We Timed That One Pretty Well!

My wife and I recently took a few days to go for a three night vacation to a couple of tourist destinations here in Michigan.  We coordinated it around the time of our anniversary, though it was technically a few days later.

Timing it when we did allowed us to get the cheapest rates of the season.  After Labor Day, the rates fall off a cliff.  In a couple of weeks, they will go back up again, as ‘going up to view the beautiful Michigan change of season’ will pick up in earnest.  Since we fell in between, we got some super awesome deals.  And, on top of that, the crowds were non-existant anywhere we went, where if we had gone even a couple of weeks earlier, we’d have been elbow to elbow.

All in all it was great.

mb-201010creditIn addition to all that, we timed things pretty well with our credit card rewards program.  We each have a Citi Dividends World Perks card.  For years, they offered 2% cash back on categories such as gas, groceries and utilities and 1% on all other charges.  Since we pay our cards off every month, this is a great card for us.

Recently, they changed their rewards program to where the ‘bonus’ rewards are on revolving categories that change every three months.  Since they just implemented it, the first batch was offered at a 5% off bonus!

What were the categories: Hotels, Restaurants, and Rental Cars!  Since we were going on this trip anyways, that meant only one thing:


While we didn’t rent a car, we certainly made excellent use of the restaurant and hotel categories.  Since we had planned the trip many months ago and would have incurred all of the costs anyways, the extra 4% we gained on our hotel stays and eating out was just money in our pocket!

This was confirmed when I received our bill.  I knew what all of the charges would be but the extra ‘rewards’ money was a nice surprise.

We timed that one pretty well, don’t you think?

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Do You Select Credit Or Debit?

Yahoo Finance recently discussed the dangers of using a debit card, pointing out that the best alternative may be to select credit if given the option.

Here are some of the reasons that they listed:

  1. Loss limits – Credit cards and debit cards both limit you to $50 of personal obligation in fradulent situations, but you have a much shorter window (2 days) to report this with debit or you’ll start to be on the hook for more.
  2. Pay now / reimburse later – Because debit takes the money from your account immediately, it won’t be there during the time that your fraud claim is being investigated, which could lead to big issues for people who don’t have a cushion or get their accounts cleaned out.
  3. Merchant disputes – Same goes here, you already paid for the item that you are now having a problem with.  With credit, you aren’t on the hook for the money during the dispute process, whereas the merchant has your money during the dispute timeframe if you select debit.
  4. Phantom charges – Some places (like hotels) will put a hold on additional money at the time of purchase.  While they eventually ‘disappear’ once the transaction settles, this could lead to problems if you have a low balance and inadvertently cost you overdraft fees or bounced check fees.
  5. Overdrafts – There’s been a direct correlation to the number of overdraft transactions and the use of debit card transactions.  One, apparently, begets the other.
  6. Skimming-  If someone gets a hold of your account number, your bank account can be cleaned out before you or the bank notices the activity.  The chances of this are a lot lower in credit card transactions.

We always use the ‘credit’ option when we use our debit card.  I’ve noticed that more and more merchants seem to be trying to subtly lead customers to using the debit option by removing the Credit/Debit choice on the pinpad devices, and instead defaulting to the ‘Enter Your PIN’ screen which would make it a debit card purchase.

The dirty little secret here is that merchants pay less to the banks when you use the debit option versus when you select credit, so it makes sense that they want you to use debit.  However, the way I look at it, they’ve already factored the costs of the credit transactions into the cost of their goods or services, and it’s not like they’re going to pass along some of the ‘savings’ along to you that they’d see if you select debit.  It goes right in their pocket.

The bottom line is that consumers take the biggest risk when they select debit, and it’s not a risk I’m often willing to take.  About the only times I ever select debit are when I’m at Costco (they don’t accept ‘credit’) or in the rare event that I want cash back and can save a trip to the ATM, and usually I’ll kill two birds with one stone and just get the cash at Costco.

This article raised some good points, but we were already in the ‘use credit’ boat.  Do you agree or is there any reason where you prefer to use debit?

