Posted: 7/30/2025 11:59:42 PM EDT
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I'm looking at which cash back credit card I want to switch to. The best I've seen for every day purchases is 2% (I don't buy lots of groceries and I don't do lots of online shopping or streaming or any of the other rewards categories). Then I found a Rocket Mortgage credit card that will give me 2% cash back-ish (via points) that can be applied to my mortgage principle, or can be applied at up to 5% back on closing costs for another house purchase (I'm always looking for rentals). I still owe about half my home's value, but due to a refi a couple years ago, I have like 26 years left on the note at minimum purchases. Their calculator says I'd save $21k on interest if nothing changes. Would you rather have 2% cash back to spend on whatever you want (which could include investments), or would 2% be better spent paying down mortgage principle? Attached File |
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You can always pay towards principal with a cash back instead of being locked into the mortgage only payment. Do you currently have a RM payment? If not, that 2% is wasted. Also, just my experience, but RM charges a lot more for closing than some others, so that 5% is just gone. |
Seriously, a tractor dealer from Possum Trot, KY has to explain this to you, a lawyer? - JPL
WTB: Glock 17 gen 2. SN CAF 895
Win if you can, lose if you must, but always look good for the crowd.
WTB: Glock 17 gen 2. SN CAF 895
Win if you can, lose if you must, but always look good for the crowd.
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Originally Posted By MisterPX: You can always pay towards principal with a cash back instead of being locked into the mortgage only payment. Do you currently have a RM payment? If not, that 2% is wasted. Also, just my experience, but RM charges a lot more for closing than some others, so that 5% is just gone. Good point about not necessarily using rocket for my next home purchase. I am currently with rocket mortgage |
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Have you had credit cards before? I am assuming so since you are talking about switching cards. While you had those card(s) did you manage them well? Did you ALWAYS pay in full before any interest? If you can manage your credit card use, you can make a little side cash on credit card use. Use it for whatever you wish but for most people, cash back on credit cards won’t make a serious dent in their investing or home payoff. If you have a history of poor management of credit cards (meaning you pay interest) then don’t even consider it. Credit card use won’t make you rich. How many rentals do you own now? |
"It behooves every man to remember that the work of the critic is of altogether secondary importance, and that, in the end, progress is accomplished by the man who does things."
Theodore Roosevelt
Theodore Roosevelt
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Originally Posted By ColtRifle: Have you had credit cards before? I am assuming so since you are talking about switching cards. While you had those card(s) did you manage them well? Did you ALWAYS pay in full before any interest? If you can manage your credit card use, you can make a little side cash on credit card use. Use it for whatever you wish but for most people, cash back on credit cards won’t make a serious dent in their investing or home payoff. If you have a history of poor management of credit cards (meaning you pay interest) then don’t even consider it. Credit card use won’t make you rich. How many rentals do you own now? I paid off the the absolute last of my credit card debt a couple months ago. If I miss one time of paying this one in full, I'm cutting it up and going back to cash only. I finally started treating cash like something to own instead of something to spend. I did NOT buy one of the heavily discounted Barrett fifties from PSA a couple months if that tells you anything. Could've paid cash but would have risked having to use a credit card for other stuff. That took some serious self control as I view guns as a reasonable investment. |
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So the rocket card lets you put 2% towards your principal. And every other 2% cash card on the planet gives you the same amount of cash, which you can then chose to put towards the mortgage? If you're disciplined, the better option is everything else, because it gives you flexibility. If you're not disciplined, the better choice is the rocket card, because it keeps you from blowing that 2% on some big fancy boombox you dont really need. Based on your post saying you just recently got out of credit card debt, i'm inclined to say you aren't the most disciplined.  I wouldn't be looking to open any new credit cards. If you're dead set on one, the rocket card at least makes sure you're paying extra on the mortgage.What happens to that card when rocket sells your mortgage? Mine are bought and sold every couple years. At one point, rocket bought mine. Then they sold it to Mr. Cooper. If I had the rocket card, would it still pay off the mortgage after they sold me to Mr. Cooper? |
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Cash back, as you can choose where it goes. Better - Fidelity Rewards card lets you direct that 2% to be automatically deposited into a high(ish) yield savings account every month, rather than sitting there waiting for you to do something about it. (There may be other cards that offer auto transfer to savings, I don't know.) Granted that earning 4% interest on 2% cash back a couple months earlier isn't a lot ... But it's not nothing, either. |
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Originally Posted By giantpune: So the rocket card lets you put 2% towards your principal. And every other 2% cash card on the planet gives you the same amount of cash, which you can then chose to put towards the mortgage? If you're disciplined, the better option is everything else, because it gives you flexibility. If you're not disciplined, the better choice is the rocket card, because it keeps you from blowing that 2% on some big fancy boombox you dont really need. Based on your post saying you just recently got out of credit card debt, i'm inclined to say you aren't the most disciplined. I wouldn't be looking to open any new credit cards. If you're dead set on one, the rocket card at least makes sure you're paying extra on the mortgage.What happens to that card when rocket sells your mortgage? Mine are bought and sold every couple years. At one point, rocket bought mine. Then they sold it to Mr. Cooper. If I had the rocket card, would it still pay off the mortgage after they sold me to Mr. Cooper? Originally Posted By giantpune: So the rocket card lets you put 2% towards your principal. And every other 2% cash card on the planet gives you the same amount of cash, which you can then chose to put towards the mortgage? If you're disciplined, the better option is everything else, because it gives you flexibility. If you're not disciplined, the better choice is the rocket card, because it keeps you from blowing that 2% on some big fancy boombox you dont really need. Based on your post saying you just recently got out of credit card debt, i'm inclined to say you aren't the most disciplined. I