2007 Year in Review - $2,222.75 in Cash Back

Posted on By Jim at 21 January, 2008, 11:18 pm

Last year was a year of change for me. I overhauled my system in 2007, which resulted in $892.78 more cash back than 2006’s total of $1,329.97 (a 67% increase). The main catalysts behind this increase were two new cash back credit cards, a new online checking account and a new online savings account.

Starting in May of last year, I switched my primary credit card from the Chase Perfect Card to the Blue Cash from American Express. I continued to use my Chase Perfect Card to back up my Blue Cash card, until it dawned on me that I could do even better by backing it up with the Chase Freedom credit card. So in October, I began using the Chase Freedom as my new backup card.

I also started experimenting with a new online savings account from FNBO Direct. Although I am not yet comfortable recommending FNBO Direct to others, it is something that despite its drawbacks is producing a superior return. Hopefully by this time next year FNBO will have earned my trust enough so that I can recommend their online savings account without reservation.

In June, I flipped my primary checking account from my local bank, which earned me peanuts, for the eOne checking account from Salem Five Direct. As I mention in my cash back tutorial, the eOne earns the same interest rate as many online savings accounts do.

Credit Card Results Breakdown

As you can see from the results below, the Chase Perfect Card produced the least percentage return of the three cards I used last year. It had the highest dollar amount earned only because for most of last year it was either my primary card or a backup to the Blue Cash.

Fig. 1 - Cash Back Earned by Credit Card

	Amount Earned	Cash Back Percentage
American Express Blue Cash	$ 331.40	1.76%
Chase Freedom Cash	$ 92.38	1.50%
Chase Perfect Card	$ 416.62	1.19%

Totals	$ 840.40	1.45%

At first blush, I expected the Blue Cash to have a higher cash back percentage than just 1.76%. Upon breaking down the numbers month-by-month however, I was reminded that 3 of the 7 months were spent at the 0.5%/1.0% tier until I had accumulated my spending level up to $6,500.

Fig. 2 - Blue Cash Rebates by Month

	Amount Earned	Spend	Cash Back Percentage
June	$ 2.09	$ 209.03	1.00%
July	$ 18.85	$ 3,177.75	0.59%
August	$ 16.53	$ 2,404.46	0.69%
September	$ 52.59	$ 2,700.49	1.95%
October	$ 61.26	$ 2,155.50	2.84%
November	$ 116.88	$ 6,079.39	1.92%
December	$ 63.20	$ 2,134.48	2.96%

Totals	$ 331.40	$ 18,861.10	1.76%

Once I started earning cash back at the 1.5%/5.0% tier, my average cash back return for September through December was 2.25%. Extrapolating these numbers over a full year’s time, I expect 2008’s cash back on the Blue Cash to come in closer to the 2% mark.

Deposit Account Results Breakdown

My highest earner here was FNBO Direct, coming in at $762.28. This account earned me a cool 6% through the end of September, and is still earning me 5.05% APY today. This is still significantly higher than my other accounts at ING Direct and Salem Five Direct which are at 4.10% and 4.20% APY respectively.

Fig. 3 - Interest Earned by Deposit Account

	Interest Earned
Salem Five Direct eOne Checking	$ 298.57
ING Direct Orange Savings	$ 311.76
FNBO Direct Savings	$ 762.28
Charles Schwab Investor Checking	$ 9.74

Total	$ 1,382.35

Because of FNBO’s continued higher rate, I have kept my non-cashflow funds there. By non-cashflow funds, I mean the funds that are accumulating for infrequent expenses such as vacation, car insurance, property taxes, etc. The remainder of my cash (that I use in the course of paying monthly expenses) I keep circulating in the eOne account.

Plans for 2008

At this early point in the year, I don’t anticipate major changes in 2008 for my credit card accounts. I have been keeping a closer eye though on my Charles Schwab Investor Checking account. It’s an account that does have some advantages over Salem Five’s eOne.

In the first half of 2007, the spread between the Salem Five and Schwab accounts was significant - 5.20% vs 4.25% respectively. Due to the nearly 1% delta, Schwab’s extra features were not sufficient enough to forgo earning the higher rate at Salem Five. The difference these days however is much smaller, 4.20% for Salem Five vs. 4.00% for Schwab. Should this difference get any smaller, I may elect to start using my Schwab account as my primary checking.

Outside of the usual credit cards and interest-bearing accounts, another major focus for me in 2008 will be putting my money to work through peer-to-peer lending at Prosper.com. I think Prosper is an interesting way to parlay the free money created with my strategy and compound it further through Prosper loans.

I also plan this year to further my education in dividend investing and grow a solid portfolio of dividend-producing stocks. Dividend investing is yet another great way to build passive income. Expect a few posts in 2008 on this topic as I put more focus on it. Be sure to either subscribe to my RSS feed or updates via e-mail if you want to know more on Prosper and dividends as I write about them.

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