There’s a new company in town, Wallaby, planning to deliver on something all credit card rewards junkies will love: one credit card that can maximize your credit card earning cash back!

No more rotating our credit cards every quarter! We can carry one card and know that we’re earning the most cash back on every purchase.

I love the idea… but will it work?

Wallaby

Wallaby launched their beta program last week. They claim “The Wallaby Card is one card to rule them all. Carry just one card and maximize cash back rebates, merchant discounts, frequent traveler rewards.”

So far, it sounds like they’re going to cover everything I wanted on My Google Wallet Wishlist!

How Does Wallaby Work?

You’ll set up a Wallaby profile that includes your credit card numbers (yes, you’ll have to give them your info… which I know will make some readers run fast!) and let them know what are your favorite types of rewards to earn and they’ll optimize your purchases. You can change your preferences anytime via their site or mobile app. There is both an automatic mode and the ability to set percentages to certain cards.

Wallaby will send you a new physical “Wallaby Card” to use. Then, they promise to maximize your rewards. Here’s more from their FAQ:

Wallaby keeps track of all of the different rewards offers for each of the credit cards you own, including limited-time and one-time discounts. We know that one credit card has 5% cash back on gas stations this month, while another has triple points on restaurants. We also know your credit line limits and cash back maximums. Wallaby automatically picks the right card for you–every time you swipe.

Each time you swipe your Wallaby Card, we look at where you are, what day it is, what cards are in your wallet, what your preferences are and what special deals are available. We then determine the best card for you for this purchase and forward the transaction to that card.

I’m also following the Wallaby story at TechCrunch where Matthew Goldman, one of the people behind Wallaby, is answering lots of detailed questions in the comments.

How to Sign Up

Wallaby is currently taking sign ups for their beta program. You can sign up at Walla.by. To sign up, all you need to provide is your name, email, how many cards are in your wallet, and your favorite card.

Once you sign up, they’ll notify you when they’re ready to let you in on the program. I figured we might as well throw our names in early to check it out!

How Much will it Cost?

Wallaby says the first 1,000 people to sign up will receive lifetime free memberships and the next 5,000 will receive 12 months free. Everyone else will get a free six months. Once the free period is over, it’s $50 per year.

Will it Work?

As with many new companies in beta, some survive, some don’t (remember Envaulted?) but I’m always happy to try it out to report back. I signed up immediately, but haven’t heard anything yet. Wallaby says that after you sign up if you share your excitement, they’ll move you up the list. So of course, I immediately got busy signing up all my family members!

I can’t wait to try it out to see if it can coordinate not only the regular cash back and 5% rotations, but can it also coordinate diverting purchases to Maximize Sign Up Bonuses, keep track of tiers, remember all of the holiday promotions, and track different redemption levels too? I hope so!

What do You Think?

Have any of you signed up and received a Wallaby card yet? If so, I’d love to hear your thoughts! Do you think this could be the answer to all of our credit card rewards optimization strategies?

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It’s summer! Time to clean out your wallet and reassign the cards you are carrying to take advantage of 3rd quarter 2012 cash rewards credit cards bonuses. Since many credit cards now offer cash back on a rotating quarterly schedule, we have to reorganize each quarter to make sure we get the best cash back.

At first I found it a pain to keep switching cards… but in a weird and twisted way, I actually look forward to it each quarter, as I can follow up on all of our rewards and make sure we’re earning the right cash back and maximizing all of our purchases.

You know how it works: switch out the the 2012 2nd Quarter 5% Rewards and maximize your cash rewards for 3rd quarter 2012 to make sure you have the right cards, you are signed up for the 5% promotions, and you know where to use them.

3rd Quarter 2012 5% Cash Rewards Credit Cards

Chase Freedom. The Chase Freedom card is moving on from groceries to gas again. I love when they run the 5% cash back on gas during the summer travel season! Restaurants are also a Chase Freedom 2012 reward. The 3rd quarter 2012 Chase Freedom 5% categories are:

• Gas Stations
• Restaurants

See the entire 2012 Chase Freedom Rewards Calendar.

Discover More. The Discover 5% cash back is also switching to gas for 3rd quarter 2012! In addition, they’re adding theme parks for the rest of the summer, which sounds like a great reason to take the kids to the water park next week! The 3rd quarter 2012 Discover More 5% categories are:

• Gas Stations
• Movies
• Theme Parks

See the entire 2012 Discover More Rewards Calendar.

