So following up
my previous post, here is a comparison of the two credit cards and their cash rewards.
1. Exchanging for CashBankAmericard
| Cash Redemption Options |
| Point Value | Cash Reward |
| 2,500 | $12.50 |
| 5,000 | $25 |
| 7,500 | $37.50 |
| 10,000 | $80 |
| 15,000 | $120 |
| 20,000 | $160 |
| 25,000 | $250 |
| 35,000 | $350 |
| 50,000 | $500 |
Look at the table above, the only time you get full cash reward is when you redeem 25000 points, which gives you back $250, giving you 100 points per $1 ratio. Less than 25000 points, your exchange ratio is less than 100 points per dollar. For my budget it takes about two years get that many points and redeem for cash, this is when I use this card every chance I can get. You might count this two year period a disadvantage for BankAmericard.
In comparison, the Blue Cash card is an annual credit, automatically applied to your account, no points to exchange etc. It's simple and you don't have to remember it!
Verdict: Blue Cash wins.2. Cash Reward RateBecause both cards are not simple 1% or 1.5% cash back calculation, we have to do some math to get an idea, which one is better and when. What's interesting is the rate of cash back for Blue Cash is none linear, we'll get to that. But first let's look at BankAmericard, here are the terms:
Earn 1 base point and 0.25 bonus points (for a total of 1.25 points) per each dollar of new net retail purchase transactions (qualifying purchases less credits, returns, and adjustments) charged to the card each billing cycle. You will also earn an annual bonus match of 25% of your yearly base points that were earned and awarded from January 1st through December 31st each calendar year. This annual bonus match will appear on your February or March monthly billing statement. Points are calculated at each transaction, rounded to the nearest whole Point, and are subject to verification.
At first sight, it seems pretty straightforward, 1.25% cash back with a 25% bonus on the base point
if you have another banking account with Bank of America for a total of 1.5% cash back over the year. But look at the text I highlighted above, each points are rounded per transaction, meaning if you spend $1.45 on one transaction, you get 1 point because 1.45 rounded to the nearest whole point is 1. Similarly if you spend $1.95 on a transaction, you actually get 2 points. So should you be concerned about this? Well, unless you are making many small transactions which will always round to the smaller whole integers, then yes, but for most of us, this doesn't make too big of a deal.
However, this way of rounding is not always the same for all Bank of America credit cards. As I was looking through some of them with flashing cash rewards, when you actually read them in detail, some of them always round to the smaller whole point or other gotchas that make them less appealing. BankAmericard is definitely one of the better ones on this term comparing with other Bank of America credit cards.
Side note: I do want to raise a concern that I found some inconsistency on the extra 0.25% points I'm getting from the monthly transactions. Some months I get less than 0.25% while other months are quite consistent. So I picked up my phone and called Bank of America. Their agent had no clue how they calculated the points, and she said the bonus points are "up to" 0.25% rather than a flat implied fixed 0.25%. When I challenge her to tell me where it is said in the terms, she actually doesn't have access to the terms of the cards...what? Exactly, that was my reaction. But anyway, I asked her to send me the terms so I can read them myself. Her explaination for not having access to the credit card terms is that "Bank of America offers too many credit cards, the computers can't store all the terms." When I heard that, I stopped further conversation and thanked her for her help and moved on. Obviously, they are still running their system on DOS or 386 computers.
Now looking at Blue Cash, it's a bit more complicated because before you spend $6500 on your total transactions using this card, the cash back rate is bad: 0.5% for regular purchases, 1% for groceries, gas, and drugstore purchases. But after you spend $6500, a new formula kicks in for all the transactions after that: 1.5% for regular purchases, and 5% for groceries, gas, and drugstore purchases.
So it's really a function of what you spend your money on and how much you spend. After one year of using this card for every purchase I could use it for (despite some cashier's face turn blue when they see my American Express card and some owners looked at me as if I have a gun in my hand and robbing them with my card), I stand at about 1.16% cash back, given that I haven't really cooked that much. In a very optimistic month, when I was cooking quite often, I spend about $250 on groceries. Let's be wasteful and add another $100 for gas (imagine it's $4 a gallon), total $350 (no drugs), that's $4200 over the year. If you spend $10000 over the term of the year, you will have an overall cash back rate of 1.5%. Here is the formula:
x = 4200/10000(6500*(x*0.01 + (1-x)*0.005) + (10000-6500)*(x*0.05 + (1-x)*0.015))/10000 = 1.5%
So if you have a big family (more than 1 person), cook your own food most of the time, spend more than $10000 a year with a credit card, you'll get more cash back than if you use BankAmericard.
Verdict: As I explained above, it's not a simple who wins in this case. If you have a deep pocket and willing to spend the money, by all means, use Blue Cash. If you are on a budget (i.e. spend less than $10000 on credit card purchases a year) and don't cook often, BankAmericard is your friend (assuming you have another banking account with them).
Last word, you may want to also consider other benefits come with each card, such as fraud protection, purchase insurances, travel convenience, etc. Both are good credit cards and may very well be the only card you need. Treat yourself something nice with the cash back for a year of hard work :).