wouldn't be looking to open any new credit cards. If you're dead set on one, the rocket card at least makes sure you're paying extra on the mortgage.What happens to that card when rocket sells your mortgage? Mine are bought and sold every couple years. At one point, rocket bought mine. Then they sold it to Mr. Cooper. If I had the rocket card, would it still pay off the mortgage after they sold me to Mr. Cooper? Fantastic point. I got out of credit card from years and years of discipline. I've had years of "that was stupid" every time I open my bank account. I'm keeping one card at home in the safe for emergencies (it had no rewards which prompts me to not want to use it). My rule with this is, if I go over ONCE, the card is getting cut and I'm done with it. Originally Posted By jwliv180: Cash back, as you can choose where it goes. Better - Fidelity Rewards card lets you direct that 2% to be automatically deposited into a high(ish) yield savings account every month, rather than sitting there waiting for you to do something about it. (There may be other cards that offer auto transfer to savings, I don't know.) Granted that earning 4% interest on 2% cash back a couple months earlier isn't a lot ... But it's not nothing, either. That's a good point. I usually try to avoid sitting on much cash (I put money in my Roth and IRA as part of my monthly bill pay, gotta pay myself first) but that would be a better place for my emergency fund. |
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Originally Posted By jos51700: I paid off the the absolute last of my credit card debt a couple months ago. If I miss one time of paying this one in full, I'm cutting it up and going back to cash only. I finally started treating cash like something to own instead of something to spend. I did NOT buy one of the heavily discounted Barrett fifties from PSA a couple months if that tells you anything. Could've paid cash but would have risked having to use a credit card for other stuff. That took some serious self control as I view guns as a reasonable investment. Good on you for getting out of debt. Good job. You said you got out of credit card debt a few months ago. Didn’t you post a recent thread about having credit card debt for a long time….like 20 years of cc debt? Based on this post and what I can remember about your last post, this is not something you should even be thinking about. Maybe get a credit card and use it a tiny bit responsibly. I don’t know you but I do know a bit about human nature. Since you got in over your head in debt before, you are VERY likely to do it again. Not saying you definitely will but the odds are against you. And, this time you’ll justify it in your mind by saying “the cash back is going to investments/mortgage pay down”. Let’s say you spend $4k on your card per year. That’s a whole $80 per year in cash back. Will $80 make a substantial difference in your financial future? Let’s say you spend $10k per year on the card. That’s $200. Again…is that really going to make any substantial difference vs the substantial risk of you getting in over your head in debt again? This isn’t intended as an insult. I very strongly recommend you drop this whole idea. Again….maybe a single card with a smaller limit to test your resolve. Don’t even think about rewards at the moment. Focus on stabilizing your finances and making money. Once you got that mastered, then you can focus on things like cash back rewards cards. Cash back rewards cards will not make you rich or even make a substantial dent in your financial planning. They MIGHT get you back in a financial debt hole. Good luck. Choose wisely. |
"It behooves every man to remember that the work of the critic is of altogether secondary importance, and that, in the end, progress is accomplished by the man who does things."
Theodore Roosevelt
Theodore Roosevelt
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Originally Posted By ColtRifle: ... snip very good points ... Cash back rewards cards will not make you rich or even make a substantial dent in your financial planning. They MIGHT get you back in a financial debt hole. Also very good points. FWIW, I view the cash back cards (and other rewards cards) as a small offset of sales tax. |
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Most places charge a 3.5% service fee for using a credit card. Anything less then 4-5% cash back is a losing proposition. Furthermore the mortgage companies I've looked at do no allow payment with a credit card. Maybe you can find one that allows it. The main advantage of paying for stuff with a credit card is convenience and security. Something happens and those companies refund your money no problem and issue a new card. When it comes to a mortgage company there is 0 reason to be concerned about convenience or security. Even if you do find a mortgage company that will allow you to pay with a credit card. And even if you don't have a service charge. 2% is small potatoes. If you charge $2000 per month all year you're talking about $480 in cash back. If you can get it do it. But you ain't coming out ahead by much. I don't know what kind of promotional deal you're looking at but just understand. Companies offer these deals to fuck people. Not help them. My wife managed a retail store and they really pushed store credit cards. They'd offer certain days with 25% off to card holders. Combine that with regular 25%-50% of sales and customers are getting 50-75% off regular prices. Think the store did that to help people out? They had massive profit margins every time they ran a 25% off day for card holders.... Credit card companies and businesses that push their use are looking to profit. |
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Originally Posted By ICEAGE: Most places charge a 3.5% service fee for using a credit card. Anything less then 4-5% cash back is a losing proposition. Furthermore the mortgage companies I've looked at do no allow payment with a credit card. Maybe you can find one that allows it. The main advantage of paying for stuff with a credit card is convenience and security. Something happens and those companies refund your money no problem and issue a new card. When it comes to a mortgage company there is 0 reason to be concerned about convenience or security. Even if you do find a mortgage company that will allow you to pay with a credit card. And even if you don't have a service charge. 2% is small potatoes. If you charge $2000 per month all year you're talking about $480 in cash back. If you can get it do it. But you ain't coming out ahead by much. I don't know what kind of promotional deal you're looking at but just understand. Companies offer these deals to fuck people. Not help them. My wife managed a retail store and they really pushed store credit cards. They'd offer certain days with 25% off to card holders. Combine that with regular 25%-50% of sales and customers are getting 50-75% off regular prices. Think the store did that to help people out? They had massive profit margins every time they ran a 25% off day for card holders.... Credit card companies and businesses that push their use are looking to profit. I feel like you totally misunderstood what the OP was proposing. It’s just a rewards card where you can use your rewards towards your payment, not paying the mortgage with the card. |