Citi Dividend. The Citi card finally released their 3rd quarter rewards which includes air travel if you are planning some this summer. They’re dropping the home and garden purchases, so you should finish those purchases up before the end of the month with your Citi Dividend card. The 3rd quarter 2012 Citi Dividend 5% categories are:

• Airline
• Car Rental
• Back-to-school shopping at Gap, Banana Republic, Old Navy, Gap Outlet and Banana Republic Factory Store

No Sign Up Needed

And as always, here are the easier cash back categories, since you don’t need to sign up:

Grocery Stores. My favorite card, which has earned a permanent place in my wallet, is still the American Express Blue Cash Preferred Card which gives 6% cash back on groceries.

Travel. Since airfare and gas are already covered in the rotating cards, we won’t need much else for travel. But I’ll keep our Chase Sapphire Preferred card on hand for hotels that don’t have a dedicated travel card.

Gas Purchases. The Pen Fed Platinum VISA gives 5% cash back for pay at the pump gas purchases. If you aren’t into switching around your quarterly cards above, you can keep this one in your wallet all the time.

Restaurants. Another option for restaurants is the Citi Forward card, which offers 5 ThankYou Points for every $1. I’m working on merging all of our Thank you points accounts, so I might use the Citi Forward card instead if we need to top off some point balances.

Target Purchases. Target purchases will keep going on the Target 5% discount credit card.

Amazon Purchases. Amazon.com purchases can go on the Amazon Visa for 3 points per dollar.

Wireless and Office Supplies. Wireless and office supplies get charged on the American Express SimplyCash Business card to get 5% on both of those categories.

Costco.The switcharoo at Costco is still working well! After showing our TrueEarnings Card from Costco and American Express as our membership card, we put our purchases on the Fidelity Credit Card for 2% cash back.

Everything Else. All other purchases are now going to gift cards purchased on our American Express. If you aren’t into the gift cards, you can put the rest of the charges on the Fidelity card or the Sallie Mae Card for 2% cash back. We’re also exploring the priceline 2% card we found during our latest Credit Card Application Spree.

How to Get Your 5% Cash Back

As a reminder, here’s my checklist for rotating cash back programs:

1. Sign up for all of the new quarterly cash back programs, even if you don’t know if you’ll use that card. To sign up, just log in to your account online and select the 3rd quarter 2012 5% cash back information. In order to earn the 5%, you have to enroll in each program quarterly.
2. Write which categories to use each card for using a marker on the front of the card. It works really well to keep the cards straight!

Sign Up Bonus Offers

If you don’t have the 5% cash rewards cards I’m using, here are the ones currently offering sign up bonus offers:

• Chase Freedom $100 Sign Up Bonus
• Citi $100 Sign Up Bonus
• Citi Forward $100 Sign Up Bonus
• American Express Blue Cash $150 Sign Up Bonus
• Chase Sapphire Preferred $400 Sign Up Bonus

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When I put together our Credit Card Application Spree to Maximize Sign Up Bonuses I skipped the travel credit cards.

I mentioned that we’re going to be celebrating our tenth wedding anniversary next year, so I was planning to wait until early next year to make a hotel and mileage run.

However, I got questions from readers who wanted to know if I would put together a travel application spree right now, what would it look like?

After some thought, here’s my prioritized travel application spree!

Travel Credit Card Application List

1. British Airways Visa Signature Card. The 100,000 Avios (miles) from the Chase British Airways card would be my first app. It expires tomorrow, so you’ll have to act quickly on this one. A reader Todd suggested that using the Avios on hotel stays is pretty good and 50k miles (after the first purchase) should get you about 4 free nights ($400-$600 value). Great tip Todd!
2. Gold Delta SkyMiles Credit Card from American Express. We’ve had this card multiple times. I sign up for it every time we plan to fly on Delta to take advantage of the free bags and then cancel after a year to avoid the annual fee. It also has a 30,000 mile sign up bonus, which can easily get us out of our local airport on the days we want.
3. United MileagePlus Explorer. Next up is the Chase United card for 40,000 miles. United is our other airline of choice, although we have to fly through Chicago O’hare, so I’d much rather use this for a flight when I’m flying without kids. When we travel with the kids, I do everything I can to avoid a layover there! But the first 30,000 miles on this card are easy to earn, so it’s near the top of my list. After you sign up, you can get 500 more miles by enrolling in the United Mobile program.
4. Starwood Preferred Guest Credit Card from American Express. The Starwood is my favorite hotel card right before we plan a trip. The 25,000 sign up points can be used for 2 nights at a category 5 hotel. I usually try to time it so that we can use the points to stay at a nicer hotel on the last 2 nights of our trip. Of course, I cancel the card after our trip to avoid the annual fee.
5. Miles by Discover Card. In an effort to spread the credit card application spree across different card companies, I’m throwing one on the list for Discover. There’s a 20,000 mile sign up bonus and they claim no restrictions on travel, that you can fly on any airline, book any hotel or car, with no blackout dates. That seems a little too good to be true, but I’m willing to test it out to see if it’s true. And since there is no annual fee, it couldn’t hurt.
6. Hyatt Credit Card. Ever since Kate brought my attention to the Hyatt card from Chase, which offers 2 free nights as a sign up bonus, I’ve had it in my back pocket waiting for our next travel spree. Since the offer is for first-time Hyatt cardmembers with new accounts, we can’t cancel and repeat this offer like the other ones, so I want to make sure I can time it to enjoy it!
7. Citi Hilton HHonors Visa Signature Card. The Hilton sign up bonus is worth 40,000 points. Since it doesn’t have an annual fee, I usually keep a Hilton card open in one of our names after an application spree. The points stretch a little further, so when I’m planning a trip, we use the Hilton nights first (before transferring to the Starwood hotel for the last 2 nights).
8. Marriott Rewards Credit Card. Now it’s time to push the envelope and see how far we can get. At this point, we’ve probably maxed out the new applications with Chase, but I’ll keep going until I get denied. The sign up bonus for the Marriott card is worth 50,000 points.
9. Southwest Airlines Rapid Rewards Plus Credit Card. We typically don’t fly Southwest since they rarely serve our tiny regional airport. However, I wanted to put it on the list since I know many of you use Southwest all of the time. The sign up bonus is for 25,000 points good for a free flight.
10. PenFed Premium Travel Rewards American Express. Finally, I’ll scoop up the 20,000 points from Penfed with the final application.

