Pass me the special sauce! In case you hadn’t heard.. Chase offers 3x Ultimate Rewards on the First Friday of the month for Restaurant category spending. This seriously is the most exciting thing, my pal over at Big Habitat calculated it was worth about $21 per year in FREE MONEY People!
So, you could imagine my excitement when I stumbled across a card that offered 10% cash back on Restaurants, along with 5% for that trifecta of Gas, Groceries and Drugstores. I thought, this could be a star. Unfortunately, this card only offers the bonus for 90 days, then it reverts to 1% everywhere, which as we know is awful, when compared against the Fidelity Amex offering double that.
How much does a card have to pay to be ‘worth an app’?
For those who are responsible with credit, card bonuses can offer tremendous value, either in travel rewards, or in straight cash back. One wonders what is the ‘breakeven’ point for a card to be worth applying for, and unfortunately this is yet another subjective question. As an example, the old Amex Blue Cash that I have offered a zero signup bonus, but I earned around $1000 in the first month as I had very high drugstore bills, the 5% cash back offered some respite from those costs. As such, you could say that it offered me better value than even the very solid 60,000 Ultimate Rewards on offer currently with the Ink Bold.
The difference between the two is that for me to benefit from the Amex Blue I had to make a lot of purchases, whereas the Ink Bold I would just spend my regular $1,667 per month for 3 months and get a nice payday. For the sake of comparison, if I had spent $20,000 on the Bold even at 1X rates I would have earned 80,000 ultimate rewards, which is almost as good value as $1,000 in cash.
If you are ‘playing the game’ and applying for cards purely to beat the signup bonus system then I think you could be happy with as little as $400 per signup. But feel free to insert your own number there, as I mentioned it is subjective.
10% is good, but is it that good? Finding the Special Sauce
When I find an unusually large offer like this 10% The first thing I look for are Spend Caps. They come in the following flavors:
- Time Cap – Either an introductory offer, as per this one (90 days) or quarterly rotating bonuses
- Spend Cap – An upper limit to the spend per year that ‘throttles’ people like myself who are aging ungracefully and spend whatever they can at the local Walgreen’s to find the elixir of youth.
Sadly, this card fails the Time Cap rule, but doesn’t seem to have a Spend Cap. What that creates is a race against the clock. Can we spend enough money in 90 days to make this card offer more than $400 when we consider opportunity costs? Remember, we can get 2% anywhere, just from that Fidelity American Express Card. Let’s consider this an 8% upside offer.
If we want $400 and we are playing with 8% upside then we need to spend $5,000 in 90 days. Not an impossible task if you enjoy dining out, but probably a stretch for many, who would be forcing themselves to enjoy ‘just one more, wafer thin mint’ at the end of the meal in order to get the spend up.
Unusually Large Spending Requirements
Personally, I paid cash for my wedding, but if you are the type of person (or know one) that wants to book out an entire restaurant and has a whopping bill for the reception then 10% cash back is actually pretty attractive. Watch out if you are thinking to do this at places designated as ‘event spaces’ etc as they may not be coded correctly to trigger the cash back. I attended a Wedding in Manhattan that held the reception in a downtown restaurant, that would be a great match for this.
Another angle that we must explore when looking for the “Special Sauce” is a way to benefit from the spread between the rebate and the resale of the product acquired. For example, if they were to consider Starbucks to be a Restaurant and therefore qualifying for 10% cash back, a talented salesperson could go into Starbucks, buy a bunch of coffee and sell it outside the store for perhaps 5% discounted from market price. This would allow people to capture a 5% profit at no cost, and allow people therefore to spend more.
Of course, reselling luke warm coffee isn’t always the easiest thing, as you can never tell when your customer is ready to order, perhaps they would rather buy the option to get coffee, with a gift card. The challenge – finding someone who would buy gift cards from you at only 5% from face value.
