Jason Bloom examines some ideas of cash back rewards cards and how to get a return on your spending as well as your investments:
Everyone focuses on gaining returns on their investments. Stocks, Bonds, Mutual Funds, CD’s, CDARS, and Savings accounts are a few investment options everyone looks at when determining how to invest their money. As a CFO in Palm Beach Gardens, I have to take a look at these options from a personal and professional aspect daily. Although I am admittedly far from an investment expert I had a few ideas on how everyone could grow their personal or business wealth with a few simple steps. Many people are always looking at the Amex rewards programs, sky miles, and complicated rewards cards that give you 5% on gas, 2% on groceries etc. I believe a straightforward cash back card can sometimes be the best solution.
Looking from a personal perspective it is always important to audit one’s finances and look for ways to save money. One can obtain the 2% Cash Back Rewards card from Citibank as an example. There are no annual fees and you receive 1% cash back on upon purchase and 1% cash back upon payment for a 2% cash back on everything you buy each month. Obviously if you are not paying the card off monthly the 2% will mean little when paying the interest rates on the cards. If someone is using this card daily for all day to day purchases of gas, cell phone, cable, telephone, groceries, day care, etc it can add up quickly.
A few examples below. If a family spends $1,000 / month on day care and the facility allows payment via credit card without surcharges you can earn $240 / year in cashback by utilizing the card each month. If you apply this to your cell phone bill, cable bill, groceries, gas, and other expenses you can see how it can add up fast. Gaining a 2% return on your expenses as well as your savings can add up quickly.
Business cards can get much more complicated depending on a lot of factors such as need for airline travel, monthly expenses, cash flow and several other items. Any company CFO needs to really take a look at all of the fine print to determine what is best for them. If you want to keep it simple you can take a look at the Capital One Spark Cash for Business which pays 2% on all purchases. Plus you can receive a $500 introductory bonus. Most businesses and vendors now accept credit cards as a way you life. If you can pay with a credit card and pay off monthly it is always a quick way to add a 2% discount to your purchases.
In a business environment this 2% can add up quickly. In a company that can charge $20,000 / month in payables to the card you could potentially receive up to $4,800 a year in cash back just by using the card for the items you will purchase anyway. As you can see the more you spend the more you can save.
A few of the best offers in 2016 are reviewed below:
The information provided here is intended to help you understand the general issue and does not constitute any tax, investment, financial/accounting, medical, or legal advice. Consult your accounting, financial, tax, medical, or legal advisor regarding your own unique situation.