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Amazon Prime Card offering new Whole Foods card art, limited-time bonus

On Jan. 20, Chase announced a new card design option for the Amazon Prime Rewards Visa Signature card featuring Whole Foods Market art and added a limited-time sign-up bonus offer for those who prefer to shop at Whole Foods in-store.

Amazon has become a leader in grocery shopping during the pandemic, with consumers avoiding grocery stores due to health safety concerns – not to mention the convenience of shopping from a web browser. Amazon Prime members can enjoy speedy free delivery, as well as get access to online shopping at Whole Foods Market and special member deals when shopping in-store.

They can also count on extra savings if they carry the Amazon Prime Rewards card from Chase – or if they’re looking to apply in the next few weeks.

Here’s what you need to know.

Amazon Prime Rewards Visa Signature card

Amazon Prime Card Whole Foods

Our rating: 3.8 out of 5
Score required: Good to excellent
Type of card: Cash back
Spending categories: Amazon, Whole Foods, restaurants, gas stations, drug stores

  • 5% back on Amazon.com and Whole Foods purchases
  • 2% back on restaurant, gas station and drug store purchases
  • 1% back on other purchases
  • $70 Amazon.com gift card upon approval or $100 statement credit after spending $100 at Whole Foods in first 2 months
  • No annual fee

Our take: While the Amazon Prime Rewards card offers excellent cash back on Amazon and Whole Foods purchases, it might not be the best choice for customers who don’t currently have a Prime membership and aren’t looking to subscribe.

A new Whole Foods card design and limited-time offer

Chase introduced a new card design option for new Amazon Prime Rewards cardholders, featuring Whole Foods Market art. New cardmembers with an eligible Prime membership can choose the new design when they apply for the card. If you’re an existing cardholder and would like to switch to the new design option, you can call in to request a new card after Jan. 22.

If you frequently shop at Whole Foods in-store, the new limited-time introductory offer can also be exciting news for you. Through March 3, new Amazon Prime Rewards Visa cardholders can earn a $100 statement credit after spending $100 in Whole Foods Market stores in the first two months from account opening. Alternatively, they can still choose the standard $70 Amazon gift card offer as a sign-up bonus.

Considering the standard bonus is lower, the new temporary offer might be a better deal. On the other hand, if you avoid shopping in-store or normally use Amazon Fresh for buying groceries, the gift card might make more sense for you.

Should I start shopping at Whole Foods if I have an Amazon credit card?

If you already shop at Whole Foods, the 5% back with the Amazon Prime Rewards Signature Visa and 10% off specially marked items is a good deal. The discounts, though, don’t make Whole Foods cheaper than other grocery stores.

In fact, according to a study from 2019, Whole Foods remains the most expensive grocery store with its prices at 34% above Walmart, which was reported to have the lowest prices overall. If your goal is to save on groceries, Whole Foods is evidently not the best option – even if you carry the Amazon Prime card.

Other cards to consider

The Amazon Prime Card isn’t the only option you should consider if you often shop on Amazon or at Whole Foods.

See related: Which is the best card to use on Amazon.com purchases?

For instance, with the Chase Amazon.com Rewards Visa card, you can get a $50 Amazon gift card upon approval and earn 3% on Amazon and Whole Foods purchases, 2% percent at restaurants, gas stations and drugstores and 1% on all else. If you don’t have a Prime membership and aren’t looking to subscribe, this is a good option, since the card doesn’t require a cardholder to be a member.

If you do have a membership and shop on Amazon a lot, the Amazon Prime card is a better deal. With 5% for purchases made at Whole Foods and on Amazon, 2% at restaurants, gas stations and drugstores and 1% on all else, this card is hard to beat for Amazon and Whole Foods lovers.

If you’re looking for a card to buy groceries, consider the Blue Cash Preferred® Card from American Express, which could save you more than the Amazon Prime Visa at Whole Foods. Why? Blue Cash Preferred cardholders earn 6% cash back at U.S. supermarkets (up to $6,000 in purchases per year, then 1%).

See related: Best credit cards for grocery shopping

Bottom line

You can now stack your rewards at Whole Foods, earning cash back and the limited-time bonus with the Amazon Prime Card, and you can get extra savings from the loyalty program. Whether it makes sense to shop at Whole Foods, even with rewards cards and the loyalty program, is up to you.