Additional Business Cards

1. Gold Delta SkyMiles Business Credit Card from American Express. Whenever I apply for a new travel card, I also throw in the matching business card. It’s an old habit that I still use. The Delta business card is good for another 30,000 miles.
2. Starwood Preferred Guest Business Credit Card from American Express. For the same reason as the Delta card, I’ll also add the Starwood Business version for an extra 25,000 miles to my list.

Overall Value

Assuming we can qualify for all of the sign up bonuses, we should be able to rack up 260,500 airline miles and 140,000 hotel points (plus 2 additional nights).

After planning it out and putting this all together… I’m really tempted to just go ahead and do the travel application spree right now! After all, who couldn’t find a way to use and enjoy all those mileage and hotel stays?

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I finally made a decision on our mortgage refinance and we just finished moving all of our insurance to a new carrier so we won’t need our credit scores anytime in the near future…

For long time readers, you know what that means; it’s time for a round of credit card applications to make some money! When I embark on a credit card application spree, I focus on just one us at a time. This one is specifically for my husband.

I figure if I’m putting hard inquiries on his credit report (which I did while shopping our mortgage), my goal is to maximize the earnings from it. In addition, if I bunch the inquiries together, they’ll all fall off at the same time in the future, which is convenient.

Here is the list of credit card applications currently in progress. They are listed in priority order, mainly to make the most money in sign up bonuses, but also to pick up some additional cards I’ve had my eye on.

Credit Card Application List

1. Chase Sapphire Preferred. $400 sign up bonus. Most of you already took advantage of this one, but I was waiting on it for my husband while we were shopping our mortgage and insurance. Still a great sign up bonus.
2. American Express Premier Rewards Gold Card. $250 sign up bonus. The annual fee is currently waived for the first year (we’ll cancel the card before the annual fee kicks in).
3. Pen Fed Platinum VISA. I have a Penfed card, but it has a balance transfer for life, so I don’t use it for the gas. I figured it was time to sign up my husband so we could get the 5% on gas. (In case you are wondering, the current balance transfer for life on the Penfed cards is 4.99% for life, with 0 fee until the end of June). Also, if you don’t want the cash rewards version, you could get the platinum rewards version which has a $250 sign up bonus.
4. Ink Cash Business Card. $200 sign up bonus. We decided to open a business credit card for one of our rentals that we’re doing some renovations with. 0% on a credit card always beats the bank rates, so I offered my husband’s credit to our partners.
5. Citi ThankYou Preferred Card. $250 sign up bonus. I’m not expecting a lot from Citi, since my husband has more Citi cards than I do, but I thought I’d give it a shot.
6. Citi Dividend. $100 sign up bonus. This card also has the 5% rotating quarters. Whenever I apply for Citi cards, I usually hit them up for two!
7. Chase Freedom MasterCard. $100 sign up bonus. Believe it or not, my husband doesn’t have this card staple. (I actually have 2, so I just removed him as an authorized user on mine before applying).
8. Blue Cash Everyday Card from American Express. $100 sign up bonus. I have the preferred version of this card, which I love, but that one has the annual fee, so I wanted to get a second card without the annual fee. This card also had a $25 referral bonus so that I could refer my husband.
9. Priceline Visa. $50 sign up bonus. My husband has been struggling with his 2% cash back card since the places he shops often don’t take American Express. Our other 2% cards are in use for balance transfers so they aren’t available. My search turned up the Priceline card from Barclays as a possible 2% cash back alternative. Time to check it out.
10. NASA Cash Rewards. If the Priceline card doesn’t work out, next on my list is the Nasa card from Nasa credit union. There’s some discrepancy about their 2% card, but I’m willing to give it a shot and report back.
11. Slate from Chase. 0% for 15 months with no balance transfer fee. We already have a Slate cards, but I figured I would try my luck and see if we can pick up another one for the balance transfer option. This one is Chase application number 3 (which is pushing it with Chase), so I will hold off and make sure the first two get approved first before applying for this one.
12. Discover More Card. 18 Month 0% Balance Transfer. Discover didn’t have any great signup bonuses, so I went for the balance transfer offer on this one. As long as I’m on an application spree, I wanted to throw something in from Discover.

