We Finally Get Better Credit Cards

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What would you do for an extra $500/year? I’ve written about how much I value my time and often choose financial simplicity over saving a few bucks here and there. For that reason, we’d been using the same 1% cash rewards USAA credit cards for many years.

Stack of credit cardsBut, given the recent economic stutter, and my role as a blogger who needs to stay informed about the latest in personal finance, I finally took the plunge late last year into higher-rewards credit cards.

I had long known that other companies and other types of accounts would offer us better kickbacks. But I had resisted because of my general distaste for financial paperwork, and because a booming economy let me overlook small sums of money.

However, we can easily put $5K or more in expenses monthly on our credit cards. (Paid off without interest, always.) Virtually every major expense of ours, other than rent, appears on our credit card statements. So, if we could increase our reward by just 1%, that would represent an extra $600 or more annually in our pockets.

I decided I was finally willing to sacrifice some of my time to achieve that payback. Here’s what I learned in the process….


It all started with the advertisements. Like every other consumer, we are bombarded with endless pitches for credit cards. Most we ignore. But two had caught my eye:

First was Amazon’s Prime Rewards VISA Signature Card offering 5% back on Amazon/Whole Foods purchases, 2% on dining, gas, and drugstores, and 1% on everything else. Wow, 5% on Amazon could be huge. We do many thousands of dollars of business with Amazon and Whole Foods every year.

If memory serves me correctly, when Amazon first introduced their credit card, there was a fairly modest cap on the points that could be earned monthly. But now, reading the fine print, I saw no limit.

Then there was USAA’s Preferred Cash Rewards VISA Signature card offering 1.5% back on all purchases. (Note: This card appears to have just been replaced by a new offering that pays 2X points on dining and gas, and just 1X on everything else.) We have been banking with USAA for many years. At the cost of a credit application, we could get an additional 0.5% back on many of our purchases.

Because of my aforementioned inclination to financial simplicity, I had a strong preference for staying with our existing financial institutions. If I could simply get another, better, card through USAA, without too many paperwork headaches, it would keep my life simpler, because we already had checking and several other accounts there.

But, just to be safe and do a thorough evaluation, I went on Bankrate.com and reviewed their credit card comparisons. Among the dizzying options there, I saw two basic divisions: Some cards rotate their rewards categories randomly every quarter or so. (Keeping track of this seems needlessly complex and error prone to me.) Other cards offer a flat percentage back on all categories.

At the time I was evaluating, a few months ago, the leading card was offering 2% cash back on everything. It would be nice to get an additional 0.5% over USAA, but was it worth the paperwork hassle of dealing with another institution?

Travel Hacking

And what about travel miles? Couldn’t that change the equation? Might there be a better credit card deal if you’re interested in optimizing for travel….

Probably. But I’m going to make a rare excuse: I normally make every effort to research options and present all the factors for readers. But when it comes to travel miles and especially travel hacking, I just can’t get interested.

“Travel hacking” is the process of opening, using, and closing multiple credit card accounts for the sole purpose of accumulating travel miles. It’s a legal, profitable, and popular activity, especially in the personal finance space.

But, honestly, travel hacking is a great example (along with certain tax maneuvers) of the kind of complicated financial gaming that I prefer to avoid. The last thing I want to introduce into my financial life is more transactions, more email, more statements, more deadlines.

But other smart and considerate people see it differently. My blogging partner Chris reviewed Brad’s course (from Choose FI) a few years ago.

Chris highly recommends this course for anyone interested in travel hacking. He himself still dabbles with the effort, generally getting 2-3 new cards/year on average and getting good value from that simple approach.

As for me, I can happily go years without getting on an airplane. I don’t want the extra paperwork. And I do want the flexibility of cash rewards.

Our Choices

So I could go with a new bank and get 2% cash back on everything. Or I could stick with Amazon and USAA and together get 5% back on Amazon/Whole Foods, 2% on gas/dining/drugstores, and 1.5% on everything else (via the USAA card).

My average kickback would probably be more than 2% by sticking with my existing institutions. That was good enough for me. There is huge value, and measurable time savings, in dealing with companies where we already have accounts. I know their web sites, I know their products, and I’ve already got related communications configured the way I want.

The Amazon Prime Rewards VISA Signature Card is noteworthy, especially if you would benefit from the other perks of Prime membership (like free shipping). At a membership cost of $119 annually, and assuming you’re getting 4% more cash back than with another card, you need to make only about $3,000 in purchases annually to get your membership fee back. Ordering many of our household supplies from Amazon, we easily reach that number in a few months.

