I've Been Doing It Wrong Since 2017! Don't Make The Same Credit Card Rewards Mistake I Did

Welcome to Saving Money with Andrew!

Amazon is our fifth-largest expense category, accounting for 8% of our annual spending. So, I swear by our Amazon Prime Visa (more discussion here) which gets us 5% cash back (and sometimes 6% with no-rush shipping) on our Amazon purchases.

This is an exceptional rewards rate. My next favorite card (the Citi Double Cash, more discussion here) pays a still attractive but much lower 2%. We use that for everything else.

Just this week, I realized (thanks Reddit LifeProTip!) I’ve been using my Amazon rewards wrong.

I normally use my Amazon rewards at checkout for a credit on my purchase. But by doing so, I don’t earn cash back on that order (because I’m not using my card to pay for it). Instead, by going to the Chase account page and instead requesting a statement credit or direct deposit, I can get my cash back and not lose rewards on any purchases.

How much in rewards have I lost? Conservatively, we’ve earned at least $2500 in Amazon Prime Visa rewards since 2017. By applying that $2500 to our purchases rather than getting a statement credit, we forfeited $125 (5% of $2500) in additional rewards, or a bit under $20 per year. Were the stakes high? Not really. But going forward, I will definitely request statement credits or direct deposits, and you should too!

Even if you don’t have a Prime Visa, this tip may be useful for you—for any rewards card, instead of using your points directly toward purchases, make sure to request a direct deposit to your bank account (or a statement credit).

In a world in which the banks pay out tens of billions of dollars a year in credit card rewards ($67.9bn in 2022), and a significant portion are likely used directly for purchases that would have otherwise qualified for cash back, these foregone rewards can easily cost consumers tens or hundreds of millions of dollars per year. That’s real money!

And now, Andrew’s pick(s) of the week:

Thelma is great. It combines one of my favorite subjects (protecting our loved ones from scams) with a suspenseful and hilarious action movie that has some profound things to say. I highly recommend it.

I hope this has been helpful. If you liked it, please share it on social media! Also, please send me your feedback, requests, and success stories.