【2016/6/14】According to Chase public relations, Freedom will continue to earn 5x UR at wholesale clubs such as Costco, Sam's, and BJ's through the end of the year. However, this is not a separate bonus: these purchases share the same $1,500 quarterly cap with the other 5x categories. Chase Freedom, Discover it, and Citi Dividend, the three credit cards that offer quarterly 5x points or cash back, have all announced or partially announced their 2016 bonus categories. In this post, we’ll briefly walk through those categories.
Discover it
Discover has already announced almost all of its 2016 5x categories:
- Q1 covers gas stations and ground transportation. If you factor in the Discover it first-year Cashback Match, that means 10% cash back on gas stations and ground transportation in the first quarter, which is quite attractive. It may be worth stocking up on gas gift cards for later use.
- The Q2 5% cash back categories are restaurants and movie theaters. Both are very practical spending categories, though of course there isn’t much MS opportunity there.
- Q3 is Amazon and Home Improvement. In addition to Amazon being highly useful, home improvement stores such as Home Depot sell Visa gift cards, but only the $100+$5.95 fee version, which is not worth buying. (And availability is a concern; many stores don’t even have them.)
- Q4 is currently listed as Amazon and More. Based on what has been disclosed so far, Amazon’s quarterly 5x category this year is exactly the same as last year. If Q4 continues the just-ended 2015Q4 setup of Amazon + Department Stores + Clothing Stores, it would be very practical. Let’s wait and see.
Chase Freedom
Chase Freedom has currently announced its 5x UR categories for the first three quarters of next year. After this year’s two events—UR losing the ability to transfer to Amtrak and the BA mileage devaluation—the value of UR has declined slightly. Still, since points can at least still transfer to Hyatt, and UA and BA 7,500-point awards can still be excellent when used well, valuing 5x earnings at 8% is still reasonable.
- Q1 is broadly the same as Discover it: gas stations and local commuter transportation. As everyone knows, Chase and Discover went head-to-head in Q4 this year. Not only did both roll out Amazon 5x bonuses, Freedom also went all-out during the holiday shopping season by offering 10x UR on Amazon purchases. It looks like that battle will continue into Q1 next year. Since gas stations don’t offer many great opportunities, the best you can usually do is stock up on gas gift cards or check whether 7-11 sells Visa gift cards, so we won’t say much more here. One thing to note is that because Chase and Amtrak parted ways, Chase specifically stated that 2016Q1 transportation does not include parking, tolls, or Amtrak.
- Q2 is grocery stores and wholesale clubs. Just like with AMEX, grocery stores do not include Walmart or Target. Grocery stores offer plenty of opportunities; if you don’t normally spend enough on groceries to use up the $1,500 cap over three months, you could buy Visa gift cards instead. Ralph's, Safeway, Kroger, and others may sell $500 Visa gift cards, so readers interested in MS may want to take a look. Wholesale clubs are a nice little surprise, including BJ's, Sam's Club, Costco, and others. Of course, Costco currently only accepts AMEX, but there are rumors it will accept Visa before this summer.
- Q3 is restaurants and wholesale clubs, including Costco, Sam's, and BJ's. Earning 5x UR on dining is pretty cool and easily beats Forward’s 5x TYP, though again there isn’t much MS opportunity. Wholesale clubs, however, are easy to use: you can buy Costco Cash Cards to use for gas, groceries, and more.
Citi Dividend
Citi Dividend is a card that is no longer open to new applications, but it can still be obtained via product change. In general, once you have held almost any Citi card for a full year, you can consider converting it to this one (another good product-change option is Citi Double Cash). Dividend has already published its full 2016 cash back calendar. One important point is that Dividend does not have a $1,500 cap each quarter; instead, it has a total annual cap of $6,000, so you could use the entire cap on Q2 drug stores.
- Q1 is The Home Depot and Home Furnish Stores. Home Depot’s Visa gift cards have small denominations, so the cost is quite high ($100+$5.95 fee), making them not worth buying.
- Q2 is drug stores and Fitness Clubs. Drug stores are basically the most profitable category. Buying three $500 Vanilla cards at Walgreen's would net an easy $60.
- Q3 is Hilton and car rentals. Earning 5% back on Hilton purchases is a bit worse than the 12x from Hilton Surpass, but slightly better than the 10x from Hilton Reserve and the 3x TYP from Citi Prestige and Citi ThankYou Premier. So it can still be worth using for hotel stays. As for car rentals, cards that do not offer Primary CDW naturally should not be used. (List of credit cards that provide Primary CDW)
- Q4 is Best Buy and Department Store. Best Buy sells $200+$5.95 fee Visa gift cards, which means about a 3% fee. However, buying Visa gift cards at BB also earns BB rewards points, worth about 2% cash back, so the net gain can be 4%. Department stores are also decent, and Macy‘s and Bloomingdale both have gift cards available for purchase.
What do you think about these 5x bonus categories? Feel free to share your thoughts with us.