We all spend a lot of money on everyday purchases, whether we realize it or not. There is a brand-new credit card designed to reward you for charging those everyday purchases (gas, groceries, and drugstore) rather than using "cash" or some similarly antiquated 20th-century method.
The new AT&T Universal Rewards MasterCard is the Applied Genius choice, hands-down. It offers an amazing 5% back in these categories, which is worth nearly $300 the first year alone without any effort at all! Mycroft carries this card (along with the the Citibank Diamond Preferred Rewards MasterCard and the recently discontinued Chase Cash Plus Rewards Visa, which are similar), and uses it for all his gas, grocery, and drugstore purchases. He's already persuaded several of his PhD-holding friends to get one of these cards. You should get it too; here's why.
Save $100 per year on gas. Gas costs $2.79 a gallon in Applied-Genius land; getting 5% back knocks the effective price down almost $0.15. You could spend a lot of time driving around to find gas at $2.65, or you could just whip out your AT&T Universal Rewards Card. If you consume 12 gallons of gas per week the way Mycroft does, that's worth about $2 per week, or nearly $100 per year just for the gas rebate. But wait, there's more.
Save $100 per year on food. Groceries and drugstore purchases also qualify for the 5% rebate. According to the USDA, the typical US household spends 5.4% of its disposable income on food at home. This amounts to approximately $2000 per US adult per year. (If you're reading Applied Genius, it's probably higher than that.) Guess what? 5% of $2000 is another $100 per year, just for the food rebate. It's $200 per year if you buy groceries for two adults, $300 per year for three, and so on. But wait, there's more.
Get $100 Free Money to Start. Citibank (the issuer of the AT&T card) also gives back 1% on all other purchases, which you can get from other cards, too. With AT&T Universal Rewards, you can take this rebate as cash on your statement (which is taxable) or as gift cards at many merchants (which, let's just say, "doesn't get automatically reported as income to the IRS on a 1099-MISC.") As if this weren't enough, Citi will give you $100 to start off with, after your first purchase. But wait, there's more.
Earn $270 or more in Free Interest. Lots of cards offer introductory "teaser" balance transfers. The AT&T Universal Rewards Card and the recently discontinued Chase Cash Plus Rewards card are unusual in that it gives you 0% APR on all purchases for the first 12 months. As you rack up charges for your everyday purchases, simply pay the minimum monthly payment -- and defer the rest until 2007 with no interest charged. If you're really ambitious, you could deposit the rest of the money into a high-yield savings account (such as offered by Citibank, HSBC, or Emigrant Direct) to earn 4.5%, risk-free, for a year on money you've already spent. If you spend $1,000 per month, this translates into a $270 gain in free interest alone. If you spend more (especially early in the year), you gain even more.
Total Benefit: $650 the first year. After you pay off your whopping bill at the end of the year, having racked up rebates the whole time -- $100 for spending $2K on gas, $100 for spending $2K on food, $100 free for signing up, $80 for the 1% rebates on the other $8K of stuff you bought, and $270 of free money from the 0% offer -- you'll have $650 to splurge with. (You could even buy some fluorescent light bulbs for an official Applied Genius parlay, turning $40 into $1400.) You can earn up to $300 each year after the first, a common cap in the industry. If you're a really big spenda, I understand Emigrant Direct has a capless 1.4% rewards card, which would be worth only $196 to our example consumer but would be worth more if you spent more than $46,428 on your card (thanks to reader J.E. for the tip.)
Now how much would you pay? Since you're reading Applied Genius, instead of Clueless Idiot, you already know that there's no annual fee. (Forbes has a list of very high annual-fee cards, which cause Mycroft to shake his head in wonder.)
You'll find a tasteful link on the left (and a really, really garish link at the bottom of the post.) You're welcome to try to apply for the Chase Cash Plus Rewards Visa (our old recommendation), which is being phased out; please call 1-888-787-0329, or apply for one of the other Citibank cards that also give 5% on gas, groceries, and drugstores listed on the left (which are very close substitutes.)
(In the interests of full disclosure, I'd like to remind you that Citi will, indeed, pay us if you sign up directly through us. And wouldn't your significant other, sibling, or parents like one, too, with their very own free $100 to start?)