More on My Application Spree

Travel Cards. You’ll notice I didn’t include travel credit cards this round. I did that on purpose. We’re going to be celebrating our tenth wedding anniversary next year, so I’m thinking it will be appropriate to wait and scoop up all of the hotel and airline cards when we get a little closer to planning our trip. We haven’t decided where we’re going yet… any suggestions?

Rolling Applications. Years ago there was a benefit to applying all in one day before the inquiries showed up. That loophole doesn’t exist anymore, so I’m working through my list as he gets approved for each one. Once we start getting a few declined I’ll suspend the spree. Currently, I’m 2/3 of the way through the list, waiting on the approvals for the Chase Freedom and Blue Cash cards. Once I get those, I’ll start working on the last four in the list.

Overall Value

If we can qualify for all of the sign up bonuses, the income from the spree is: $1525 at the time of writing (some cards have updated their offers)! (Plus a few cheap balance transfers and some new cash back cards to try out.)

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Chase has a great Free Money Friday offer. Their Slate card has a $75 sign-up bonus and it’s perfect for low spenders!

The $75 sign up bonus from Chase has one of the lowest amount of spending requirements we’ve seen in awhile.

How to Get Your $75 Statement Credit

1. Apply for the Chase Slate card.
2. Use the card to spend $300 within 3 months.
3. After 6-8 weeks, you’ll see a $75 statement credit on your account!

Chase Terms and Conditions

• No annual fee.
• One-time bonus offer & valid only for first-time cardmembers with new accounts.
• Previous and existing cardmembers/accounts are not eligible.

More on Chase

0% Intro APR. For those with good credit, Chase is offering a 0% intro APR for 15 months on purchases and balance transfers. For those with average credit, there is 6-month 0% intro APR offer. However, remember the balance transfer offer has a 3% fee.

Chase Blueprint. The Slate card offers Chase Blueprint, a unique set of features that can help you avoid interest, pay off balances faster and see spending trends at a glance.

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I love extreme, creative, personal finance. So when a reader, Joe, told me about his story on paying off not one, but two mortgages with credit cards at 0%, I couldn’t wait to share his story with you!

Payoff Your Mortgage with a Credit Card

Joe, who is 37 years old and married, says:

I’ve used zero-fee, zero percent balance transfer offers to pay off my last home and current home mortgage. In a nutshell, I took out roughly 40K in balance transfers (I knew I could cash flow these and pay them off before they came due) between 2 credit cards and applied that money towards my mortgage.

I was hooked, and couldn’t wait to hear more from Joe about it. He loves telling this story, so he was happy to share the details with us (thanks Joe!).

How to Payoff Your Mortgage with a Credit Card

Joe used the strategy twice. Here’s more on how Joe did it the most recent time with his current house:

• Joe took out 2 no fee balance transfers, similar to the Discover More and Chase Slate offers* right now.
• He paid off $38,598 of his 6% mortgage with the 2 credit cards (he used a Countrywide card and a Commerce card at the time), leaving $62,000 on his mortgage.
• He then made payments to the credit cards, and because there was no longer interest on the balances, every payment went 100% to the principal.
• He paid off the balances when the 0% rate expired.

*Find and compare all current credit card offers in our credit card directory.

Using a mortgage calculator, Joe determined that he saved over $20,000 in interest (at 6% over 15 years). Review current mortgage interest rates.

By using this strategy he was very focused on paying off the debt. Joe adds:

I think it helps you reach your goal quicker (paying off the mortgage) by giving you a set amount that needs to be paid off in a set amount of time…. If you don’t pay the credit cards off by the ‘deadline’, you’ll owe a large amount of interest.

Mortgage Payoff Tips

Extracting the money. When Joe used this strategy, he actually paid off his Countrywide mortgage with a Countrywide credit card (nice one Joe!). Since most credit cards prohibit paying off a loan at the same company, you can use the ways to extract money from balance transfers for ideas.

