For 2.5%, the Alliant is a better deal.
Alliant Visa Signature
https://www.alliantcreditunion.org/bank/visa-signature-card
- 2.5% Everything
- No AF, No FTF
Requirements: keep $1,000 in Alliant bank, sign up for electronic statements, have one qualifying electronic deposit per month (can be as little as $1/month).
Limits: Cash back limited to first $10,000 spent per billing cycle, 1.5% thereafter.
Cash back redemption: Alliant bank account (can ACH out afterwards), or statement credit. Redemption starts at $50.
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There is a lot of (justifiable) balking about the required $1,000 deposit into their bank, so let’s do the math:
People claim that they are losing out on ~4% (current HYSA interest rates), making this an “effective” $40 annual fee card. (1000 x 0.04 = $40), making a 2% catch-all card a better deal.
The interest rate at Alliant is 0.25%, not zero.
So the actual difference is (1000 x (0.04-0.0025)) = $37.50.
But you would pay taxes on this, right? Assuming a 22% marginal tax rate, you’re taking home (37.5 x 0.78) = $29.25 in interest. Substitute your own number here for your own context, of course.
The difference between 2.5% Alliant and a regular 2% card is 0.5%. So the needed spend is 29.25/0.005 = $5,850.
So, look at your own annual spending on your current 2% catch-all card. If it’s less than $6k/year, then stay. If it’s significantly over $6k/year, then it’s worth it to at least look at the Alliant. YMMV, good luck.