but they do not impose monthly spending restrictions on items unlike the Chase Freedom. Overall, I would say that yes, they should have this card on the list.

5. Citi Professional Card - I’m really not too sure why this card was included since it is actually a reward card? Lets you earn 3 points/$1 at restaurants, gas stations, office-supply stores, auto rentals and 1 point/$1 for every thing else. It has a 100,000 cap and new cardholders get 10,000 bonus points.

6. Discover More Card - Well, in my opinion, this is a controversial card to include as a ‘top’ cash back credit card. The Consumer Report rightly states that “you get 5% back in designated categories like home or apparel, which changes 4 times a year, 5% through their shopping site; up to 1% on everything else.”

While what they stated is true, there more to it as well. For example, for the first $1,500 in your annual spending, you only earn 0.25% rebates! For the next $1,500, you earn 0.5%. Only after spending $3,000 do you earn 1%. Hence, the rebate formula is not very impressive. However, Discover allows you to exchange rebates for gift certificates (and presently there are about 80 partners) and you can double the value of your rebates for certain merchants. Hence, if you are a gift card junkie, this is actually a great card.

Discover Open Road Card - Consumer correctly states that you earn 5% cash back for gas and auto maintenance - 5% through shopping site - and up to 1% on everything else”. What it does not say is that you can only earn 5% on gas for up to $1,200 in annual spending. Given that is cost over $50 for most cars these days to fill up, that $1,200 limit could be a little bit low.

Other Cards They Should Have Included

Aside from some of the cards which I thought should not have included, I feel that they have missed out on a couple of gems. They include the :

Simply Cash Business Card from American Express - For gasoline savings, this card is probably the best. Why? because you can earn 5% on gasoline purchases. This is better than Chase Freedom or Citi Dividend Card which only lets you earn 3% and 2% respectively. Also, unlike the Blue Cash, you earn 5% straight away. Unlike the Discover Open Road Card, you can earn unlimited rebates. You also earn 5% rebates on wireless phone services, office supplies and equipment. Though this is technically a small business credit card, you can also apply as an individual.

True Earnings Card from Costco - If you are a Costo Member, this is a great card to have. You get to earn 3% rebates on gasoline purchases and restaurants, 2% for travel and 1% on everything else. Best of all, there is no cap on how much rebates you can earn. This I think will make a great rebate card for those looking to save money on gas, eating out and are Costco members!

So that’s my two cents worth on what Consumer Reports had to say. I thought they could have been a little more thorough and included a couple of better cards. What cash rebate cards do you have and should there be any more listed here?

This entry was posted on Saturday, April 26th, 2008 at 3:26 pm and is filed under Cash Back Credit Cards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.