Source: creditcards.com



Fed maintains target rate at near zero at January meeting

In its first meeting for 2021, and its first one during the Biden administration, the Federal Reserve’s rate-setting body voted to hold its target interest rate steady in the 0% to 0.25% range.

This means there is not likely to be much upward movement in variable credit card interest rates, which are typically tied to the Fed’s target interest rate, or the fed funds rate.

The Fed will also continue with its purchases of at least $80 billion in Treasury securities and $40 billion in agency mortgage-backed securities every month to further support the economy.

See related: What to expect from Biden, Harris on financial policy

Economic outlook

In a media release, the Federal Open Market Committee said, “The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic. Weaker demand and earlier declines in oil prices have been holding down consumer price inflation. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.”

The course of economic growth will depend on how effectively the pandemic is reined in, including with the use of vaccinations. Meanwhile, the Fed will aim to maintain its almost 0% target rate until it deems the economy to have attained “maximum employment” and inflation outpaces its 2% target for a while.

The Fed’s aim is for inflation to overshoot its 2% target for a while so that average inflation remains around 2%, considering that inflation has been running below target for several years now.

In a related press conference, Fed Chairman Jerome Powell noted that there are positive signs for the economy going forward, and a number of forecasts call for a stronger economy in the second half of the year because of vaccine rollouts and fiscal stimulus. He expects that “widespread vaccinations would enable us to put  the pandemic behind us.”

Powell added that there’s “nothing more important to the economy right now than people getting vaccinated” since that will enable everyone to get back to work. He himself has had his first vaccination shot and expects to be getting a second one soon, he mentioned.

However, he sees the pandemic as still presenting “considerable downside risk”  to the economy considering that no one knows how the vaccination rollout will go. Given this, the Fed has set its policy to be accommodative until it actually sees economic improvement.

See related: Millennials defer debt payoff, tap savings in pandemic

Full employment recovery a long way off

Considering that the shock from the pandemic “was unprecedented both in terms of its nature and its size,” in modern history, the economy is still at least nine million jobs short of maximum employment, according to Powell. He also noted that the real unemployment rate is at least 10% taking into account people who have dropped out of the labor force.

He is concerned about any potential long-term damage from unemployment to people, which will ultimately prevent the U.S. economy from achieving its full productive potential.

Powell also pointed to racial disparities in terms of employment gaps, wealth gaps and home-ownership gaps that “even controlling for many other factors, they’re persistent and difficult to explain.” Broader prosperity for everyone is important since the Fed wants the “potential output of the economy to be as high as  possible.”

See related: Pandemic pins parents under financial strain: Survey

Fed doesn’t see transient inflation rise as a threat

Although there could be a rise in inflation as the economy  reopens, Powell expects this to be transient and not “troubling inflation.” The world has been facing “disinflationary pressures” for a while now, and Powell is more concerned about any damage to people and the economy from tightening its monetary policy too soon than about fighting off the possibility for higher inflation.

He also doesn’t see risks to financial stability as high, based on asset prices and the use of debt by the banking system, businesses and households. News about vaccines and fiscal policy is what is driving asset prices, as he sees it.

It’s premature for the Fed to think about rolling back its securities purchases and start being less accommodative, according to Powell. The Fed has learned a lot from its experience after the global financial crisis and the “taper tantrum” that ensued after it decided to start tightening its monetary policy during that recovery.

Accordingly, it will communicate its policy stances well in advance and be transparent this time around. “It’s too soon to be worried. When it comes (time) to exit, we know how to do that,” Powell said.

Source: creditcards.com



How to stack cards to get the most on your everyday spending

Some of the offers mentioned below are no longer available.

Running an errand to fill up your gas tank or restock your pantry may not be the most glamorous part of your day, but, with the right cash back card, you can make those everyday tasks much more rewarding.

