ScoreCard Research Douglas Clinton - The Penny Hoarder

There’s no way around it -- most of us have to work for our money.

It’s a good rule to save or invest some money from every paycheck (the more, the better). But what about your regular expenses?

Once that money is out of your wallet, there’s no way to make it work for you, right? Wrong.

Here’s how I started making my money work for me even after I spent it.

Start With How You Spend

I’ve written about the power of cash-back credit cards in the past. Using cash rewards cards is an easy way to reclaim a percentage of your spending each month.

I use different cash-back cards for different purposes to maximize my rewards, such as groceries, gas, utilities and Netflix. Using multiple credit cards means I have to be more vigilant about how I spend.

I treat my cash reward cards as though they’re charge cards -- an obligation I have to pay off in full every month.

Putting Your Money to Work

Once I made the most of my credit card rewards, I started thinking about ways to wring even more value out of the money I spend regularly.

That left me with two problems to solve: How to partition my money in a way that made spending easy to track, and how to make the most of that money.

At the time, I’d started using Capital One 360 as my primary bank account. For a checking account, Capital One 360 does offer a decent return -- a
% APY with no minimum balance to earn. Considering Bank of America only offers 0.01% APR on a regular savings account, it’s a great value.

Inspiration struck when I discovered you can add up to 25 free savings accounts on Capital One 360. Those accounts offer an even higher interest rate with no minimum balance required.

This solved both my problems in one fell swoop: I simply added a savings account for each of my rewards credit cards. After that, whenever I spent money on a credit card, I simply transferred it to the corresponding savings account.

Since I can pay my credit cards directly from my savings account, I just let the money sit there, accruing interest, until the day my credit card payment is due.

If I buy something at the beginning of a billing cycle and make my credit card payment on the due date, I’ll have money earning interest for nearly two months after I’ve spent it!

Increase Your Earning Power

After doing some digging, I discovered GE Capital Bank, which offers a 1.05% APR on savings accounts. You can have an unlimited number of accounts and there’s no minimum to earn interest.

If you’re already a Capital One 360 customer, you may prefer to use their savings accounts. Although the interest rate isn’t as high, the money you transfer from checking to savings is instantly available no matter when you make the transfer.

GE Capital Bank does not offer a checking account, so it’s difficult to use as your primary bank. Also, transfers made after business hours or on the weekend aren’t processed until the next business day and it can take up to a week for the funds to be available.

I’ve used both banks at different times, and I’m always on the lookout for another one that will offer me higher interest with a comparable user experience. For me, the flexibility of being able to have so many accounts is paramount.

In June 2015, American consumer spending averaged $90 a day. Using either of the accounts listed above, a year’s worth of spending adds up to an extra $18-$28 dollars a year. Not big bucks, but free money all the same.

This strategy does require some work to get started, but once you have your accounts set up, it’s easy to use. Give it a try, and your money will be working for you -- even after you’ve spent it!

Your Turn: What are your favorite cash-back rewards cards? How much have you saved using them?

Disclosure: We have a serious Taco Bell addiction around here. The affiliate links in this post help us order off the dollar menu. Thanks for your support!

Douglas Clinton is a New Englander, an AmeriCorps Alum, a Kentucky Colonel and a playwright whose work has been performed across the U.S and abroad. He lives in Charleston, South Carolina, with his fiancee and three cats.

Cash reward cards are everywhere these days. If you use credit cards on a regular basis, chances are you already have one (or two or three) in your wallet. But if you don't have a cash-back card yet, or you’re considering upgrading, check out this guide to popular options.

In theory, cash-back credit cards are pretty straightforward – you spend the money, then the credit card company gives you a percentage back. In practice, there are a few more wrinkles to the system; not all cash reward cards are created equal.

Here’s a rundown of six popular cash-back rewards cards and what you can expect from each one.

1. American Express Blue Cash Preferred

The American Express Blue Cash Preferred card comes with the most eye-popping reward on the market: 6% cash back on the first $6,000 you spend at grocery stores each year, and then 1% cash back after that. If you hit that limit in a year, you will have earned $360 in cash rewards! The card also gives you unlimited 3% cash back at gas stations and select department stores such as JC Penney's and Sears, and unlimited 1% cash back on all other purchases.

