How to Stretch your 5% cash back

These days it is possible to get 5% cash back on a lot of your purchases. One of the ways I get 5% cashback on my purchases is by buying things in the rotating 5% cash back categories offered by my Chase Freedom and Discover it® card. Right now the Discover it® card is offering 5% cashback on home improvement purchases and the Chase Freedom card is offering 5% cash on restaurants, movies, and Lowes until the end of June. Both of them have a $1500 limit on purchases that will earn the cash back but since I’m not a big spender that is more than I would normally spend. It is still possible to get the full advantage of the 5% cash back offered though.

The methods to stretch your available cash back are fairly obvious but they didn’t actually occur to me until I read about them in a forum. The first method to stretch your cash back is to buy a gift card at a store in the current 5% cash back category. For example, since restaurants are in the 5% cash back category I could buy some $50 gift cards at McDonalds, Burger King, etc. for however much I think I’d spend at restaurants in the next few months. I’d want to make sure I didn’t spend over $1500 so I’d get the 5% on all my purchases. I don’t spend nearly that much at restaurants in a year so I wouldn’t have a problem with staying under the $1500 amount. I do use this strategy, but I usually just pick up a couple of gift cards before the end of the quarter and don’t worry about getting the absolute maximum amount of cash back.

Another method also involves buying gift cards. The difference here is that you are buying gift cards for stores that are outside the current category. For example, the Discover it® card is currently offering 5% cashback at home improvement stores. This isn’t beneficial to me since I don’t own a home and don’t really need anything from a home improvement store. To still earn a little cash back I’ve been buying $50 gas cards at Lowes. Even though I’m buying a gas card the purchase is still categorized as a home improvement purchase I still earn the bonus cash back. I’m only saving $2.50 with each purchase but it only takes 5 minutes and Lowes is on my way home from work so I think it is a good use of my time.

If you are shopping online you should go through a online cash back shopping portal like Mr. Rebates. Depending on the merchant you can earn even more than 5% cash back.

These are only some of the strategies to stretch your 5% cash back. These are the simplest strategies but if people are interested in reading about more strategies I will write about them.


12 thoughts on “How to Stretch your 5% cash back”

  1. You mentioned one of the things I do not like about cashback cards. They rotate the product or services that apply to the cashback. I prefer airline cards for the frequent flier miles or the 5% instant rebate I get at Target on all my purchases.

    • I have another card I use for purchases that don’t pay 5% cash back that pays me 2.2% in travel rewards. I also have the Target card for 5% cash back but I don’t shop at Target very often.

  2. Another thing to consider is that you can use eBates to get an additional rebate, and then at those stores, you can buy giftcards to other stores that you shop at.

    For example, Home Depot has a gift card center that you can buy other retail cards at. So, you may not need home improvement, you can get the savings still at places you do shop.

    • The Home Depot by me only sells their own gift cards. I did mention in the post that I buy gas cards at Lowes to get my cash back since I don’t need home improvement.

  3. I’d read about this strategy over the years, and I even have that Chase card. But my regular card gets me 2%, and the Chase deal is pretty annoying, three months rotating categories.

    Early last year I saw a card that offered 10% (gas, grocery, drug store) for 90 days. I wrote a full article on this at Budgets are Sexy, but the punchline is that $50000 worth of Visa gift cards later, I pocketed over $4500 in rebates, and it only took 9 months to use the cards for normal purchases. (Yes, fifty thousand)

    • That was quite a score. I wouldn’t be able to buy $50,000 of gift cards unless I was able to turn them into cash. Still a 10% back card would be nice.

      The rotating categories aren’t much of a problem for me. I keep a post-it note in my wallet to remind me what the categories are. Purchases outside the bonus categories go on my 2.2% travel rewards card.

  4. Outstanding information, Andy. I guess much of it’s commonly known, but not to me! One would need to be really careful, though, so as nt to end up with “gifts” not used. The percentage of gift cards that are never used is shocking!


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