What about taxes? For those who want to argue with Joe about giving up his mortgage interest deduction, don’t worry he did the math for his situation. Joe found that when he carried his mortgage, he was only able to itemize about $14,000 per year, or $2,600 above the standard deduction in 2010, which meant he would save only $650 in taxes in 2010, much less than the amount of interest he was paying.

Remaining balance. Since Joe was able to eliminate a large portion of the mortgage balance with this strategy, he was also able to payoff the remainder much faster; more money was going to principal instead of interest with each remaining payment.

Available cards. If you are considering something similar, you can use the current credit card offers in our credit card directory at 0% to replicate Joe’s strategy.

More on Joe

Obviously, Joe has a lot of discipline when it comes to money. Here’s more on his background, spending habits, and credit card use now that he is debt free:

I don’t play credit cards much more or try to use 0% deals to my advantage. My identity was stolen in 2010, so I’ve tried to cut back on doing credit card deals. I did that Sapphire deal under my wife’s name…. We use two credit cards currently for rewards, and that’s it. Pay them off each month. We don’t buy anything, unless we can afford it, including our 2010 Altima we paid cash for (salvage title, but it was a steal and no body damage). My goal is to pay cash (or put on credit card and pay off every month) for everything from here on out – no more loans, whether it be a home, car or any other big ticket item.

Final Thoughts

Joe shares his final thoughts:

You should not employ this strategy unless you can guarantee you can pay off the balance transfers before the interest starts up (either by free cash flow every month or by investments you could liquidate if you got into a bind, like losing your job). If you cannot guarantee that, it likely is not worth the risk.

Thanks Joe, for sharing your story! It’s such a great one and I hope it inspires readers to think outside the box when it comes to personal finance!

Do you have a creative personal finance story you’d like to share? Let us know!

More on Credit

• Credit Card Directory
• Your Guide to Free Credit Scores, Reports and Monitoring
• Quarterly Rotating Cash Rewards Credit Cards
• 6 Steps to Use Credit Cards Strategically
• How Much Do Credit Inquiries Really Matter?
• Over $3,000 in Featured Deals and Sign Up Bonuses

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After Discover More rolled out the recent no fee 0% balance transfer a reader, Mark, and I had a great discussion about using the offer to extract money.

Mark is planning to use the balance transfer for arbitrage (he’s considering purchasing CDs or investing in a stable bond fund) but wanted to know how to extract money from the card in order to do this?

I thought it would be helpful for other readers who are planning to do something similar after reading about the Discover More 12 Month 0% No Fee Balance Transfer.

4 Ways to Extract Money From Balance Transfers

Use a line of credit. An easy way to make a balance transfer is to transfer the money to a line of credit. I use a heloc, but a personal line of credit would work too. Then, once the money hits, just write a check from your line of credit to your bank account, or wherever your final destination for the money is.

Deposit the money to your checking account. Many of the credit cards are more than willing to deposit the balance transfer money directly into your checking account. Often times when I call, they suggest this before I can even ask if it’s an option. It doesn’t get any easier than this!

Create a negative balance on another card. This is the method that I was discussing with Mark. Here is an example of how it works: Let’s say you have a Citicard with a $0 balance. Now you get the new Discover card (it also comes with $0 balance). You call Discover and ask for a balance transfer (let’s say $10,000). You ask Discover to transfer the $10k to your Citicard. Now you have a Discover card with a $10k balance and a Citicard with a negative $10k balance. You call (or go online) to Citibank and request a refund of your negative balance. They send a check. I’ve done this sucessfully with Citibank, but others have also suggested using American Express for this strategy.

Make an actual balance transfer. This one is pretty obvious, but I thought I’d include it on the list anyways. If you have another credit card account, loan, or other debt, you can directly transfer the balance to the new card to get the 0%. I often make a direct transfer when the timing lines up perfectly for an old 0% card expiring and a new one starting.

Balance Transfer Tips

Adverse Action. Obviously, some of these strategies aren’t going to win you any bonus points with the credit card companies (like requesting checks for negative balances). I’ve never had any companies take any adverse action for requesting checks for negative balances… however, I would caution you not to get too greedy and overuse this strategy. I usually rotate between the various strategies to keep the credit card companies happy.

It’s Extreme. Floating 0% balance transfers on credit cards isn’t exactly routine personal finance. I always like to throw that out there, just to remind readers I’m a little extreme when it comes to credit card arbitrage. But as always, it is not for everyone!

Available Cards. In addition to the Discover More card at 0%, you can also use the Chase Slate card at 0% to take advantage of the no fee 0% balance transfers right now.

