Which Cash+ categories should I choose?

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I’ve mentioned before that U.S. Bank’s Cash+ card may just be the best cash back card there is.  U.S. Bank allows cardholders to choose two 5% cash back categories from a long list, and one 2% cash back category among gas stations, grocery stores, and drug stores.  All other purchases earn 1%.

Where things get really interesting is that there are multiple ways to easily increase your earnings with this card.  First, by opening a Platinum checking account, you get an extra half percent cash back for all purchases.  So earnings go from 1%/2%/5% to 1.5%/2.5%/5.5% just by opening this account.  If you have a credit limit of $25,000 or more across all of your U.S. Bank cards, the Platinum checking package is free.  Even better, each time you withdraw cash rewards of $100 or more, U.S. Bank throws in a $25 Visa gift card bonus.  So, by simply redeeming your rewards $100 at a time, you can increase your earnings by 25%.  By stacking these two opportunities, the earnings go to 1.875%/3.125%/6.875%.  Those are pretty spectacular cash back earnings, especially for a no-annual fee card!

Time to Choose for Jan-March 2013

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Each quarter, it is necessary to pick your 2% and 5% categories.  Here are my thoughts about each…

2% Categories (effectively 3.125%)

Gas/Grocery/Drugs: I can only pick one of these in order to get an effective rebate of 3.125%.  I don’t tend to spend much on gas (I work from home!), so the real debate is between groceries and drug stores.  For reasons that will be apparent to frequent readers of this blog, I’m leaning towards drug stores.

5% Categories (effectively 6.875%)

I can pick two of the following.  Which should I pick?

Department Stores: I used this option this past quarter and regretted it.  I found that neither Sears online, nor Kmart in-person counted as department stores.  I simply don’t often shop at regular department stores, nor do I know of any that have really good gift card racks.

Restaurants: I do eat out a lot, so this could be a good choice, but I already get 5X from my Citi Forward card at restaurants.  When paired with a ThankYou Premier card, 5X is worth 6.65% towards airfare.  That’s good enough, so I think I’ll pass on this option.

Home Improvement Stores: I do have some real home improvement purchases on the horizon, so this one is very tempting.  The main argument against this category is that it is easy to buy Lowes and Home Depot gift cards at office supply stores with my Ink Bold card for 5X Ultimate Rewards points.  On the other hand, I noticed that OpenSky showed up on my credit card bill as a home improvement store.  Maybe they’ll bring back the 150X MyPoints promotion…

Electronic Stores: This is another tempting category.  I may buy a new computer sometime soon and it would be great to get 6.875% cash back for the purchase!  Also, there would be some interesting lab experiment opportunities such as checking out at Target via the electronics counter…

Airlines: Thanks to having so many miles & points, I hardly ever pay for airfare anymore.  I don’t see a good opportunity here for me.

Hotels: I’m a little tempted here because I may go for the Hyatt Diamond Challenge beginning in February.  If so, I’ll need a number of paid nights to qualify.  That being said, my American Express business credit cards give me 5% cash back for Hyatt transactions thanks to the OPEN Savings program.  So, this wouldn’t save me much money over what I could do already.

Bill Payment: This option covers telephone charges, cable, internet, and insurance.  Through my Ink Bold card, I get 5X on all of those except for insurance.  I’m not sure that my quarterly insurance payments are high enough to justify selecting this category.  However, I’m tempted to pick this category for just one quarter and prepay my insurance for the whole year…

Fast Food: See restaurants, above.

Furniture Stores:  Know any furniture stores with good gift card racks?  I didn’t think so.

Car Rental: I still have a bunch of Hertz points from last Spring’s Daily Getaways.  I don’t see myself spending much in this category unless there’s a great mile earning opportunity.

Charity: I picked this last quarter and I’m tempted to do so again.  It’s a great way to get something back while doing good.

Movie Theaters: My Citi Forward card has this one covered at 5X already.

Help me choose

So, what do you think?  Among the 5% categories, I can only pick two, but I’m torn between Home Improvement, Electronics, Charity, and (to a lesser extent) Bill Payment.  What do you think I should do?

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