Cash Back Bonuses vs Savings Interest


20160319_164531Cash back earned from Chase Freedom in 22 months: $481.41

Cash back earned from Discover it Miles in 7 months: $90.26 (which will double in 5 months)

Total cash back earned in less than 2 years: $571.67 ($661.93 if we add in the anticipated double points)

Total interest paid on those cards: $0

Interest earned on a 1.20% APY savings account with $15,000 and no monthly deposits in 2 years: $364.17



As I was writing my post on getting the most out of cash back rewards cards, I started thinking about the savings account I opened not too long ago and I realized that I’ve made more from cash back and bonuses with two credit cards in less than two years than I will have made after having my savings account for two years. Which led me to think about how my cash back rewards aren’t taxable and the interest earned from my savings is. Let me say this now: I’m not discouraging opening a savings account or any similar taxable accounts. I’m still earning money from my money while I’m not using it, instead of it just sitting there. I just thought this was an interesting thing to think about.

This is how much I made from two cards. Eventually, I might stop getting sign-up bonuses, but even then I would make a decent amount from cash back and in the future, hopefully, travel rewards. I haven’t even gotten cards that will give me even greater rewards for gas and Amazon purchases because I spend a lot on those. The wheels are turning in my mind right now thinking about the possibilities.

The only time I’ve ever paid money I didn’t already spend on my credit card was that one time I paid my Chase Freedom bill late (by only like 5 hours) and had to pay a $25 late fee. Luckily, no interest was charged since it was during my intro 0% APR period so my no-interest streak continues. But I learned my lesson and now have my bills set on autopay and haven’t had another late payment since.

I guess this is just a small continuation on my other credit card articles and a peek into my train of thought. Also, someone close to me is anti-credit cards and maybe this will convince them to change their mind. I’ve said it before and I’ll say it again: pay your cards in full each month so you don’t get charged interest. Don’t let the credit card own you. You own the credit card.

*Side note: The interest earned from the savings account in my example isn’t based on mine. 1.20% APY is one of the highest you’ll find for a savings account these days and that bank requires a $25,000 initial deposit. I just made up that scenario since a $15,000 deposit seemed more obtainable.

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