More on Credit Card Arbitrage Balance Transfers

• What is Credit Card Arbitrage?
• Credit Card Arbitrage Q&A
• My Evolving Credit Card Arbitrage Strategies

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Two readers, Kelly and Barbara, are taking the 6% from Blue Cash Preferred Card from American Express straight to the bank, literally!

Barbara first came up with the idea to cash out the gift cards for actual cash instead of using the cards for spending in our American Express 6% Cash Back Q & A.

After they reported back on their test runs at the bank, I’m more than excited at the potential this card has!

Cashing Out at the ATM

Kelly was originally working on using the gift cards for large payments but couldn’t resist the challenge of cashing out the gift cards at the ATM. Here’s a summary of Kelly’s adventures:

• Kelly bought a $500 PayPower brand gift card with her Amex Blue Cash Preferred at the grocery store (Safeway) to earn 6% cash back.
• She activated the gift card and established a PIN number.
• She cashed out the gift card at an ATM, paying a $3 ATM fee and $1.95 to PayPower.

Her comments:

In my learning process I ended up making two withdrawals and paying the fees twice. Keep in mind that even though you loaded the card with a value of $500 you’ll probably only be able to withdraw $480 at the ATM because most ATM’s only allow you to withdraw in multiples of $20 and because there has to be enough money on the card to cover both the ATM’s fee and PayPower’s ATM withdrawal fee….
Also, with the PayPower cards they require you to provide your Social Security number to them and from what I’ve read looks like you’re only allowed one PayPower card per person. That’s the other reason I think I’d have trouble repeating this, if I tried to buy another PayPower card I think I’d have trouble with PayPower’s verification process.

I promised Kelly that next time I’m at the grocery store I’ll check to see which brand of gift cards allow ATM withdrawals in our area so we can help Kelly expand beyond the PayPower cards. If anyone else has names of other gift cards that allow ATM withdrawals let me know and we can start a list.

Cashing Out with a Cash Advance

And I’m really excited to report that Barbara is back from her mission and has another way to empty the gift cards: cash advance. Here’s a summary of Barabara’s adventures:

• Barbara bought a $500 Visa prepaid card with her Amex Blue Cash Preferred at the grocery store to earn 6% cash back.
• She paid a $3.95 activation fee.
• She took the card to the bank and asked for a $498 cash advance. She kept $2 on the card to cover the cash advance fee.

Her comments:

In less than five minutes, I had $498 deposited to my account. Then I came home and checked the account online and for whatever reason, Visa did not charge me $2 so I have $2 remaining on the card. Glad I did not cut it up.

I’m glad you didn’t cut it up either! We found the easiest way to empty out small amounts left on various cards was to just add them to our Amazon account for the holidays.

Let’s Do the Math

We covered the basics of the American Express 6% Cash Back Credit Card when buying gift cards for the purposes of spending. Now let’s take a look at the math for cashing out the gift cards instead:

• Earn 6% cash back on the gift card purchase at the grocery store.
• Pay a $3.95 activation fee, and possible $2 cash advance fee.
• Earn $30.24 in cash back, less $5.95 in fees.
• Pure profit for each card: $24.29
• Multiply and repeat: ???

Wow. I’m only imagining at this point, but using just a portion of a $15,000 credit limit (saving some for actual groceries and other purchases), you could buy 20 cards a month for an extra $485 per month in free money….

And this is before we even talk about the gas rewards!

Blue Cash $150 Sign Up Bonus

This card just keeps getting better. American Express increased the sign up bonus for the American Express Blue Cash Preferred card to $150. Just spend $1,000 in the first 3 months… which shouldn’t be too hard now that we can cash out the gift cards!

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As we convert to our new favorite card, the Blue Cash Preferred Card from American Express to take advantage of the 6% cash back, I discussed many of the ins and outs of this card with readers as we all learn how to maximize our cash back.

We started with an overview of how to get the American Express 6% Cash Back Credit Card & $100 Sign Up Bonus and use it for grocery store purchases, gift cards, and prepaid debit cards.

Since American Express reports cash back one statement behind, we had to wait until we got our second statement to confirm many of our cash back purchases.

American Express 6% Cash Back

Here are some of the questions and answers about the Blue Cash Preferred Card that might be helpful to maximizing the profitability of this card:

Does American Express payout in Membership Reward points or straight cash? – Wayne

Hi Wayne,
The rewards were based in dollars that I could use to purchase gift cards or as cash back. The cash back was available in multiples of $25 which was applied as a statement credit when I redeemed it.

I signed up for the AMEX Blue Credit Card for the groceries cash back. Thanks for the tip. My question is, what qualifies as groceries? I’m assuming it is by the store. What about a place like Walmart, Costco or Target that sells Groceries and regular stuff?