Best credit card combinations for everyday spending

  • For Amex loyalists
  • For maximizing points
  • For maximizing cash back

There are many cash back credit cards that offer bonus rewards on everyday purchases such as gas and groceries. One of our favorites is the Blue Cash Preferred® Card from American Express, which gives you a whopping 6% cash back on U.S. supermarket purchases and (up to $6,000 in purchases per year, 1% thereafter), 6% cash back on select U.S. streaming services 3% cash back on transit and U.S. gas station purchases and 1% cash back on everything else.

The card does charge a $95 annual fee, but we think that fee is well worth it if you want to earn the most cash back on your everyday spending. We figure that the average shopper who spends $15,900 on the card would earn around $323 in cash back each year.

Estimated yearly rewards: Amex Blue Cash Preferred

Blue Cash Preferred® Card from American Express Average rewards rate Estimated cash back earned (after annual fee)
  • 6% U.S. supermarkets (up to $6,000 in purchases, 1% thereafter)
  • 6% select U.S. streaming services
  • 3% transit and U.S. gas stations
  • 1% other purchases
2.63% $323

Even better, you can push your rewards rate higher by pairing the Blue Cash Preferred card with credit cards that offer bonuses on other categories of purchases. Here are some of the best card pairings for the American Express Blue Cash Preferred card.

Combination one: Amex all the way

If you love American Express cards, or you just want to keep things as simple as possible for yourself by sticking to a single issuer – the American Express Cash Magnet® Card that offers 1.5% cash back on every purchase makes a great partner to the Blue Cash Preferred card.

See related: Which 1.5% cash back card is right for you?

By swapping in the Cash Magnet card to earn 1.5% cash back on purchases that don’t qualify for a bonus with the Blue Cash Preferred card, the average cardholder can push their cash back rate to 2.91%, amounting to $368 in cash back with $15,900 yearly credit card spend.

Estimated yearly rewards: Blue Cash Preferred + Amex Cash Magnet

Combined rewards Average rewards rate Estimated cash back earned (after annual fee)
  • 6% U.S. supermarkets (up to $6,000 in purchases, 1% thereafter) with the Blue Cash Preferred card
  • 6% select U.S. streaming services with the Blue Cash Preferred card
  • 3% transit and U.S. gas stations with the Blue Cash Preferred card
  • 1.5% other purchases with the Cash Magnet card
2.91% $368

Combination two: Maximizing points

The Chase Freedom Unlimited® is another great card to pair with the American Express Blue Cash Preferred card. Just like the Cash Magnet card, it offers at least 1.5% cash back on every purchase. However, the rewards that you earn with the Freedom Unlimited card are a little more versatile than the Cash Magnet card and it comes with additional cash back categories: 5% on Chase Ultimate Rewards travel, plus 3% on dining and drugstore purchases. You can transfer them to certain Chase Ultimate Rewards cards, including the Chase Sapphire Preferred® Card*, which awards a 25% bonus on those points when you redeem them for travel for the Chase Ultimate Rewards portal.

If you prefer to earn points rather than cash back on purchases that fall outside the Blue Cash Preferred card’s bonus categories, Ultimate Rewards cards are a great way to go:

Estimated yearly rewards: Amex Blue Cash Preferred + Chase Freedom Unlimited

Combined rewards Average rewards rate Estimated cash back earned (after annual fee)
  • 6% U.S. supermarkets (up to $6,000 in purchases, 1% thereafter) with the Blue Cash Preferred card
  • 6% select U.S. streaming services with the Blue Cash Preferred card
  • 5% Chase Ultimate Rewards travel with the Freedom Unlimited card
  • 3% dining and drugstore purchases with the Freedom Unlimited card
  • 3% transit & U.S. gas stations with the Blue Cash Preferred card
  • 1.5% other purchases with the Freedom Unlimited card
3.49% $459.91

Combination three: Maximizing cash back

If you prefer cash back rewards and want to earn the most cash back possible, the Citi® Double Cash Card and the Blue Cash Preferred cards is one of the ultimate card pairings. The Citi Double Cash card offers up to 2% back on every purchase – 1% when you make the purchase and another 1% when you pay your bill on time.

Combined with the Blue Cash Preferred card, the Citi Double Cash card pushes the rewards rate to 3.19% cash back for the average cardholder. We figure that a cardholder who spends around $15,900 per year on these two cards can earn nearly $412 in cash back per year.

