Published on March 2nd, 2015 | by Chuck45
The Noose is Tightening on 5% Everywhere
This is another post in our Manufactured Monday series. We try to offer some insights into manufactured spend each Monday. You can view all posts in this series by clicking here.
We have a few options of credit cards with strong 5% bonus categories. But the noose is tightening…
Here are the main 5% options available:
- Old Amex Blue Cash – earns 5% on grocery, drugstore and gas
- Wells Fargo Rewards – earns 5% for the first 6 months on grocery, drugstore and gas
- TD Easy Rewards – earns 5% for the first 6 months on grocery and gas (Update: this card is now more limited)
- Citizen’s Bank Cashback card – earns 5% for the first three months on grocery, drugstore and gas
- INK from Chase earns 5x rewards at office supply stores
I wrote some thoughts on these cards a while back, see 5% vs 5% vs 5%.
INK from Chase is a great card, but there doesn’t seem to be any easy way of getting $500 gift cards at office supply stores. It also has a cap to the 5x rewards at $50,000. And as we know, Old Blue from Amex is now limited to $50,000 per year of spend. Both are nice cards to have, but no unlimited 5% machine here.
The Citizen’s Bank card is limited to 3 months of 5%, and I believe I’ve seen that they’re stingy with credit limits, which makes it hard to make good use of. [UPDATE: It has now come to our attention that this card has been discontinued, see Citizens Bank & Charter One Eliminate Their 5% Cash Back Card.]
[Read: 5%+ Cashback Credit Cards]
Let’s look at the two remaining candidates, Wells Fargo Rewards and TD Easy Rewards…
The Wells Fargo Rewards card has its share of issues:
- They only approve existing customers for their credit card product, making it necessary to first open a checking account with them a number of months before applying.
- There’s a clause in the terms which state that if you have a Wells Fargo credit card you may not be eligible for the 5% bonus. This is very important, since many people have the Wells Fargo Propel card. One Flyertalk member was denied the 5% bonus since he had the Propel card. [UPDATE: In the comments to this post, there are conflicting reports on this point. One report confirms it, but a second report says that this was not the case for them.]
- If you make a payment from an external (non-WF) account they’re known to often take a couple of weeks until they release the available credit line.
- There are reports of accounts which are limited in the dollar amount they could spend in bonus categories. The card is not frozen and can be used for small transactions, but any large purchase at a bonus merchant is coded to be declined. Calling in doesn’t help.
- Reportedly, they recently added a clause in the terms which excludes gift cards from earning points. This gives them more leverage to confiscate rewards on gift card purchases.
The TD Easy Rewards was another good 5% option. This card always had a few limitations, but it’s been getting worse.
Here’s the old news:
- Only available to those in the following states: Connecticut, Delaware, Florida, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, Washington, D.C.
- Like Wells Fargo, TD will only approve those who have an existing relationship, making it necessary to first open a checking account with them in order to be able to apply.
- People report that certain large payments (coming from non-TD sources) will trigger a security freeze on your account for 8 business days, or close to two weeks. This is worse than the Wells Fargo issue mentioned above, since they completely freeze the account, it’s not just a hold on the credit line.
- It’s been noted by a number of Flyertalk members that Walmart and Target are not earning 5%, even when they are coded by Visa as grocery stores. I can attest to this myself: I made Target purchases at a grocery-coded Target and in the TD login itself it’s called a grocery store, but it doesn’t earn 5%. [I believe I’ve seen that Wells Fargo does earn 5% at the Targets (and presumably Walmarts) which are coded by Visa as grocery stores.]
Recently, there’ve been numerous reports of TD being more proactive in holding up accounts which have high-dollar bonus spend going through them. I haven’t yet seen any reports of accounts which were shut down (a la Old Blue), but there’s a recent spike in reports of accounts being reviewed and temporarily frozen. Since the 5% bonus period is only for 6 months, they are perhaps pursuing a strategy of running out the clock. Or perhaps they’re trying to figure out what to do.
Here are the more recent developments:
- They’re freezing accounts more often for review. Officially, the review is supposed to be a day or two, but it drags on for weeks.
- They are limiting amounts of spend at bonus merchants. The card is not frozen, but if you try putting large transactions on it, the transaction won’t go through. “Real-time score”, it says as the reason.
- They seem to be slowing down the pace that rewards move on to payable, possibly as a scare tactic, or as part of revamping the speed of the rewards for everyone.
As a side note, I just saw today a report on Flyertalk of the TD 5% being churnable. This Flyertalk member closed his TD account and applied for a new account 8 month later and he received the 5% bonus on the second card. He was told that so long as the last card was closed for 3 months, you’re eligible to receive the bonus again.
Conversely, the Wells Fargo 5% card is reportedly not churnable, according to the Flyertalk wiki.
I have the Old Blue and TD cards, but not the Wells Fargo card. Old Blue I’ve been using moderately. Since I already met the $6500 initial spend threshold it’s worth using, but I’m not sure what I’ll do when my year is up. If I was comfortable that Amex is okay with $50,000 then it would be worth it for me, but if they’re still making problems I may just keep it as a fee-free Amex for things like Small Business Saturday.
As for TD, it’s a shame because I was just getting into it over the past couple months, trying to maximize my last few months at 5%, and now the noose is tightening. A couple months ago, I got a two week freeze on my account due to a large payment. Just recently, I got limited in my transactions to a $1500 per transaction. Interestingly, there isn’t any limit on how many times I can swipe $1500, it’s just a $1500 swipe limit. Not terrible, but it makes it harder to deal with.
Anyway, now that I see Flyertalk reports of account freezes, I may cool it a little, and just use it moderately for the last month or so.
Another thing I noticed (mentioned above) which I didn’t see anyone else mention, is that they clearly slowed up something in the processing of the rewards. It used to be like clock-work: swipe, wait 2 business days until it went from pending to complete, wait one more business day until the rewards become available. Now, it’s much choppier and slower, though the rewards are still hitting within a week or two which is a very nice speed.
Let us know in the comments your experiences with WF and TD 5%.