These features make the American Express Blue Cash Preferred card quite appealing, but there is a catch. The card comes with a $75 annual fee, but if you're using it on a regular basis, it's easy to put aside a portion of your rewards to apply to the annual fee each year.

Where this card really suffers is the redemption process. There's a $25 threshold to redeem your cash rewards, which is not uncommon. What makes me grind my teeth over this card is you can only redeem cash rewards in increments of $25. Last month, I had more than $40 in cash rewards, but since I didn't pass the $50 threshold, I could only redeem $25. The remainder is still on my account, but I have no way of accessing it. This is the only card in this article with this restriction.

The other demerit this card earns is that an account credit is the only form of redemption -- you cannot take your rewards in the form of a direct deposit or check.

This is still a great card -- I'm able to easily meet the $25 threshold each month using it as my primary grocery card -- but it doesn't offer as much flexibility with cash redemption as I'd like.

2. Bank of America BankAmericard Cash Rewards Signature

I've discussed the BankAmericard Better Balance Rewards card and how to maximize its benefits on this site before, when we looked at how to get Netflix for free.

The BankAmericard Cash Rewards Signature card is a more traditional cash rewards card. It offers 3% back on gas and 2% back on groceries for the first $1,500 in combined gas and grocery store purchases each quarter, as well as unlimited 1% cash back on all other purchases.

The card also gives you a 10% bonus when you redeem your rewards into a Bank of America checking or savings account. Unfortunately, this doesn't mean your 3% gas reward becomes a 13% gas reward -- that extra 10% is calculated from the cash back amounts. If you take advantage of this program, that improves your rewards to 3.3%, 2.2% and 1.1% for the categories above.

This card also comes with a $25 threshold to redeem, but there are no restrictions on the amount you can redeem. That being said, it can be more of a struggle to reach that $25 threshold with the rewards limits.

3. Capital One Quicksilver

This card needs little in the way of introduction -- Samuel L. Jackson has already raised its profile with his ubiquitous television ads.

This is the most straightforward of the cash rewards cards: 1.5% cash back on every purchase, with no rewards categories. Additionally, there's no minimum to redeem your rewards, so you can get a check or statement credit in any amount at any time.

If you find it's easier to automate the process, you can set up an automatic redemption preference for a set time each calendar year or when your rewards hit a specific threshold ($25, $50, $100 or $200).

This is a great card if you want cash back and don't want to put a lot of thought into it.

4. Chase Freedom

The Chase Freedom card works differently from the cards above. In addition to 1% cash back on all purchases, Chase offers 5% cash back each quarter on up to $1,500 in combined purchases in that quarter's bonus category. The bonus categories rotate throughout the year, and have included cash back at grocery stores, restaurants, gas stations and Amazon.

A significant difference between the categories on the American Express and Bank of America cards listed above and those on the Chase card is that you need to sign up for each quarterly category -- the 5% bonus is not automatic.

Chase does have a lower threshold for redemption -- just $20 (or 2000 points) -- which makes it easier to get your hands on your cash. The big drawback is that you have to chase (no pun intended) rewards throughout the calendar year. While it's great to have a fourth-quarter Amazon reward bonus, 5% cash back on groceries for three months is less appealing when another card can give you 6% back year-round.

5. Citi Double Cash

At first, the Citi Double Cash card seems to have a clear edge against Capital One Quicksilver. After all, 2% > 1%, right?

While I do like the Citi Double Cash Card and use it as my all-purpose (i.e. non-gas and grocery purchases) card, it is the only card where your reward depends on you paying your bill.

With this card, you get 1% back when you spend, and 1% back when you pay your bill. So when you charge $100 on your card, you automatically get $1 in rewards, but you don’t get the other dollar until you've paid off the $100 charge.

This is a great cash-back card, but bottom line, it's only worth it if you pay your bill in full each month. There's a $25 dollar minimum to redeem cash, but there's a convenient direct deposit option for when you do so.

6. Discover

Discover is the grandfather of rewards cards -- the upstart card that started the cash rewards trend nearly 30 years ago.

Discover has a lot in common with Chase Freedom: a standard 1% back on all purchases, with 5% back on rotating, quarterly categories.

This card does have its own set of issues. I've had to wait multiple billing cycles for a quarterly bonus to appear on my statement, and and some retailers do not accept Discover.

My favorite part about Discover is that, like Capital One, you can redeem your cash in any amount at any time. Having access to my cash rewards is important to me, so I appreciate the flexibility Discover offers.