Estimated yearly rewards: Amex Blue Cash Preferred + Citi Double Cash

Combined rewards Average rewards rate Estimated cash back earned (after annual fee)
  • 6% U.S. supermarkets (up to $6,000 in purchases, 1% thereafter) with the Blue Cash Preferred card
  • 6% select U.S. streaming services with the Blue Cash Preferred card
  • 3% transit & U.S. gas stations with the Blue Cash Preferred card
  • 2% other purchases with the Citi Double Cash card (1% when you buy, 1% as you pay)
3.19% $412

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Source: creditcards.com



My 2021 credit card predictions

In 2020, the coronavirus pandemic brought a huge shift in spending as the country shut down. The travel industry specifically took a hit, and many card issuers responded by adding rewards on everyday spending to travel cards.

While I think travel spending will eventually rebound in 2021, it seems likely that the additional perks on everyday spending are here to stay.

Read more from our credit card experts.

Ask Ted a question.

Everyday spending

Early on in the COVID-19 pandemic, many card issuers pivoted to grocery spending, food delivery and takeout, streaming services, home improvements, and other everyday spending categories out of necessity. In 2021 and beyond, I think they’ll do so by choice.

These perks really seem to be resonating with consumers, whether we’re talking about earning bonus rewards for these types of spending, redeeming points or miles at a higher than normal ratio to offset related purchases, receiving free premium memberships for services such as DoorDash and Instacart, or getting statement credits to defray eligible costs.

It all adds up to cash back with a twist. There’s an experiential component that cardholders love and habitual aspects that appeal to card issuers trying to build loyalty. If you’re more likely to use a card that offers these perks – especially if you’re willing to pay an annual fee – that’s a win all around.

See related: Guide to Chase Pay Yourself Back

Travel

Necessity is the mother of invention, of course, and the fact that the pandemic crippled travel led to many of the aforementioned incentives. I expect travel to bounce back in a big way once we have widespread vaccine availability. Late Q2 or early Q3 seems like a good bet, according to health experts.

This should unleash an incredible amount of pent-up travel demand. People want to see their families and friends, they want to explore bucket list destinations and many will have money (and points and miles) to burn after a year of lockdowns.

I expect the good deals will last for a while because it’s a competitive industry, and business travel should remain depressed longer than leisure travel. Airlines will want to pack planes, hotels will want to fill rooms and cruise lines will be especially desperate for business. We should see favorable prices along with other incentives to liquidate rewards and sign up for travel credit cards.

Approval standards

In 2020, lenders became much more risk-averse as the pandemic created a ton of uncertainty and job losses. In Q2, 72% of credit card issuers tightened their approval standards and 0% eased them, according to the Federal Reserve’s Senior Loan Officer Survey. In Q3, 31% tightened and 4% eased. A similar trend played out with respect to existing cardholders’ credit limits.

This hit balance transfer cards the hardest. According to Mintel Comperemedia, card issuers sent 42% fewer direct mail advertisements for 0% balance transfer cards in the first three quarters of 2020 when compared with the same period in 2019. Card issuers were worried enough that their existing customers wouldn’t pay them back; taking on new customers with existing debt wasn’t particularly appealing.

This will hopefully turn around in the second half of 2021, assuming we have widespread vaccine access and a better economy and job market. I think balance transfer cards will be the last card sector to bounce back, however.

sign-up bonuses. But approval standards will likely remain tight as issuers look for the most creditworthy and affluent applicants. We saw some of this in late 2020, like the 100,000-mile Capital One Venture Rewards Credit Card bonus (since expired) which required $20,000 of spending within the new cardholder’s first 12 months.

I think particularly lucrative bonuses will become more widely available and less restrictive in the second half of 2021. Early in the year, the best offers will probably be reserved for those with high credit scores and high incomes.

Final thoughts

A couple of pleasant surprises this year: Credit card debt and delinquencies both fell in 2021. Credit card debt declined 11% between February and October, according to the Fed. This could be due in part to the government stimulus package passed earlier this year or consumers spending less and prioritizing paying down debt.

While we’re all anxious for our lives to return to normal, carrying less credit card debt would be a good habit to hold onto after the pandemic is over.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and I’d be happy to help.

Source: creditcards.com




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