Conclusion
Providing you don’t get shut down… this could be a pretty lucrative card even for 90 days, but that is mainly due to the 5x Drug, Gas, Groceries. If you are the type of person who, like me is constantly buying beautifying products from Drugstores and who has lavish tastes when dining out it might be valued at more than $400 for 90 days of work…all in all not too shabby, but it isn’t the next big thing. Here’s the link in case you want to look further: CashBack Platinum from CharterOne please abuse credit wisely.
Could buy gift cards at restaurants and stock up for future use.
Of course, might not be as good as getting GCs at resellers like giftcardgranny
where discount could be more than 10%
Yeah it’s really not great with the 90 days, could be a good 5x card for some that have no other options, but requires a heavy hit to be valuable
Oddball issuers often give low CL so difficult to run up meaningful charges. But rather than just theorize, why not be the Guinea Pig for all of us? Get the next DO’s meals catered by a restaurant…
Interesting idea- we had some other plans cooking but yep, would make for a good test run 🙂
Two questions:
(1) Isn’t this that slightly odd card where the maximum reward payout is $250 / mo, so if you really work it you’ll get a stream of $250 monthly checks?
(2) Are there any restaurants that sell Visa prepaids? I keep meaning to check Cracker Barrel to see if they do, but they’re the only likely suspect I can think of.
I was wondering if we could just load it up in 90 days and have checks appear like an annuity for life? Not sure about Cracker Barrel but I’d be keen to know too 🙂
Not any of the cracker barrels i’ve been to
Please don’t take any discussion between PF Digest and I seriously
Its kind of a sucky card and yes you’ll get the checks for ever (or like 110 months) if you do it right. I have some knowledge about their methods to handicap the 90 days. Not the best choice for moderate to heavy users.
Any suggestions on what would be a good choice for moderate to heavy users? I currently have a WF 5% cashback card that I am really really really going to miss when my 6 months are up.
The old Amex blue I believe is still kicking- $6500 of 1% then 5% for the rest of the year
This could be good for those upper-crusters for paying dues for dining clubs, assuming the club accepts annual payments via credit card and the transactions code with a restaurants MCC. As far as Starbucks I think buying via one of the gift card resellers could yeild more savings… Maybe good for a gift card for a restaurant group such as Restaurants Unlimited or a chain with locations that also participate in the various Rewards Network dining programs.. Hmm…
I think there may be some value as you say, but it’s a narrow market..
Charter One sucks. I got this card while I was in Chicago for the FTU last year. Once they realize that you are doing this for cash back , which isn’t that hard to figure out, they put your payments to credit card on hold for 10 business days. This makes it really hard to go big on this card since the CL is small to begin with.
Good info thanks – I’d heard they weren’t great but didn’t know thos
This seems like a great card to take to Alaska. Really food there is ridiculously expensive.
Our travel category expenses are appropriately charged but this seems like a nice chance to earn cash back. If the CL is super low, I wonder if you could preprime it with an advance payment. So it would run positive as accrue charges.
Yeah but it’s so good too! Love the seafood up there… Low CLs are hard to get around, prepriming can sometimes work but I think it’s not guaranteed to always count as a valid points transaction.
Oh, Charter One. Brings back memories. Good times 🙂
The Miles Professor spoke to us in CLT about how 5% CB cards can quickly negate fees on prepaids. For me – since I buy a certain prepaid at a certain grocery store – this would be valuable, even for 90 days and even if it means a hard pull, since the only 5X card I have currently is an Ink and it doesn’t get 5X at grocery stores. And this card is from a bank we don’t usually churn. I am adding it to my list.
I think that’s the way to look at this, and the 10% is just icing on the cake, but as aegt mentioned, watch out for them clamping down… Just decide how much a pull is worth and run the math, if you can get $750 by earning $250 a month at 5% it is worth it… which might (or might not) sneak under the radar…
Sallie Mae MC allows for just $1250 monthly spend at 5%, so you only get $750/year. Boo hoo.
Yeah that’s a nice card but way too throttled