All six of these cards have their flaws, and what works best for you depends on your personal spending habits. Hopefully this has provided you some guidance with which card (or cards) is the best fit for you!

Your Turn: What’s your favorite cash-back credit card? What do you like about it?

Douglas Clinton is a New Englander, an AmeriCorps Alum, a Kentucky Colonel and a playwright whose work has been performed across the U.S and abroad. He lives in Charleston, South Carolina with his fiancee and three cats.

I’ll admit it: I haven’t always been great at budgeting. For years, I’d stand at cash registers doing rapid mental arithmetic to decide whether I could put something on my debit card or if I needed to reach for a credit card.

Last year, I finally buckled down and started tracking my expenses. Once I came to terms with my finances, I started to look for small but regular expenses I could eliminate.

By far, the least of my expenses was my monthly Netflix bill of $8.67 (my subscription plus tax). It’s not a lot, but it seemed like I could find a creative way to get around the expense. After doing a little bit of research, I figured out how to get Netflix for free.

My strategy depends on a credit card and checking account from Bank of America. If you want to follow my lead, you’ll need to use the same accounts -- though if you find similar options at your bank of choice, please let us know in the comments!

Here’s how to use these two accounts strategically to get free Netflix -- and a little extra cash in your pocket as well.

Sign Up for the BankAmericard Better Balance Rewards Card

This credit card offers a $25 reward at the end of each quarter when you make more than the minimum payment or pay off your balance in full each month. The bank markets this card to users who keep a balance on their accounts to encourage them to slowly pay it down, but I use it strategically. For this trick, you’ll pay off your balance in full every month.

Here’s what my Netflix account costs me each quarter:

$8.67 (monthly Netflix fee) x 3 (months in a quarter) = $26.01

That $25 reward comes pretty close to covering it. However, I would still be paying $1.01 every three months for my Netflix subscription. That’s certainly a good deal, but as a Penny Hoarder, I was up for the challenge of eliminating that expense, not just minimizing it.

So I dug a little deeper to see whether I could boost my rewards. Deep in the card’s Terms of Service, I found my opportunity.

Open a Bank of America Core Checking Account

When I read the fine print, I learned I could get an additional $5 a quarter by automatically depositing my cash rewards into a Bank of America savings or checking account.

You can do the math: That’s $30 a quarter in rewards, which pays for three months of Netflix and even puts a few bucks in my pocket!

I picked the simplest, lowest-cost checking account. It does have one drawback, but it’s pretty simple to get around. Unless you’re a college or high school student, the Core Checking account has a $12 a month maintenance fee. But if you keep a minimum daily balance of $1,500 or have at least one qualifying direct deposit of $250 each month, such as a payroll deposit, they’ll waive the fee. I go with the direct deposit and use that money to pay other bills from this account.

Follow These Steps to Get Netflix for Free

Once you’ve got your credit card in hand and your checking account open, you’re ready to roll:

  1. If you haven’t already, sign up for Netflix.
  2. Update your Netflix account to bill your new credit card each month.
  3. Update your credit card rewards preferences to deposit your rewards to your new checking account.
  4. Pay your credit card balance in full each month.
  5. Look for your $30 reward in your checking account at the end of the quarter -- that’s everything you paid for your Netflix account, plus a little extra cash!
  6. Relax and enjoy watching Netflix for free.

Be sure to wait for a new credit card statement to post before you make your payment. One month, I paid twice in the same statement and went into the next month carrying a $0 balance. If you do this, you’re not eligible to receive your quarterly reward -- which means you’ll have to bear the cost of Netflix for the next three months.

So long as you avoid that pitfall, there’s nothing standing between you and free Netflix. Now when you settle in to stream your favorite shows and movies, you’ll have the added satisfaction of getting it all for free!

Now that I’ve knocked my Netflix bill off my monthly budget, I’m taking aim at my renter’s insurance, which costs $12.84 a month. If I find an equally creative solution to cover that expense, I’ll be sure to share it with you!

Your Turn: Have you tried this strategy? Do you know of similar rewards credit cards and accounts that could help you use the same strategy at other banks?

Douglas Clinton is a New Englander, an AmeriCorps Alum, a Kentucky Colonel and a playwright whose work has been performed across the U.S and abroad. He lives in Charleston, South Carolina with his fiancee and three cats.