One reason I had long been dreading and putting off new credit cards was the chore of unfreezing our credit reports, so the applications wouldn’t be blocked. I originally froze our credit reports years ago, when the option first became available, and there have been many changes to the credit reporting agency systems since. When I tried unfreezing about 5 years ago for our rental approval, one of the agency web sites didn’t recognize my credentials. That would potentially take me weeks to correct via postal mail. This time it all went smoothly though, and I managed to unfreeze all three of our reports (Equifax, Experian, and TransUnion) in less than an hour online.

The application process for the credit cards themselves was blessedly simple. (The banks have a huge financial incentive to make it easy for people to use credit.)

It was a bit disconcerting, as always, to be asked for my “income.” That’s a loaded word for early retirees living off assets. Our financial picture doesn’t look like the average wage earner’s. For starters, income is highly variable and more under my control, depending on our tax picture and how I’ve harvested assets for living expenses in a given year. Some years it’s low, and some years it’s high. Fortunately this past year was a high one, so I chose that number and the application proceeded smoothly.

Within less than half an hour, I had two new credit cards approved and on the way. Amazon even automatically linked my new card as the primary for my online account, and was ready to take orders on it!

Follow-On Tasks

A drum I beat repeatedly here on the blog is the value of financial simplicity, to me, at least.

Getting new credit cards is a perfect example. Most people probably would consider that a trivial, low-cost exercise. Fill out a simple online application and you’re done. But, taken end-to-end, it’s anything but a quick process in my experience.

Looking back now, my concerns about the time consumed for the entire transition were spot-on. It’s been a grueling process consuming, when all is said and done, close to a full workday (8 hours) of my time. Don’t believe it? In addition to the initial research, unfreezing of credit reports, and application, consider these follow-on tasks:

My first job when getting a new credit card or number is transferring all our existing automatic payments to the new account. We have long since set up every one of our bills for automatic payment, preferably on a credit card account to get rewards. But that means substantial work whenever a number changes. Between us, my wife and I have more than a dozen automatic payments every month. Changing those means logging onto each vendor’s web site, then entering and verifying the new payment information. Time required: 1-2 hours.

Next I needed to set up automatic payment for the credit card bills themselves, from our checking account. This was simple enough though, in the case of the Amazon card, it required registering a new account at Chase.com, because it’s Chase Bank that administers the Amazon card. Chase has an attractive and generally intuitive site, but it was still something new to learn. And as I scrolled past all their other banking and investment offerings, I wondered, “How long will it be before they start pitching me on these other products?” Time required: 30 minutes.

Next we needed to add multiple users to our cards. Why? When managing the estate process for our parents, we learned the importance of joint accounts. If you aren’t joint on your spouse’s credit card and they pass away, once the bank receives notice of the death, they will block access to the account until the estate is settled. This can be a huge hassle and even financially dangerous, if critical bills are being paid from that account. Hence, my wife and I are joint on each other’s credit card accounts, even though, to keep expenses organized, we only make charges on our primary cards.

Having the authority to charge on an account is not the same as having access to view transactions and statements. I need that authority in order to reconcile our accounts each month. But adding it was a separate task, requiring a call to the bank for help. And that didn’t work on the first try, so follow-up was required. Total time for issues related to joint accounts: 1 hour.

Now come the new statements to access, decipher, and reconcile. The USAA statements are familiar terrain, but the Chase statements are all new. And don’t forget setting up email notifications related to statements and payments. Total time: 30 minutes.

Then there was cancelling our old cards. With twice as many credit cards now, we saw no point in keeping our old, lower-rewards cards active. To us, it was a security risk. But for the bank it was potential profit lost. They didn’t go out of their way to make the process easy. I had to talk with a representative and got a bit of a sales pitch. She reminded me in somber tones that it was OK to keep a zero balance, and that cancelling cards could impact our credit score. Finally, she proceeded with the cancellation. (I don’t care about minor ripples in our credit score. It’s been decades since we needed credit.) Total time: 30 minutes


Ironically my wife’s credit card number was stolen while she was traveling in the middle of this process. Fortunately she was already carrying her new card, so she wasn’t stranded without the ability to pay for expenses. But it meant we had yet another credit card showing up, for the old account, which would now need to be cancelled.

Finally, and still unfolding, is the process of claiming our rewards points. Amazon seems to make it easy. There is a choice on our payment screen every time we order at Amazon.com to apply some or all of our current rewards balance. USAA also shows our rewards balance in our main Accounts list. But there is an outstanding mystery as to why my wife’s and my rewards balances are different. If this is a banking snafu, it will require even more time to untangle. Total time: 1+ hours?

In the end, we are happy to have multiple, higher-rewards cards in our pockets now. They give us more flexibility and should save us money in the long run. But, as my detailed discussion above shows, it will likely be a year or two before we recoup the time costs of making the transition.

I’m just hoping that “better” credit cards don’t appear on the market in the interim!

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