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Savings spotlight: how I missed out on $1,314 in credit card rewards last year

Learn how to avoid this mistake and maximize your credit card rewards

Beami Team

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Each January, I review my spending from the prior year to inform my spending and savings goals for the new year. I knew that I wasn’t fully maximizing the value of my credit card rewards, but the thought of going line by line through my transactions, and determining where I could maximize my savings, was daunting. Well, I buckled down and did the math, and the results were astounding.

What to know:

Determine how much you earned in rewards value last year
Determine whether you can optimize your rewards value with your existing credit cards
Determine whether using a different mix of existing and new credit cards could substantially improve your rewards value
Beami can do this for you, free for a limited time. Click here to get started.

A breakdown of my research and calculations

Long story short, had I used a different mix of credit cards to maximize my rewards, I could have earned 3X more in rewards last year than I actually did. I earned $627 in credit card rewards instead of $1,941, leaving $1,314 on the table. That’s $109.50 per month I could have put towards a savings goal or a small splurge on myself.

Also, it became glaringly obvious to me that my current cards weren’t aligned with my financial goals. I’m focused on gaining financial freedom and retiring early. My goal is to earn cash back on my credit card spend and apply the savings towards investing or a high-yield savings account (HYSA). Last year, two out of three of my cards were travel cards, and I can only redeem their points for flights, or gift cards that I could get a better deal buying at Costco.

Below, I break down results from the various scenarios I ran to come to this conclusion:

To see where my money went, I also created another view to show which categories I was spending in the most:

The step-by-step actions I took to figure out how to maximize my credit card rewards

I spent a total of $60,767 last year, excluding my mortgage (I pay these via ACH - more on that in a future article), using the following cards: the Southwest Rapid Rewards® Plus Credit Card, Chase Freedom Unlimited® Credit Card and Delta SkyMiles^® Platinum American Express Card.

Step 1: I consolidated all of my purchases in one place

I linked each of these accounts to Beami, and Beami automatically extracted my transaction history (purchase date, description, amount and bank-specified category, only) from each so I could see everything in one place. You can add your own expenses manually in the Credit Card Spending Tracker and email to hello@beami.io., but linking your accounts is much faster and easier.

Step 2: I calculated how much I earned in rewards last year

Next, I multiplied each transaction by the rewards rate specific to the category of the corresponding card I used to come up with a baseline monetary value for my rewards, less the annual fee.

I earned $627 in net rewards value at a 1.03% net rewards rate. This is my baseline, or what I actually earned last year. As you can see, I mainly used my Southwest card last year. This card was in the wallet attached to my phone, so it was easy to access and use mindlessly. This isn’t the best strategy to use when trying to maximize rewards, but it is a common one. For many people, including myself, it’s hard to imagine that a purchase here and there could lead up to some serious savings.

For reference, the rewards values I used, by card type and by category, are listed below:

Southwest Rapid Rewards® Plus Credit Card:

Rewards: 2X points (~3%) per dollar spent on Southwest purchases, Rapid Rewards® hotel and car rental partners, local transit and commuting (including rideshare), internet, cable and phone services; 1X point (~1.5%) per dollar spent on everything else
3,000 bonus points (~$45 in value) each cardmember anniversary
$95 annual fee

Chase Freedom Unlimited® Credit Card:

Rewards: 3% back on restaurants (including takeout and eligible delivery) and drugstore purchases, 5% back on travel purchased through the Chase Ultimate Rewards portal, 1.5% back on all other purchases
$0 annual fee

Delta SkyMiles^® Platinum American Express Card:

Rewards: 3X miles (~4.5%) on Delta purchases, 2X miles (~3%) on purchases made directly at hotels, dining (including takeout and delivery) and groceries, 1X miles (~1.5%) on everything else
$250 annual fee

Step 3: I calculated the optimal amount of rewards I could have earned last year with my existing credit cards

After analyzing my spending patterns and crunching the numbers based on my existing set of credit cards, I found that I could have optimized my spend by shifting all of purchases to the Chase Freedom Unlimited card. Had I done this last year, I would have earned $1,187 in net rewards value, at a 1.95% net rewards rate. That's almost 2X my baseline rewards value.

Step 4: I calculated the maximum amount of rewards I could have earned last year using a mix of existing and new credit cards

Here’s where it gets really interesting. I could have maximized my cash back last year, using these cards for these categories:

Chase Freedom Unlimited® Credit Card: (yay, I already own this card)

Rewards: 3% back on restaurants (including takeout and eligible delivery) and drugstore purchases, 5% back on travel purchased through the Chase Ultimate Rewards portal, 1.5% back on all other purchases
$0 annual fee

SoFi Credit Card:

Rewards: 3% back on all purchases in year 1 (with a direct deposit account setup), 2% back on all purchases thereafter
$0 annual fee
Intro offer: $50 bonus for $1-5k, $250 for $5k+ in direct deposits

Savor Rewards Card from Capital One:

Rewards: 4% back on food & drink, entertainment, streaming, 3% back on groceries, 1% back on everything else
$95 annual fee
Intro offer: Earn $300 when spend you $3,000 within first 3 months of account opening

By using this combination of cards for their respective categories, I would have earned $1,941 in net value year 1 ($1,537 after). A 3.19% net rewards rate (2.53% after). That's 3X my baseline rewards value.

Note: I realize that not everyone would be willing to open up a direct deposit account that's required for the SoFi Credit Card. Alternate options include

Wells Fargo Active Cash Card:

Rewards: 2% back on purchases
$0 annual fee
Intro offer: $200 cash rewards bonus when you spend $1,000 in purchases in the first 3 months

Citi Double Cash Card:

Rewards: 1% back when you buy and 1% back as you pay
$0 annual fee

Learnings and next steps

Throughout this process, I’ve learned that small steps make a big difference over time. That tiny moment deciding how to pay can be another source of income, or ultimate side hustle if you will, if you’re diligent.

To date, I've opened up a new SoFi Credit Card and set up a direct deposit account. I will continue to use my Chase Freedom Unlimited® Credit Card for travel-related purchases, and my SoFi Credit Card for everything else, at least for the first year. In 3-6 months, I will open up a Savor Rewards Card from Capital One. I'll leave my other credit cards open to reduce my overall credit utilization, but I won't use them and will cancel them before I incur the next annual fee. (Note: a card without an annual fee is OK to leave open, as it maintains your account history and lower utilization rate).

Beami can help you maximize your credit card rewards, too

For a limited time, Beami is offering to analyze your purchases and share insights on how you can maximize your savings on future purchases. We’ve spent hundreds of hours researching the best credit cards and alternative payment options that work best for your goals, credit situation and more. Here is an example of the comprehensive report you’ll receive.

How to get started with Beami

Simplify fill out a quick survey and tell us about yourself and your goals.

Link your accounts securely through Teller

At the end of the survey, you’ll be prompted to link your financial accounts (similar to Venmo) through Teller, a secure third party connector. We don’t ask for or collect your private information. Teller only shares purchase date, description, amount and bank-specified category with us.