If it is by the store, then I am assuming (and you may have already written about this) that if my grocery store sells gift cards to Amazon, etc. that I can parlay my 6% cash back into non-grocery items that way. – Rory

Hi Rory,
Glad you like the amex card! I too am loving the 6% cash back. We have determined that it is coded by store. I looked at my account, and Costco doesn’t count (it shows up as Wholesale Stores). I haven’t tried it at Walmart or Target yet, but I have a feeling those are also probably not coded as grocery stores.

As far as your grocery store selling gift cards- yes, that’s what I’m doing, Amazon gift cards, restaurant gift cards, and the generic visa gift cards to use everywhere else.

Madison, can you confirm that you have already received the 6% cashback on the purchases where you bought the $500 Visa card at Grocery stores? I’ve only had this now for one statement cycle and in the last statement I did get 6% back on my purchases at Grocery stores but I did not make any purchases of gift cards during that cycle. I’m trying to arrange a very large payment with the $500 Visa cards… I feel like it’s a little risky to be sure I’ll get the cashback from American Express until I actually see the BlueCash gets credited on the purchases of Gift Cards I made at Grocery stores. – Kelly

Hi Kelly,

I just got my second statement in the mail this week, and I can confirm that all $1,286 of my grocery store purchases from my first statement, which included my first 2 $500 gift cards, earned $77 reward dollars, all at 6%!

For the record, both of those purchases included gift cards and groceries in the same transaction.

When I login to my account online to check the recent activity, you can expand the store purchase for more information. When I do that, I see the purchase labeled like this – Category: Merchandise & Supplies – Groceries.

I think the purchase category depends more on the actual store than on what you purchase.

I am looking at the AMEX card that gives 6% back at grocery stores, not that we buy that many groceries, but we do buy other things. I looked at our Safeway yesterday and they had tons of gift cards along with the Visa PrePaid Credit cards in amounts up to $500. I didn’t get much info b/c the small print was folded up on a white piece of paper inside the packet and since I wasn’t buying it, I did not feel I should tear it out. However, it did say on the outside of the packet I could add monies to it once I had used all the monies. That defeats my purpose of getting back 6% each time I buy in $500 increments.

Then I stopped by my bank to see if I could use it as cash and everyone there was uncertain. They thought I might be able to use it at their ATM (not positive, though) and they did not know if I could take out the entire $500 at once. I was thinking if I bought a bunch of these things, it would pay me to use them to pay everything, but I may be dreaming in lala land. Can you please help me? Thanks so much for your time. – Barbara

Hi Barbara,
Your lala land sounds fantastic! I think you might be onto something great here. You’re right, you don’t want to add money to it since you would miss out on the 6% cash back.

My husband and I have been stocking up on the gift cards every time we’re at the grocery store, and we now use them for almost all of our other purchases, but cashing them out at the ATM is another added twist I didn’t think of.

I pulled out the last few cards I bought, and one of them doesn’t look like you can cash it out at the ATM, however, 2 of the other cards do allow ATM withdrawals. One has a small fee for the ATM withdrawal, and the other says ATM withdrawals are free!

If I were you, I’d go ahead and purchase just one and do a trial run at the ATM. If it rejects it, then just spend the $500 on regular purchases. If it accepts it… I think you just found new part time job driving between the grocery store and the ATM every day. I’ve noticed that ATMs have different withdrawal limits. Our local bank (which has free ATM withdrawals) would allow a $500 withdrawal, so you might need to look around in case yours has a lower limit.

Good luck! I can’t wait to hear how it goes!

What other tricks, twists, and tips have you discovered with your American Express 6% Blue Cash card?

More on the Blue Cash Preferred Card

• Emptying Your 6% Cash Back via ATM and Cash Advance
• How to Stack Gas Rewards on American Express for Free Gas
• American Express 6% Cash Back Credit Card & $150 Sign Up Bonus

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A frequent question I see from readers is about the impact of credit inquiries on your credit score. How much do inquiries matter? I just applied for a credit card, how long do I have to wait before I can I apply for another one? I will be buying a new house soon, should I open a new credit card?

We’ve talked about credit scores before, but let’s dig deeper into the credit inquiries.

Why You Shouldn’t Be Scared of Inquiries

Inquiries on your credit report are a tool. They’re an indicator. They aren’t evil, and you should use them to your advantage, not be scared of inquiries and avoid them at all costs.

I’m an extremist when it comes to credit cards, we had 89 credit cards as of my last count, but once you understand how inquiries work, you’ll find the power to make good decisions with your inquiries whether you have 1 credit card or 5 credit cards.

How Inquiries Impact Your Score

Inquiries are not black and white. They are part of the mathematical formula that determines your credit risk.

