What Do Pizzas & Cash Back Credit Cards Have In Common

The following is a guest post by Michael from CreditCardForum, a message board and blog for discussion of the worst and best credit cards.

Cash back credit cards and pizza ordering are two drastically different things, but they do have one thing in common… if done correctly, each has the potential to save you money on food. But if done the wrong way, you are going to get ripped off big time!

First, let’s talk about pizzas…

For some reason, most people are quick to criticize ordering out food as a waste of money. They say it’s cheaper to make it yourself at home. Usually that’s true, but when it comes to pizza, that is rarely the case.

A few years ago I was dead broke and tried every trick in the book to pinch pennies. Pizza was something I just couldn’t give up, so I was determined to find the cheapest way to get it. For the first few months, I experimented with the do-it-yourself mentality by making pizzas from scratch. I would buy all the ingredients; flour, yeast, sauce, cheese, oil, and sometimes I would splurge on toppings. I would pick these ingredients up either on sale or I would hit up Costco and buy them in bulk.

Much to my surprise, I discovered it was actually quite expensive to make them yourself! When making a large pizza, it would usually take around a pound of shredded mozzarella (sounds like a lot but it melts down to be very little). Nowadays the small bags are often only 6 ounces and even when they’re on sale 2/$5 or 2/$6, you’re still only getting a total 12 ounces. Buying big bags usually ended up costing more per ounce because they were never on sale. Then add in the flour, yeast, tomato sauce, olive oil (or soybean to be cheap), and a topping or two, and it really adds up! Plus, my gas bill was higher for using the oven so much.

Conclusion? Making pizza for yourself is not only too expensive, but it’s also very time consuming… especially the part where you have to wait for the dough to rise!

Ordering out pizza is the way to save money…

If done correctly, ordering out pizza can save you a lot of money! Here are a few ideas to do it on the cheap:

(1) $5 large pizzas: You get a 1-topping for $5 plus sales tax. Little Caesars is really who’s responsible for this trend; by changing their business approach to this model they have also forced competitors to offer similar deals (i.e. Dominos 5-5-5 deal). Trust me, it would be pretty hard to make something this filling for this price at home.

(2) Multi-pizza deals: Even if you’re just a bachelor, buying several at once may be the way to go if the price per pie is a lot cheaper. What I would do is eat one and freeze the others in big Ziploc bags.

(3) Coupon deals: So if you’re not that frugal and want to splurge on a specialty with a bunch of toppings, just make sure there’s a good coupon for it.

So what’s the wrong way to do it? Well at most chains, it’s usually a big ripoff to order at menu price. Without a deal or coupon, you are getting hosed… especially if you get a lot of toppings.
The other wrong way to do it is not tipping the delivery guy (like Jeff!) generously. Remember just like waiters, drivers are dependent on tips to make their money. Not to mention, they are saving you the time and expense of driving to get it yourself. If you can’t afford to tip fairly or are too cheap, then you should not be getting delivery.

Now let’s talk about cash back credit cards…

Just like ordering out pizza can save money on eating, so can cash back credit cards to a lesser degree. But you’re also going to get ripped off big time if you don’t do it right.

Some of the best cash back credit cards on the market give a 5% rebate at grocery stores. For example, the American Express Blue card does, but the catch is you don’t start earning that until after your total spending reaches at least $6,500 in a calendar year. Meanwhile some cards like Citi Dividend and Chase Freedom used to offer 5% all year long at grocery stores, but they have since watered down their reward programs (in my Chase Freedom card review and Discover More card review I talk about how they only include grocery stores 3 months out of the year). So these cards may not give much, but they still can save a few bucks on groceries if used correctly.

But for some it’s best to avoid these credit cards altogether!

Even the best cash back credit cards are a bad choice for many consumers. Here’s why:

(1) Carrying a balance – If having one of these cards is going to lead to you carrying a balance, then you should avoid them, plain and simple. In general, reward cards have outrageously high interest rates. So carrying a balance just one month can be enough to easily wipe out any rebate you may have earned on groceries.

(2) Spending more than normal – For some, the idea of getting a rebate leads to spending more than they normally would. So instead of saving money, they are actually wasting money! Will having a grocery rebate credit card lead to you splurging on an item or brand you wouldn’t normally buy? If so, DO NOT USE THESE CARDS!

(3) Poor money management – The great thing about cash is it forces us to live within our means. Instead of spending “invisible money” with credit cards, we have tangible limits on how much we can spend. Cash back credit cards just don’t make sense unless they are used with extreme discipline… and that means keeping track of exactly how much you’re spending and on what. If you can’t or think you will have problems doing that with a credit card, then it would be best to avoid using one.

Conclusion?
When done properly, eating pizza can save a lot of money on your food budget and cash back credit cards can save a little too. However if you don’t approach each the right way, you are going to end up wasting money instead of saving it!

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