How I earned more than $2,500 using credit cards in 2020

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I racked up $1,732 in cash back from my 2020 credit card spending (a 2.8% return). If you include the $500 introductory bonus I earned on one of those cards, the total increased to $2,232 (a 3.6% return). Using a credit card that offers purchase protection, I also received $299 to repair a broken Apple Watch. Throw that in, and my total was $2,531 (a 4.1% return).

All of this proves why credit cards can be so valuable. I didn’t pay any interest in 2020, which is key to any good credit card rewards strategy, because the average credit card interest currently sits above 16%. I also only paid one annual fee ($95), which I factored into my calculations.

That was for the Blue Cash Preferred® Card from American Express, and it was well worth the fee. I used the card mostly for groceries because it offers 6% cash back on up to $6,000 of annual spending at U.S. supermarkets, then 1% after that. I maxed out that limit, which was worth $360 of cash back all by itself.

I also benefited from the card’s 6% cash back on select streaming subscriptions and 3% at U.S. gas stations.  And I nabbed another $43 in cash back via Amex Offers. Even after accounting for the annual fee, I earned a total of 5.6% cash back on this card in 2020.

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The other cards I used

I also earned 5.6% cash back on my spending on the Wells Fargo Propel American Express® card*. That surprised me, because the COVID-19 pandemic cut substantially into my travel and dining spending (this card gives 3% cash back on both categories). I did take one big trip in early 2020 though.

Later in the year, I took advantage of a few 10% cash back grocery promotions through the Wells Fargo Earn More Mall. The biggest surprise I uncovered while preparing this year-end recap was how much the card-linked offer promotions added up on my Propel and Blue Cash Preferred cards.

My Chase Freedom Flex℠ card yielded a 4.4% total return. I started the year with the Chase Freedom and switched to the Freedom Flex once it debuted in September. I maxed out two of the four quarterly 5% cash back promotions (cardholders need to activate these and they’re capped at $1,500 in spending, then you earn 1% after that). I came close in another quarter and hit roughly half of the limit in the other. This is also the card I have to thank for my $299 purchase protection claim.

For categories that I couldn’t maximize on one of these cards, I started the year putting everything else on the Capital One Quicksilver Cash Rewards Credit Card (1.5% back on all purchases). In February, I signed up for the Capital One Venture Rewards Credit Card, and that became my primary “everything else” card because it gives 2 miles per dollar on all purchases.

While this is technically a travel card, Capital One expanded the card’s redemption options soon after the pandemic hit to include statement credits (akin to 2% cash back) on eligible takeout, delivery and streaming services. The promotion has been extended through April 30, 2021, and it has worked out very well for me.

When I signed up, the Venture card’s $95 annual fee didn’t kick in until year two (it now starts from the beginning). I plan to request a waiver when my card comes up for renewal in February. Most annual fee cardholders who asked for a waiver got at least some relief in 2020.

I think I’m an especially good candidate because I use this card a lot. If I’m turned down, I’ll have to consider switching to a no annual fee 2% cash back card like the PayPal Cash Back Mastercard the Fidelity Rewards Visa Signature card or the Citi® Double Cash Card, which gives you 1% when you make a purchase and 1% when you pay it off.

My top card suggestions for 2021

Someone who wants even more simplicity might opt for the Alliant Visa Signature Card. It gives 2.5% cash back on all purchases, although there’s a $99 annual fee (waived the first year). The 2.5% rate is capped at $10,000 in monthly spending. Factoring in the annual fee, you need to spend $20,000 or more annually to come out ahead with the Alliant Visa Signature, compared to a 2% cash back card.

In your first year as a cardholder, the Discover it® Miles is also particularly lucrative. The card offers 1.5 miles on all purchases, but Discover will automatically match any earned cash back in your first year as a cardholder, effectively earning you 3 miles per dollar. After the first year, the rewards rate drops to 1.5 miles per dollar.

If you have at least $100,000 in eligible savings or investments, Bank of America has a couple compelling options through its Preferred Rewards program. At that threshold, cardholders earn a 75% rewards bonus. That means the Bank of America® Cash Rewards credit card would offer 5.25% cash back on a monthly category of your choosing, 3.5% on grocery and wholesale club purchases and 1.75% on everything else (the top two categories are capped at $2,500 in combined quarterly spending).

Meanwhile, the Bank of America® Premium Rewards® credit card would give 3.5% cash back on travel and dining and 2.625% on everything else if you have that six-figure savings or investments balance.

Final thoughts

I’m not ready to sign up for a new card just yet, but I expect 2021 will be an interesting year. If the COVID-19 vaccine rollout progresses well and the economy rebounds, there should be a lot of compelling credit card offers on the market.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and I’d be happy to help.

*All information about Wells Fargo Propel American Express card has been collected independently by CreditCards.com and has not been reviewed by the issuer.