Impact on Score. Credit scores are routinely modeled to weight around 10% of a score model to inquiries. However, 70% of the score is made up from payment history, utilization and balances. A late payment or delinquency on your credit report will drag your score down much more than an inquiry. If you are focusing on maintaining a stellar credit score, you should focus first on the areas of the score that are weighted most heavily.

Inquiry Maximums. Many models of credit scores use tiers to weight the inquiry portion of your credit score. For example, some tiers max out at 4 inquiries. If you have 4, 5, or 20 inquiries, it’s going to have the same impact on your score. Many models I have seen also diminish the impact of inquiries both over time and on the weight of the impact with each added inquiry.

You Don’t Need Perfection. I get it. The A-type personality in me agrees with all of you who think achieving a perfect credit score is something great. But let’s think school for a moment. In school, a 93% got you an A, and the A was just as good as a 100%. As long as your credit score is good enough to qualify for the best rates, perfection isn’t going to reward you any more. In fact, what if I told you that you can sell the other 7% for cash? (More about that below.)

Yes, inquiries do impact your credit score. But like most things in life, moderation is the key.

Tips to Manage Inquiries

In an effort to keep our credit score strong, here are some of the tips that we use when it comes to managing inquiries.

Rotate Spouses. Since the impact of inquiries fades after about six months, I often apply only for cards in my name for six months, then switch to my husband for six months. That way, during any part of the year we usually have one credit score that isn’t being used and is available for any unplanned needs. In addition, for companies that routinely check your credit score, like insurance, they’ll often use only one score, so it comes in handy to have one spouse with excellent credit if the other spouse doesn’t.

Rotate Credit Bureaus. Many companies still only check one credit bureau during an application. When I used to monitory my score more closely, I’d keep a log of which companies used each credit bureau. Then, when I wanted to apply for another set of cards, I’d spread the inquiries out.

Bunching Inquiries. I’m still a fan of the old App-o-rama from years ago when we would apply for about 2 dozen new credit cards in one sitting. The credit bureaus didn’t update as quickly and often didn’t see any inquiries made that day. While the reporting is quicker now, I still notice that many inquiries don’t show up for at least another day, so I still bunch a handful of applications into the same day. An added bonus, is that the impact of all the inquiries often falls off the report at the same time giving you a fresh slate to work with.

Price Your Inquiry. If you calculate the value of an inquiry, you can determine which offers are worth pursuing. For example, I’m almost always willing to sell an inquiry on my credit report for $500, but for $10, not so much (unless it’s a product I want to try out for readers). A lot of times the threshold moves depending on what is coming up in the future; if I know our insurance will be renewing soon, or we plan to refinance, the value will move up. If I have no use for my credit in the next few months, the threshold will drop, and I’ll apply for anything that I get a sign up bonus for. However, if you avoid inquiries altogether, you must realize it’s also a lost opportunity, since you’ll never get that time back on your credit report.

Using Adverse Action. I use two different methodologies to manage inquiries. For my own credit score, I keep pushing the envelope to see how many cards I can get before I get turned down. If I get a denial, I just cool it for 3-6 months before turning it on again. In my mind a letter of denial is a great tool to measure data points. For my husband, who believes that if he were turned down it would be a bad reflection on him (as opposed to just who he is married to), I often take some time to review his credit report in advance and make sure that his score is excellent before applying for a bunch of new cards.

When It Matters Most

There are a few times when I don’t screw around with my credit score and add a bunch of inquiries.

Mortgages. One is when I know we will be purchasing a new house. Obviously, a $50 sign up bonus would not be worth it in the long run if you have to pay an extra .125% on a mortgage over 30 years. Excessive inquiries can contribute to lowering your score to the point of getting adverse action when applying for a mortgage. And since your mortgage will likely be your largest expense, it’s not worth it!

For the record, even when we are planning a house purchase, I don’t put a complete moratorium on new inquiries. A new must have card that pays 6% cash back is almost always worth an inquiry for me! I would not, however, purposely put more than 1-2 new inquiries on my credit report before planning a mortgage application.

Beginners and Young Adults. The other time I reign it in is when I’m working with beginners. My young in-laws will get a very different message: one of very careful credit management and avoiding applying for a credit card just for a sign up bonus (or a free t-shirt on campus). In other words, do as I say, not as I do! Only after they learn to manage credit wisely (and for some of them, that time may never come) do we start talking about sign up bonuses.

Inquiry Action Plan

The bottom line is that, yes, if you sign up for new credit cards, it will impact your score. That however, should not scare you. Rather, it should be used as an informational tool. If you understand the impact that inquiries have on your credit score in relation to the other (much larger) components, and you understand the goals you have in the future (if you will be applying for a mortgage soon), you can use your credit score as a tool to improve your wealth.

And since I know you’ll ask, the current sales price for an inquiry on my credit report: $250. On my husbands: $500.

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