Cards without annual fees that let you earn more than 1 percent cash back on every single purchase across the board are pretty uncommon. But Citi just launched a new product that promises to give you 1 percent when you buy something — and another 1 percent when you pay for it.
The Citi Double Cash card offers a unique way to earn “double” cash back on all purchases. Here’s how it works and how it compares to the competition.
How you earn the extra cash back
With most cards, you earn rewards as you make the purchase. Say you have a card that gets you 2 percent back on dining. You eat at a restaurant, pay with your card and, as soon as that purchase is posted to your account, those rewards are yours.
Citi’s Double Cash card works a bit differently. When you pay with your card (for any purchase), you get 1 percent back right away. Want those extra rewards the card offers? You need to pay your card balance on time. Once you make a payment (whether you pay in full, or just the minimum), you get an additional 1 percent back on the amount you pay.
So, it’s not always accurate to call this a 2-percent-cash-back card. For one thing, you’re sacrificing that second round of cash back if you fail to pay on time. Plus, if you redeem your rewards for a statement credit, it will reduce the amount you owe by 1 percent and, thus, the amount you can earn rewards on when you pay the rest of the bill. Still, the card gives you the chance to earn more on your “everything else” purchases than any other no-annual-fee cards offer. Before this card, the Capital One Quicksilver offered the highest rate of cash back on all purchases among no-annual-fee cards — 1.5 percent.
You can redeem your rewards for a statement credit, cash back (check) or gift card (for a minimum of $25).
EMV chip: As an added perk, this card has an EMV chip. It seems like every new card these days is sporting one, but no-annual-fee cards that have an EMV chip are still in the minority.
The EMV chip will allow you to use your card overseas in many cases where magnetic stripe cards aren’t accepted. However, the card unfortunately has a 3 percent foreign transaction fee, meaning it might not be the best choice for purchases abroad. With the U.S. migrating to EMV, though, the card should be increasingly handy state-side over the next few years.
Citi Price Rewind: This benefit (offered on several other card’s in Citi’s portfolio) allows you to monitor price fluctuations after you buy an item. If the price drops within 60 days, you might be eligible for a refund of the difference (up to $300 per item and up to $1,200 per year).
Purchase protection: If an item you bought was stolen or damaged within 120 days of purchase (or 90 days if you’re a New York resident), you can be refunded for up to $1,000 per item.
Extended warranty: If you turned down the extended warranty when you purchased an item, you might regret that decision if the item breaks. This card adds up to an extra year on warranties of five years or less for no additional cost.
Travel protections: You get secondary car rental insurance, trip cancellation and interruption insurance (up to $1,500 per year), and travel accident insurance (up to $250,000).
Citi Private Pass: The Double Cash card gets you access to preferred and presale tickets, as well as access to special events.
What to watch out for
If you carry a balance on the card, that extra 1 percent you get when you pay will be cancelled out by interest. So, while you can earn extra rewards by paying only the minimum, you’re still coming out behind. To get the full potential double cash back reward, you will have to pay your balance in full every month before the due date.
But that’s really no different any rewards card; paying interest cancels out your rewards, across the board, plain and simple. The plus side of this card is that, because you don’t get the extra 1 percent until you pay, there’s an added incentive to pay – and possibly make larger payments or pay in full. If you’re the type to do that anyway, you might not care. But tying rewards to desired behavior could help those who require a little extra motivation.
The competition — what else is out there?
If you want to earn a full 2 percent cash back, there are ways to do that. The Barclaycard Arrival Plus World Elite MasterCard, for example, offers 2.2 percent back on all purchases – but for an annual fee of $89. The only other card without an annual fee that gives 2 percent back on absolutely everything is the Fidelity card from American Express (a CreditCardForum advertising partner). However, you have to have a Fidelity account to get the card.
Also keep in mind there are other no-annual-fee cards that offer 5 percent cash back in certain categories (the Discover it and the Chase Freedom. Depending on your spending, those cards might net you more rewards overall. However, you need to enroll in quarterly categories to get 5 percent back — and those categories have spending caps. The ideal strategy, therefore, might be to combine the Double Cash card with a card that offers elevated category spending. That way, you can get extra cash back within the categories and use the Double Cash for all other spending (and for category spending after you hit your limit on the 5 percent card).
The bottom line: The Citi Double Cash card is likely the easiest way to get a steady higher-than-usual rate of cash back on absolutely everything with no cover charge. It would work well on its own (if you don’t want to mess with chasing rotating categories) — or as a good sidekick to a rotating-category card. Still, keep in mind that things do change, and Citi has, in the past, offered especially lucrative rewards on a card and then pared them back, as some of our forum members are pointing out, citing the Dividend Platinum Select as an example. In addition, during the cards first days, Citi cardholders have been reporting problems product-changing to the Double Cash.
This review was written or last updated on Aug. 28, 2014.