While my goal with rewards programs is primarily to accrue free and discounted travel, there are sometimes opportunities to gain additional benefits. Such was the case over Labor Day weekend with the grocery chain Kroger. Like many supermarkets, Kroger sells gas, and loyalty points accrued from purchases in the store can be applied for discounts on fuel. Normally, you earn double points on gift card purchases, but, this weekend, Kroger offered a digital coupon for 4x gas points on gift cards and wireless airtime. This is not a rare promotion but it is infrequent enough that I definitely wanted to take advantage of the opportunity to save a little on gas!
Kroger sells a very large selection of gift cards from a broad variety of companies. There are cards for restaurants, travel, gas, online retailers, clothing retailers and many more. They also sell cash cards from the major credit card companies, i.e., MasterCard, Visa and American Express, though these require an activation fee. If you purchase these cards and receive no credit card rewards you are still looking at a very nice return on your money. For every $100 in gift cards I buy, I earn a rewards return of approximately 3.4%:
- $100 dollars earns 2x Kroger points at all times - 200 Kroger points
- Save $0.10/gallon for each 100 Kroger points used on a gas purchase - 200 points = $0.20/gallon
- Total savings is gallons purchased times discount - $0.20/gallon x 17 gallons = $3.40
- $100 spend earns $3.40 in savings - $3.40/$100 = 3.4% return
With the 4x points digital coupon, my return doubles to 6.8%! But the best part is that there may be an additional kicker: if you earn category bonuses on credit card reward points for supermarket purchases, you can earn lots of reward points on top of the gas discount!
My Chase IHG Rewards MasterCard earns double IHG Rewards points for purchases at supermarkets. Other cards offering bonuses at supermarkets are the Amex EveryDay Preferred Credit Card and Amex EveryDay Credit Card. My strategy was partly, though not exclusively, to buy gift cards for businesses where I do not receive bonus rewards for spending directly with those merchants. For example, I do not get any bonus points with any of my credit cards for purchases at Netflix or Barnes & Noble, so I picked up a few of their cards. However, I did buy one gift card where I would have received more value in credit card rewards by spending directly with the company.
I can earn double points for Starbucks purchases with either my Citi Prestige Card or my Chase Sapphire Preferred card since both cards offer double points at restaurants. While 200 Citi Thank You points or 200 Chase Ultimate Rewards points are worth more than 200 IHG Reward points, I would lose the 3.4% or greater return from the Kroger fuel points by spending directly with Starbucks. And 3.4% exceeds even the near industry-leading valuation of the Chase Ultimate Rewards points. So I picked up a $100 Starbucks gift card to load my Starbucks account. (Don't forget that you can earn stars toward free drinks and food if you pay in the cafe via your Starbucks account!)
All told, I bought $235 of gift cards and received 940 Kroger points! This will be worth approximately $15 when I next fill up! This case highlights just one example of how you can stack rewards opportunities. By doing so, I was able to earn over 8% in value from a single purchase! That's a rate that savings accounts can't even dream about these days. In addition to great savings, buying gift cards can be used to meeting credit card spending requirements for sign-up bonuses. If you need to meet a deadline for initial spending on a new credit card, buying gift cards to use for known future purchases can be a wise move. Regardless of your motivation, stacking rewards just takes is a little bit of extra effort for outsized returns. Have you found other stackable reward opportunities. Share them in the comments!