Category Archives: Cash Back Cards

Costco TrueEarnings Amex Personal Card: Now with 3% Rebate on Gas

According to FW, all Costco Amex cardmembers will begin receiving 3% rebates on gas in February:

Got this from costco magazine Feb 2008.
“Beginning this month, members with the cards begin receiving 3 percent cash back on gas purchases! These include gas purchases from Costco gas stations and stand-alone stations (such as Chevron or Shell stations that are not part of a retail or grocery chain).”

Previously, the Personal version of the card offered only the standard 1% rebate on gas, along with a 3% rebate at restaurants, 2% on travel and 1% on everything else.

Edit 1/31: I just confirmed with Amex Customer Service that the Business version will not be changing and will retain its 5% rebate on gas. Further, the Personal version of the card will begin to receive 3% on gas starting February 11. You can view the actual ad in Costco magazine here.

Discover More Card: 5% Cashback Bonus at Restaurants, Florists and More in February

Discover More cardholders can enjoy a 5% cash back bonus on purchases in February in the following categories:

  • restaurants
  • florists
  • bookstores
  • candy shops
  • pet stores

Purchases that earn this bonus will be limited to $200.

You can sign up for the offer at this link. (Note: Any purchases made in February before signing up will not be eligible for the bonus.)

BankAmericard Rewards Visa Credit Card – 1.5% Rebate on Everything

Bank of America is now promoting the following offer for the BankAmericard Rewards Visa:

  • Earn 1 point for every $1 in net retail purchases
  • With an eligible banking relationship, you’ll also earn an additional .25 bonus points for every $1 in net retail purchases each month. Maintain this relationship, and your base points earned during the year will be matched by 25%
  • 0% Introductory APR on Purchases, Balance Transfers and Cash Advance Checks for your first 6 billing cycles

What this means is that, when you factor in the annual 0.25% bonus, you’ll earn a total of 1.5 points per dollar spent on anything. The main requirement is that you will need to have an open and eligible deposit, loan (other than a credit card), or investment account with Bank of America in order to earn that rate.

Points can be redeemed for cash, gift cards, travel or merchandise. According to a representative I spoke with, the points redemption for cash is as follows: 2,500 pts = $12.50; 5,000 pts = $25; 10,000 pts = $80; 15,000 pts = $120; 25,000 pts = $250; 50,000 pts = $500.

As long as you redeem at least 25,000 points at a time, this turns the card into a 1.5% flat cash back card on anything with no caps.

You can apply online at this link.

IRS Hassle is Your Gain: Why a Business Miles Card is Better than a Cash Back Business Card

I’ve been noticing that Amex has been running a lot of TV ads for the Plum Card recently and it got me to thinking: What is the true value of its 2% early pay discount? Aside from the time value of money aspect, are there tax implications for small business owners that reduce its usefulness even further?

The tax argument against business cash back cards
It’s commonly accepted that any cash rebate that you receive from personal credit cards is not taxable, as it just another form of a discount to you. In the case of a business, however, when the cash rebate is treated as a discount, it reduces the cost basis of your purchase. As a result, this decreases your effective rebate by your marginal tax rate.

To make this concrete, consider this example: You purchase merchandise for $100. You resell it for $150. Your credit card gives you 1% cash back. Your cost basis is actually $99 then. So your profit was $51 instead of $50, and you’ll be taxed on that extra dollar you earned as a rebate. If your effective tax rate of your business is 40%, after tax you made $30.60 ($51 x 0.6) instead of $30 ($50 x 0.6). Your effective credit card rebate then is 0.6% rather than 1%.

What about business miles cards?
Now then the question becomes: is it any better when you earn points or miles instead of cash back? The answer, I believe, comes from IRS Announcement 2002-18:

Most major airlines offer frequent flyer programs under which passengers
accumulate miles for each flight. Individuals may also earn frequent flyer miles
or other promotional benefits, for example, through rental cars or hotels. These
promotional benefits may generally be exchanged for upgraded seating, free
travel, discounted travel, travel-related services, or other services or benefits.

Questions have been raised concerning the taxability of frequent flyer miles or
other promotional items that are received as the result of business travel and
used for personal purposes. There are numerous technical and administrative
issues relating to these benefits on which no official guidance has been provided,
including issues relating to the timing and valuation of income inclusions and the
basis for identifying personal use benefits attributable to business (or official)
expenditures versus those attributable to personal expenditures. Because of
these unresolved issues, the IRS has not pursued a tax enforcement program
with respect to promotional benefits such as frequent flyer miles.

Consistent with prior practice, the IRS will not assert that any taxpayer has
understated his federal tax liability by reason of the receipt or personal use of
frequent flyer miles or other in-kind promotional benefits attributable to the
taxpayer’s business or official travel. Any future guidance on the taxability of
these benefits will be applied prospectively.