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Citi Dividends Changing Terms

I’ve been a faithful Citi Dividends cardholder for a few years now.  I signed up a few years ago, enticed by the cashback rewards.    Before Citi, I had used a couple of different rewards cards, but eventually settled with Citi as the cashback rewards made this a great card, especially considering that there was no annual fee and that we don’t pay any interest charges, paying off our balance every month.

Citi recently sent a notification that the terms of the card are changing.  For the past few years, they paid 2% cash back on the ‘bonus’ categories including gas, groceries, and cell phone bills and 1% on everything else.  Beginning July 1st, they will still pay 1% on everything, but the ‘bonus’ percentages will turn into a ‘rotating’ category program where different categories will offer ‘bonus’ money for three month periods.  The first period (July 1st – September 30th) pays 5% on some categories, most notably restaurants.

My dad asked me how this will affect our usage.  At this point, both my wife and I have between $25-35 in rewards on our cards.  Since Citi will only pay you after you reach $50 in rewards, we are going to continue to where we at least get a reward.  After that, I think we will probably keep the card and use it selectively on the ‘bonus’ categories that we spend money on anyways.  I would think we might look for another cash back card that offers higher rewards especially on gas and groceries, as it’s been nice to get those extra rewards for so long.

Does anybody know of any good cash back rewards cards that pay above 1% rewards across the board or on various categories?

Will anybody be cutting up their Citi Dividends card as a result of this announcement?

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How Citibank Paid For Our New TV

Read the title of this post and you might think that Citi got generous and sent us a new TV.

Unfortunately, the generosity of Citi isn’t quite to that level.  However, it was the next best thing in my book.

Both my wife and I have been using our Citi Dividends cards for over three years now.  Citi Dividends is a cashback rewards card that currently has no annual fee.  Since we pay our credit cards off every month, I pay little attention to what the interest rate is.

The Citi Dividends card pays at least 1% cash back for all purchases.  They pay an extra percent (total of 2%) for certain categories of purchases including those at grocery stores, gas stations, convenience stores, drugstores, and utilities.  I believe that there are others as well.  You accumulate reward cashback every month, and when your balance hits $50 you are eligible to request a check.

My wife and I have both been putting purchases for all of the 2% categories on our card, as well as most ‘bigger ticket’ items, figuring that 1% is better than nothing.  When we get a check, we have been banking it in our long term savings accounts (currently split between ING Direct and GMAC Demand Notes).

Last year, around the holidays, I found a Slickdeal on a TV for our kitchen.  We previously had a small tube TV, but it was bulky and took up a lot of room on our countertop, which is often in high demand.  The deal was a nice 19″ LCD HD TV for $129.99 including shipping, plus we received a couple bucks back through Bing’s cashback program.  When it came time to pay for it (and it went on our Citi card, of course), I simply removed the money from our earmark and paid it off.

My wife and I have decided that we want to use that money for more ‘luxury’ purchases rather than to pay bills or pay down student loan debt.  I think we have both agreed that we’d be using this for electronic type purchases, so additional TVs, computers, etc. would be funded completely or in part with this ‘free’ money that we earn just by using our credit card.

We make sure that we don’t buy things unnecessarily, so it’s not like it’s costing us money to use the card via unnecessary purchases.  As I mentioned, we also pay it off every month, so there’s no offseting interest charges for us to worry about.

I know that there are other cash back cards out there.  In fact, I think that Citi no longer even offers this particular card for new customers, but I know that they have other cash back cards out there, so I’d recommend shopping around in the event that you don’t have a cash back rewards card but are interested.

Citi has had the same level of rewards for a few years now, and I’ve never ‘chased’ other rewards cards for fear that as soon as we got new cards paying a little more, they’d end up cutting the rewards anyways.  So, until one comes out that has a deal too good to pass up or until Citi cuts their rewards or raises their rates, they have at least two loyal customers.

Customers that like ‘free’ TVs, too!

Note: This is an unsolicited post; I was not paid or asked by Citi to write this post.

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