Citi Double Cash: a New Cashback Credit Card Option

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Citi just announced the launch of a new cash back credit card with a unique twist on earning. Unlike most cards, which offer rewards based solely on spending, the Citi Double Cash Card awards 1% cash back per dollar spent, and then offers another 1% cash back as you pay down your balance. The earning structure is set up to reward people for paying off their balances; at the end of the day, Double Cash is a no-annual-fee card with an overall return that’s pretty competitive for those who wish to bank money instead of points and miles.

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Card Features

  • Earn 1% cash back on purchases, with no limit on earnings.
  • Earn another 1% cash back on payments you make toward charges that appear on your current monthly statement, so long as you pay at least the minimum amount due.
  • 0% intro APR for 15 months on purchases and balance transfers (after that, 12.99-22.99% based on your credit worthiness).
  • Get a pass on your first late fee.
  • Other standard Citi benefits like Price Rewind.
  • No annual fee

The cash back rate is consistent; there are no category bonuses.  That can be a positive or a negative depending on how you manage your spending. If you’re diligent about maximizing bonuses, then Double Cash can’t compete with cards like Chase Freedom and Discover It, which offer 5% back in rotating quarterly categories. However, if you prefer to just have one cash back card that you can use anywhere without having to enroll in new category bonuses every few months, then Double Cash could work for you.

Cash back is earned in the form of “cash rewards,” which can be redeemed at 1 cent apiece for statement credits, gift cards, or a check, with a minimum redemption of $25 (2,500 points). It’s not clear what gift card inventory is offered, but the point is moot since there’s little incentive to redeem for gift cards when cash back redemptions are offered at the same rate.

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Notably, Double Cash has no signup bonus. That makes it less attractive off the bat than cards like the Capital One Quicksilver Cash Rewards, which offers 1.5% cash back on all purchases, also has no annual fee, and comes with a $100 bonus when you spend $500 in the first 3 months.

However, a card like Double Cash with a higher cash back return is one you get for the long haul, not for the signup bonus.  If you regularly spend a lot in categories that don’t offer bonuses on other cards, Double Cash can eventually come out ahead.

For example, consider a cardholder who spends $20,000 annually in non-bonus categories. The chart below breaks down the returns over 5 years offered by Citi Double Cash, Quicksilver, and Chase Freedom (which also currently offers a signup bonus of $100 after spending $500 in the first three months). I assumed that spending on Chase Freedom would be one fifth in 5% categories and the rest in regular 1% categories. Also, I left out the 2% cash back Fidelity Amex since it requires you to have a Fidelity account; its earnings would be equal to those of Double Cash.

Double Cash Quicksilver Freedom
Bonus $0 $100 $100
Annual Fee $0 $0 $0
Year 1 $400 $400 $460
Year 2 (net) $400 ($800) $300 ($700) $360 ($820)
Year 3 (net) $400 ($1,200) $300 ($1,000) $360 ($1,180)
Year 4 (net) $400 ($1,600) $300 ($1,300) $360 ($1,540)
Year 5 (net) $400 ($2,000) $300 ($1,600) $360 ($1,900)

Double Cash easily outpaces Quicksilver at this level of spend despite the initial $100 bonus. For higher spending, the difference is more dramatic; for lower spending, Double Cash still wins out in the end, but not as quickly.

The competition with Freedom is closer, but Double Cash does eventually win out in the third year. That’s a somewhat long horizon for maximizing credit card rewards, but the overall effect of the higher base cash back rate is apparent. However, that result depends on how much you can use category bonuses. If you instead put one quarter of your spending into a 5% category on Chase Freedom, then you’ll break even with Double Cash. If any more than one quarter of your spending earns 5%, then Chase Freedom wins, even without the signup bonus.

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The percentage return of Citi Double Cash is strong, If Citi were to throw a signup bonus on top, then Double Cash would be a clear winner over other no-fee, cash back cards. As is, Double Cash still seems like a good bet for those who want to keep their finances simple. If you can maximize bonus categories, Chase Freedom or Discover It will likely get you a better return.  That said, a good strategy for those interested in cash back would be to have both: a 5% back card to use for spending in bonus categories, and Citi Double Cash for other spending.

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