This relief does not apply to travel or other promotional benefits that are
converted to cash, to compensation that is paid in the form of travel or other
promotional benefits, or in other circumstances where these benefits are used for
tax avoidance purposes.

Essentially what the IRS is saying is that because it’s too much of a hassle to put a value on your points or miles, they won’t make an attempt to tax them. If, however, you convert them to a cash equivalent, you should pay tax on them.

So, on the one hand you have cash back rebates that are taxed; on the other you have mileage and point rewards that the IRS will not pursue–if all other things are equal, which card are you choosing?

Let me take the time to issue a disclaimer: I am not an accountant, and you should not take this as tax advice. Consult a professional before taking any action.

Office Depot Worklife Rewards Visa: 5% Rebate on All Office Depot Purchases

Chase just announced the release of the Office Depot Worklife Rewards Visa Signature Card. This new OfficeDepot credit card has both a consumer and business version. Its key features include:

  • 5% rebate (in statement credit) on OfficeDepot purchases with no exclusions
  • 1% rebate on all other purchases
  • $25 bonus after first purchase made with the card
  • 0% intro APR on purchases and balance transfers for up to 6 months (with a BT fee of 3%, min $5, max $99)
  • Purchases made prior to March 1, 2008 that equal to or greater than $499 may qualify for a Deferred Interest Promotion, where no payments need to be made until January 2009*

One inconvenient feature of the card is that it requires a purchase to be made at Office Depot before your rebates are released to you. If a purchase is not made at Office Depot within a given month, rebates will continue to accrue until the next Office Depot purchase is made, at which point the rebates will be applied as a statement credit. You can find the Worklife Rewards Visa application here.

Other Credit Card Options for Purchasing Office Supplies
If you are looking for a good credit card to use on office supplies, however, you should consider a few alternatives. Consider the benefits of the American Express SimplyCash Business Card:

  • Earn a full 5% cash back on gas, office supplies (at any office supply store) and wireless service
  • Earn 1% everywhere else
  • 0% intro APR on purchases for up to 12 months

In addition, as part of the Amex’s OPEN savings network, using the SimplyCash card gives you automatic discounts ranging from 3 to 25% on purchases at companies like FedEx, Delta, and Hertz.

A couple other cards to consider are the Discover Business Card (with review here) and the Advanta Business Card with Rewards, both of which also give 5% cash back at office supply stores.

Penfed Rewards Visa to Offer 2% Rebate on Groceries

According to Banking Guy, PenFed will be improving their already-excellent Visa Platinum Gas Cash Rewards card. In addition to 5% on gas and 1.25% on everything else, PenFed will begin offering a 2% rebate on groceries as well, starting in January.

With your cash back credited back to your account monthly and no additional fees for purchases made in foreign currencies (other than those imposed by Visa), the card is excellent for general-purpose use. While membership in PenFed is required, it is easy to join. A list of eligible institutions is located here; if you are not already a member of one of these groups, you can join the National Military Family Association for a one-time fee of $20, and become instantly eligible for PenFed membership.

Chase Freedom Plus Card: 3% Rebate on Spending in Top 6 Categories

Chase has introduced the Chase Freedom Plus card, a new and improved version of its Freedom credit card. It appears no different than the regular Chase Freedom cards, except that it offers a 3% rebate on spending in your top 6 monthly categories, rather than your top 3, in addition to a 10,000 point introductory bonus. Also, it appears that there is a $30 annual fee, which is waived the first year, although the terms on Chase’s website are conflicting about that.


US Bank Check Card: Triple Cash Back Bonus Online

US Bank has its own exclusive holiday shopping offer for holders of its Cash Bonus Visa Check Card. For a limited time, when you use your U.S. Bank Cash Bonus Visa Check Card to make purchases with select online partners through their Cash Bonus Partner Center, you can triple your cash back.

Details of this offer can be found here. Nearly all of their normal partners are participating which means there are some deals to be had. Some examples:

  • 15% cash back
  • Barnes& 12% cash back
  • 6% cash back
  • 15% cash back
  • 9% cash back
  • 6% cash back
  • 12% cash back
  • 75% cash back
  • 12% cash back
  • 15% cash back
  •, 21% cash back
  • 9% cash back
  •, 9% cash back
  • 12% cash back

See the complete list of participating retailers here. (Via SD)

Citi Dividend: 5% at Electronics, Department and Apparel Stores for 3 Months

You can tell that the holiday shopping season is approaching with the number of special offers being served up. The latest is this–existing Citi Dividend card holders are eligible to earn 5% Cash Back* on purchases made at Department, Electronics and Apparel Stores for 3 months when their offer is activated.

To register for this promo, log into your Citi account online. If you have multiple Citi cards, make sure that you have your Dividend card selected. Under the “Manage Your Account” tab, check the “Special Offers” section. The offer should be located there. (Via SD)

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