Best Buy the latest to slim down its credit card rewards program?
Posted on July 6th, 2009 – 11:03 AMBy Kara McGuire
I’ve heard that the Best Buy Reward Zone Program MasterCard has one of the best loyalty programs in the business. But maybe not for long, according to a post from Consumerist about the store’s shrinking rewards program.
I’ve contacted Best Buy for a comparison of the new and old terms and did not receive a response.
Best Buy certainly isn’t the first and I bet it won’t be the last credit card company to pare back rewards this year.
So which cards are still the best rewards cards out there?
Not my Chase Freedom card. It changed its reward terms - for the worse, in my opinion - on June 30. (NOTE: Some readers say that their rewards program with this card has not changed. I’ve contacted Chase for details about the change and I learned that all cards will eventually change to the new program).
I used to earn 3 percent cash back in the three out of 15 every day categories where I’d spend the most money each month. I also earned 1 percent cash back on all other purchases. Also, for every $200 in rewards I earn, I would get a $50 bonus.
Now, the $50 bonus is gone and my purchases earn just 1 percent cash back. So Chase Freedom is now a pretty typical run-of-the-mill cash back credit card.
Chase says the card will feature certain spending categories where I’ll earn 3 percent for limited periods, but I haven’t noticed this yet. Even when they do launch that feature, it’s just a less generous version of the Discover Get More program, which gives 5 percent cash back on selected categories (although Discover is less generous with every day spending. You have to spend $3,000 with Discover before the 1 percent reward kicks in; before that you earn a measly .25 percent on purchases).
Chase Freedom isn’t my everyday card, so I’m not too broken up by the changes. But at a time when credit cards are changing terms not only on rewards, but also on how a card accrues interest, it it critical to read any disclosures that come your way.
My most used cards?
I like Discover’s 5 percent cash back program and use my card whenever I can take advantage of that deal. Otherwise, the American Express Costco True Earnings card and Citi Drivers Edge Mastercard are my primary cards. The Drivers Edge card, with 3 percent back on groceries, gas and drugstores and 1 percent on everything else, is no longer offered.
But if I were in the market for a new card, I’d probably take a look at both the Fidelity Rewards American Express Card and the Schwab Invest First Visa. Both reward spending with a 2 percent cash rebate into a Fidelity or Schwab account.
According to the calculator on Fidelity’s web site, $12,000 in purchases per year on your Rewards Card amounts to a $240 cash reward. Invested each year at 4 percent for 10 years and your rewards could grow to $2,916.
That’s not too shabby, even if you project you’ll earn less than 4 percent in interest.
Did I miss a great rewards credit card? If so, do share below.
25 Responses to "Best Buy the latest to slim down its credit card rewards program?"
National City - Everyday Rewards is pretty good. Tiered % based on category starting at 4% for Gas purchases.
That’s news to me about the Chase Freedom card. I have one as well, and I don’t think I noticed a changeover; I just went online to check the terms for my account, and it still has the 3% most used deal.
It’s not my every day card anyway. I use the American Express Blue Cash card, since I have no problem hitting the $6,500 yearly spending to get the 5% rate on gas and grocery purchases.
I wonder if the CEO and management will also do with less perks…parking reimbursment, tax prep reimbursement, etc. Naaaaaaaaaaaa
Don’t forget about the Target Visa - you can earn 10% off shopping rewards at Target, plus Target donates money to schools with every purchase you make. It’s not cash back, but saves you money on you Target purchases.
For business: American Express Plum Card is still quite good. Two “rewards: 1. Pay 10% and you can defer the full card payment for an extra month. This is great for people in industries where your expenses come well before your payments. I do a lot of work where I get paid NET30. 2. If you do pay “on time” (which is much quicker than a normal card) you get a 1.5-2% credit towards your next bill. When the card first appeared, the reward was 2%. New accounts are at the 1.5% level, and I believe that all accounts will be switching to 1.5% after the card’s expiration date.
I like the REI Visa card…
5% rebate on REI purchases
1% rebate on everything else
no annual fee
REI co-op membership refunded
no min spending required to get rebate
Rebate can be exchanged for cash for no additional charge…
http://www.reivisa.com/cgi_w/cfm/credit/rei/intro.cfm?ics_src=50362&redirect=62rei
I use an AmEx Blue Cash card that sounds very similar to your Discover card referenced here, but better rewards on non-threshhold amounts.
I use only one card and it’s the USAA MasterCard with Eagle Rewards. There’s a $49 annual fee but I pay that with points otherwise I only redeem points for air travel which is at a conversion rate of 2% so for every $25k we spend I get a domestic RT ticket on any airline with no blackout dates up $500. There’s also USAA great service as they’re always there and in 20+ years I’ve disputed 3 charges due to dissatisfaction with products/services that I wasn’t able to resolve with the merchant and USAA instantly credits my card back and then works it out with the merchant and I usually never hear about it again. We probably ave $4-5k/mth on the CC so we rack up miles in a hurry and there’s value in being able to fly over school holidays and spring break w/o restrictions.
Not just credit card, but airline rewards points are getting harder and harder to use. It is frustrating!
Shell Mastercard pays 5% at Shell stations (I live a mile from one) and 1% on everything else.
Everybody that used credit cards for rewards and paid balances off timely just got a HUGE tax increase complements of the Democrats that wrote new regulations robbing credit card companies of their profits. This was to be expected. The goverment stepped in and once again said hard working people that pay off their credit card bills have to SUBSIDIZE those that don’t.
