All great credit cards programs eventually die and this month the Sallie Mae MasterCard from Barclay joined the graveyard of once great credit card reward programs that were killed by banks because they found their cardholders were making too much money from them. Here is how to replace your Sallie Mae credit card with some pretty good alternatives and what to do with your old card.
Replacing Sallie Mae with good cards
So let’s talk about how to replace the great cash back you were getting from Sallie Mae with other cards
5% Cash back at book stores (Amazon.com)
If you make a lot of purchases at brick and mortar book stores I don’t think I can help you out. If you make a lot of purchases from Amazon that isn’t too hard.
Amazon Prime Rewards Card is really your only option here. No annual fee, a $70 Amazon gift card when you sign up, and 5% cash back at Amazon. There is also 2% cash back at restaurants, drug stores, and gas stations if you don’t already have a 2% card. That is a pretty good card if you do any significant shopping at Amazon.
5% Cash back at grocery stores
Your best bet here is the American Express blue cash everyday card. It comes in 2 varieties, a 6% option with an annual fee, and a 3% option with no annual fee. The 6% option has a bigger sign on bonus and no annual fee for the first year, so I recommend getting that one first, and then maybe downgrading to the 3% card after a year.
I wrote about a couple other grocery card options here.
5% at gas stations
The slam dunk best option here is the Sam’s Club Mastercard. 5% cash back at gas stations, 3% at restaurants , and 3% on travel make this one of the front cards in my wallet. You also get $.05 off per gallon at Sam’s Club gas stations for being a member.
There is no annual fee, but you do have to be a Sam’s Club member for $50 per year. For me, even if there wasn’t a Sam’s Club around me I would still join just to get this card.
RIP Sallie Mae MasterCard
The Sallie Mae MasterCard had a place in my wallet for several years because it offered 5% cash back at book stores (including Amazon.com) up to $1,000 per month, 5% cash back at grocery stores up to $250 per month, and 5% back at gas stations up to $250 per month. A pretty good card I would say.
Your Sallie Mae Mastercard has now been downgraded to the “Commence by Sallie Mae” which is a fairly lousy card which is mostly useless. But….
While there is now no reason to carry the Commence card around in your wallet. It might just be useful enough to be worthy of not closing and keeping in a drawer. There are three reasons you may not want to cancel your Commence card.
Reason #1- If you don’t have a 2% cash back card
The Commence card pays 2% cash back on utilities such as phone, cable, electricity, and gas. It does not appear to pay 2% cash back on garbage service or water bills. If you already have a 2% cash back on everything card such as the Citi double cash card then this is of no value. But there are lots of people walking around out there only making 1% cash back, so the Commence card might actually have some small bit of value.
I pay $40 per month for 2 Republic Wireless cell phones and lets say an average of $200 per month combined between gas and electricity. Making an extra 1% on $240 per month comes out to $2.40 per month or almost $29 per year in extra cash back. Is it worth $29 to keep the Commence card around in a drawer? Maybe, but a better idea would be to just get a 2% card.
Please don’t combine reason 1 with reason 2. Like baking soda and vinegar, they shouldn’t be mixed together in the same recipe.
Reason #2- If you use balance transfer offers
This card is issued by Barclay Bank which is always putting out some good balance transfer offers, if you’re into that sort of thing. If you are careful enough to play the balance transfer game it might be a good idea to cut the card up, throw it away, never ever ever ever use it for another purpose, and wait for the balance transfer offers to come in.
Reason #3- Closing the card could hurt your credit score
One of the factors in how your credit score is calculated is the ratio between how much balance you have on your cards (including your monthly purchases you pay off each month) and the total credit limit of all your cards. Closing a card lowers your total credit limit, which will raise the ratio of balance to credit limit.
For example lets say you have 2 cards each with a credit limit of $5,000 and your combined statement balance each month is $1,000. Your ratio of balance to credit limit is 10% ($1,000/$10,000). If you close 1 card your ratio suddenly doubles to 20% ($1,000/ $5,000). So if you aren’t going to replace the card it might be a good idea to cut the card up, throw it away, never think about it again, but not close it.
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