How I earned more than $2,500 using credit cards in 2020

These cards helped me earn a 4.1% rate of return on spending last year

Summary

Some flat rate credit cards will help you get 2% back on spending, but using a variety of cards catered to your top spending categories can help you earn even more.

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I racked up $1,732 in cash back from my 2020 credit card spending (a 2.8% return). If you include the $500 introductory bonus I earned on one of those cards, the total increased to $2,232 (a 3.6% return). Using a credit card that offers purchase protection, I also received $299 to repair a broken Apple Watch. Throw that in, and my total was $2,531 (a 4.1% return).

All of this proves why credit cards can be so valuable. I didn’t pay any interest in 2020, which is key to any good credit card rewards strategy, because the average credit card interest currently sits above 16%. I also only paid one annual fee ($95), which I factored into my calculations.

That was for the Blue Cash Preferred® Card from American Express, and it was well worth the fee. I used the card mostly for groceries because it offers 6% cash back on up to $6,000 of annual spending at U.S. supermarkets, then 1% after that. I maxed out that limit, which was worth $360 of cash back all by itself.

I also benefited from the card’s 6% cash back on select streaming subscriptions and 3% at U.S. gas stations.  And I nabbed another $43 in cash back via Amex Offers. Even after accounting for the annual fee, I earned a total of 5.6% cash back on this card in 2020.

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The other cards I used

I also earned 5.6% cash back on my spending on the Wells Fargo Propel American Express® card*. That surprised me, because the COVID-19 pandemic cut substantially into my travel and dining spending (this card gives 3% cash back on both categories). I did take one big trip in early 2020 though.

Later in the year, I took advantage of a few 10% cash back grocery promotions through the Wells Fargo Earn More Mall. The biggest surprise I uncovered while preparing this year-end recap was how much the card-linked offer promotions added up on my Propel and Blue Cash Preferred cards.

My Chase Freedom Flex℠ card yielded a 4.4% total return. I started the year with the Chase Freedom and switched to the Freedom Flex once it debuted in September. I maxed out two of the four quarterly 5% cash back promotions (cardholders need to activate these and they’re capped at $1,500 in spending, then you earn 1% after that). I came close in another quarter and hit roughly half of the limit in the other. This is also the card I have to thank for my $299 purchase protection claim.

For categories that I couldn’t maximize on one of these cards, I started the year putting everything else on the Capital One Quicksilver Cash Rewards Credit Card (1.5% back on all purchases). In February, I signed up for the Capital One Venture Rewards Credit Card, and that became my primary “everything else” card because it gives 2 miles per dollar on all purchases.

While this is technically a travel card, Capital One expanded the card’s redemption options soon after the pandemic hit to include statement credits (akin to 2% cash back) on eligible takeout, delivery and streaming services. The promotion has been extended through April 30, 2021, and it has worked out very well for me.

When I signed up, the Venture card’s $95 annual fee didn’t kick in until year two (it now starts from the beginning). I plan to request a waiver when my card comes up for renewal in February. Most annual fee cardholders who asked for a waiver got at least some relief in 2020.

I think I’m an especially good candidate because I use this card a lot. If I’m turned down, I’ll have to consider switching to a no annual fee 2% cash back card like the PayPal Cash Back Mastercard the Fidelity Rewards Visa Signature card or the Citi® Double Cash Card, which gives you 1% when you make a purchase and 1% when you pay it off.

My top card suggestions for 2021

Someone who wants even more simplicity might opt for the Alliant Visa Signature Card. It gives 2.5% cash back on all purchases, although there’s a $99 annual fee (waived the first year). The 2.5% rate is capped at $10,000 in monthly spending. Factoring in the annual fee, you need to spend $20,000 or more annually to come out ahead with the Alliant Visa Signature, compared to a 2% cash back card.

In your first year as a cardholder, the Discover it® Miles is also particularly lucrative. The card offers 1.5 miles on all purchases, but Discover will automatically match any earned cash back in your first year as a cardholder, effectively earning you 3 miles per dollar. After the first year, the rewards rate drops to 1.5 miles per dollar.

If you have at least $100,000 in eligible savings or investments, Bank of America has a couple compelling options through its Preferred Rewards program. At that threshold, cardholders earn a 75% rewards bonus. That means the Bank of America® Cash Rewards credit card would offer 5.25% cash back on a monthly category of your choosing, 3.5% on grocery and wholesale club purchases and 1.75% on everything else (the top two categories are capped at $2,500 in combined quarterly spending).

Meanwhile, the Bank of America® Premium Rewards® credit card would give 3.5% cash back on travel and dining and 2.625% on everything else if you have that six-figure savings or investments balance.

Final thoughts

I’m not ready to sign up for a new card just yet, but I expect 2021 will be an interesting year. If the COVID-19 vaccine rollout progresses well and the economy rebounds, there should be a lot of compelling credit card offers on the market.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and I’d be happy to help.

*All information about Wells Fargo Propel American Express card has been collected independently by CreditCards.com and has not been reviewed by the issuer.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

Credit Card Rate Report
Reward
18.76%
Student
19.53%
Airline
18.58%
Business
17.05%
Cash Back
18.68%

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