My wife and I quit using our other credit cards in favor of the Schwab Invest First Visa. It has a couple of advantages over most other cash back cards: One, as Kara mentioned, it’s 2 percent cash back on everything, not the bait-and-switch spending limits and revolving categories common to most cash back cards. Two, our full cash back balance is automatically deposited into our Schwab One investment account each month. We no longer have to wait until our reward has reached a certain amount or redeem it in $20 increments.
Interesting point, Mary. But Marketplace Money’s Chris Farrell had a different point of view shortly after the legislation passed in May. Curious what everyone else thinks.
My wife and I have been using the Chase Freedom as our everyday card since July 2005, when it offered 5% on gas, groceries and drugstores or fast food. They since reduced it to the 3%, and that is what we still have today per the website…
Rewards Program Details
With Chase FreedomSM, you now have the flexibility to earn more cash back with every eligible purchase.
Your eligible everyday purchases earn you 3% cash back. It’s never been easier to reward yourself with Chase Freedom.
Gas: Use your card for fuel, repairs, car washes and other gas station purchases
Groceries: Stock up on food, household goods and more at participating grocery stores
Quick Service Restaurants: Rewards add up fast from pizza to hamburgers to tacos - even sandwich shops, coffee houses and more
These are just some of the places you can use your Chase Freedom credit card to earn 3% cash back. And you’ll still earn 1% cash back for every eligible dollar you spend on all other purchases.
You have a choice when it comes to rewarding yourself:
Reach $50 in rewards and redeem for a $50 check
Save up $200 in rewards and redeem for a $250 check
With Chase Freedom, you have the freedom to reward yourself the way you want to. You can change your mind and switch your rewards to earn points instead of cash back. Points earn you rewards like gift cards, airline tickets and high-quality merchandise. To switch, just click the “Switch to earn points” link on this page.
View rewards program rules and regulations
I had balances on my 3 cards, but I’ve been paying them off over the past few months with money that would have gone into my 401k but for the fact that my employer canceled the match for this year. 2 are down to $0 and I’m working on the third. Some of the above cards look enticing, but isn’t card switching bad for your FICO score? I don’t want to rock the boat.
Chase BP adds 5% for fuel purchases or about anything else you get at the BP supplied C-stores. But the 5% tops out at $25 a month. I doubt that I’ll buy $500 worth of gas every month.
I travel a great deal and I upgraded recently to the Hilton Honors SurPass from American Express. It offers 3 pts per dollar spent, except groceries, drug stores, gas, cell phone, and post office yield 6 pts per dollar, and for Hilton stays I earn 9 pts per dollar. Combined with the fact that the card elevates you to Gold status at Hilton you will actually earn about 21 pts per dollar spent at a Hilton property (9 pts from Amex + 12.5 pts from Hilton Honors). It also gives you a membership with Priority Pass which gives you access to any Airline Honor Club when you are traveling. Lots of perks and incentives for those that travel.
so kara is now writing articles based on the often incorrect, ranting crap that gets posted on consumerist.com?! what next an article based on a tip from TMZ.com?!
i certainly wouldn’t call the changes best buy made to their reward zone program “worse” at all. they are mostly technical “user safety” changes as opposed to changing the point earning structure or something like that.
Pwr2Ppl - you sir are a giant douche! get a job and a life you free loader.
Mary, that is ridiculous. This isn’t a “tax increase”. I have zero problem with tightening credit card regulations. I am fully cognizant of the fact that much of my rewards are earned from despicable practices like universal default and outrageous late and over-limit fees, and usurious interest rates. If my rewards programs are reduced because credit card companies can’t gouge customers as much as they used to, that’s 100% fine with me. I’ll still use credit cards for all of the other benefits, like grace periods and extended warranties. Besides, American Express makes enough money from their high merchant transaction fees.
Jimmy: My Chase Freedom reward options have been pared back and are identical to the rewards for new cardholders. I’ll check tomorrow to see if some users have been allowed to keep the better perks.
Consumerist.com is a piece of trash website: One change that Best Buy made is in ending the provision where points could be rolled over year after year. That’s a reduced benefit in my opinion. I’ve contacted Best Buy and am waiting for a response. If BB can explain how the changes are not reducing benefits in any way, I’ll be sure to update the post with the company’s remarks.
Oh– and I meant to point out that Consumerist is owned by the parent company of Consumer Reports.
My Chase Freedom card hasn’t changed its reward terms yet. It may well be coming though.
And I completely disagree with Mary. Look at it from the other way around. The struggles of lower-income people to keep up with their bills when something bad happens has been the subsidy. The credit card companies have been using the ridiculously high fees slapped on them to give perks to those of us who have no trouble paying our bills promptly. Now, I do still go for rewards because me opting in or out wouldn’t have changed the banks’ behavior, but I’m very glad they’re finally being reined in, and if that means my rewards go down, that’s just fine with me. If anyone disagrees with this, I’d love to have them explain to me why we should keep practices like universal default because it helps them take a free flight sooner.
And also, the credit card bill that recently made it out of Congress was not exactly an act of courage, since all it really does is slightly speed up new rules that were already being enacted by the Federal Reserve in 2010. So it would be much more accurate to level the vitriol at Ben Bernanke.
Many of us warned that if congress passed and Obama signed the Credit Card Consumer “Protection” bill those who pay their CC bills would lose benefits.
Like Jimmy, I have the Chase Freedom with the 3% on Gas/Groceries/Fast Food rather than the rotating categories. I haven’t received notice of any changes, and my account web site also still lists those categories and the $200/$250 (detail/T&C dated 11/28/06).
I remember them sending a promo a year or two back pushing a change to the rotating categories, but I think there was some other catch so I avoided it at the time. Maybe it’s only those on the newer rotating categories program that were changed?
Starwood Amex. Just netted a 5% conversion rate on hotel rooms on our recent trip…has anyone else beat 5%?
