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I like to leverage my everyday purchases to earn miles and points to use for travel. I get the most value for my spending that way, I have the most fun that way, my family benefits the most that way. End of story. However, my story isn’t the same as everyone elses’ story, so I totally get that sometimes cash is king, and cash back cards makes more sense than points for some , especially in non-bonused spending categories.
There are a plethora of cash back cards on the market, but one just came out that is worth a mention thanks to the relatively high cash back rate and simple earning structure.
Citi® Double Cash Card – Earn 1% cash back as you buy and another 1% as you pay
Assuming you pay your credit card bill (and hopefully in the same month to avoid interest), this comes out to 1% + 1% cash back on a card that has no annual fee, no category restrictions, and no caps. That is pretty solid for a cash back card, even coming from a miles addict like myself.
Compare Double Cash Back to Travel Rewards Cards:
Let’s compare that to the Barclaycard Arrival Plus World Elite MasterCard® that awards 2x miles on all purchases since it is one of the more similar cards to the to Citi Double Cash Card in terms of earning (among the cards I regularly talk about or use). They both are essentially earning 1 + 1 cents or 2 points (worth one cent each) with each dollar charged on the card, assuming you pay your Citi bill. The difference is that the Barclaycard will give you a 10% bonus in the form of returned points if you redeem the points toward travel expenses put on the card. The Barclaycard also comes with 40,000 bonus points after you spend $3,000 in the first three months whereas the Citi Double Cash card does not have a sign-up bonus.
So assuming you are going to use your points for travel, the Barclaycard gives a better return at 2.2x instead of a total of 1% + 1%. It has the edge of a sign-up bonus and no foreign transaction fees, but the downside of an $89 annual fee after the first year ($0 intro annual fee the first year). This means it is a clear winner the first year, but not necessarily in subsequent years thanks to the annual fee. There is an annual fee free version of the Barclaycard, but it earns points at a lower rate.
I Still Prefer Miles and Points:
Personally I’m getting higher than 2x for most of my spending thanks to bonus categories on my various rewards cards. For example, I’m getting 4.5x at grocery stores thanks to the Amex EveryDay Preferred via 3x on groceries + 50% bonus if you have 30 transactions in a month. Right now I am using the Chase Freedom® to get 5x at gas stations since they are a 3rd quarter 5x bonus category. I get 2x at restaurants all the time on my Chase Sapphire Preferred® Card, but you could get 3x on restaurants with the Citi ThankYou® Premier Card.
Best of all, those points I am earning with my other cards are worth more than one cent each to me each. That means if I am earning 2x worth of points that are worth say 1.5 cents each to me, I am in some ways getting 3% back in value. Often I am doing even better than that. My non-bonused spending is usually going toward hitting a minimum spending requirement to trigger a sign-up bonus on a new card.
I’m okay with a complex system to maximize my family’s spending, and I value travel highly enough to have most of my rewards for spending come in the form of more travel. That means that this cash back card is not currently high on my radar. However, I still really like that it exists because my priorities today might be different than my priorities down the road. If we came to a point where travel was not a priority, or we were simply done with dealing with annual fees, then having a no annual fee card that gave us 1% + 1% back in the form of cash back would be quite good.
Is a cash back card a part of your overall strategy? Does this new option sound better than what you are already using?
Editorial Note: The opinions expressed here are mine and not provided, reviewed, by any bank, card issuer, or other company unless otherwise stated.