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Citi Double Cash: a New Cashback Credit Card Option

by on August 29, 2014 · 28 comments

in Barclays, Chase, Citi, Credit Cards, Discover

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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.

Citi Double Cash image 2

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.

Doublecash Citi image 3 banner

Comparison

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.

Chase freedom banner

Conclusion

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.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • Ed

    Irrealistic example. Nobody spends $20,000 annually in non-bonus categories.

  • Wla Home

    Uhm, I do. Hell, I spend a lot more than $20k a year in non-bonus categories!

  • Ed

    Such as..?

  • Wla Home

    You have any idea how much 2 kids in daycare costs? I wish it “only” cost $20k! Amazon payments, water bill, propane bill, general business expenses, etc.. Not everyone eats Top Ramen for dinner every night…

  • Ed

    Utilities can be paid with Chase Ink. Day Carr with AMEX checking funded with prepay cards from Staples.

  • thehogsters

    You forgot the , I spend 5k a month on vgc column. City gets a big fat 0 in that department and essentially worthless to me.

  • Redpanda

    Not everyone has access to the chase ink cards, and a lot of people don’t want to go through the tedious process of grinding gift cards and loading them at walmart (which is out of reach for a lot of people anyway)

  • Greg Haney

    Yes, this. Childcare costs often don’t fit into other bonus categories, so the flat 2% here really is a winner.

  • Rocky Rockwell

    I agree, one of the potential benefits of this card is to simplify your spending. I have neither the time nor inclination to drive across town in one direction to buy reloads and then back across the other direction to deposit them. My time is worth WAY more than the >hour a week I would need to do that.

  • Rusty Longwood

    You’re funny, maybe a troll, maybe just a little dull. What do you think people who make a decent bit of money do? Save 90% and retire in 3 years? Health insurance, car repair, dental work, a few nice suits, hotels outside ones offering a card, membership dues and charitable donations can easily hit $20k. I pay quarterly estimated taxes to the Feds of over $25k quarterly. My reservation on a Tesla was $5k. I’ve taken a number of expeditions abroad for $10-50k that let me put 5k on my card. For me, even Barclay’s extra 0.22% justified the annual fee.

    A lot of people might not have that kind of spending, but it’s not impossible by any stretch of the imagination.

  • Rusty Longwood

    Pumping prepay cards into a checking account is more a MS liquidation method than general spending. But even then, say I’m already MSing those checking accounts to the max and cutting the checks to myself. Better to put the rest on a card than paying less to myself.

  • Matt

    Would you say it’s fair to compare this card more to a fixed earning program like Barclay Arrival? With no annual fee, it seems 2% back would be better than 2.2% with Barclay with the $89 annual fee for the average spender.

  • Rusty Longwood

    For a modest spender, I’d have difficulty justifying holding the Arrival long enough to pay the annual fee vs this card. Free FICO scores come on other free cards and trip it pro is good but not great.

  • Josh

    Seems like a great card. If you don’t do MS, long term it’s the best non-category card unless you spend ~$45k or more, or you get a value of 2+ cents out of UR or MR.

  • SM

    Called about converting to this from a dividend world card… no go.

  • Extended Appendage

    TPG, any opinion/insight on if/when there will be a signup bonus for this card?

  • Sharpened Longwood

    “Health insurance, car repair, dental work, a few nice suits, hotels outside ones offering a card, membership dues and charitable donations can easily hit $20k. . . . For me, even Barclay’s extra 0.22% justified the annual fee. . . . I’ve taken a number of expeditions abroad for $10-50k that let me put 5k on my card.” Paying taxes by credit card incurs a substantial fee, so I assume you include your alleged $100k in yearly taxes just to brag about your income/poor tax planning.

    $30000 * 0.0022 = $66

    The fee is what, $89? Congratulations on losing ~$23, even assuming all that spending was in one year.

  • some guy

    I spend about 20k a year on cards. I primarily max out my freedom with categories and random spending, discover if possible (rarely, although 6 flags popped up and worked out), marriott card for the one night for $85 and use abroad, salliemae for gas and groceries when not a category, i have the quicksilver which i use for monthly subscriptions like my gym membership and EZpass, as soon as this card came out i signed up for it and it shall replace the quicksilver role once i reach the $25 threshold. (tracking subscriptions on a credit card with low # of transactions makes managing easier)

    I milk rewards as much as possible and treat reward programs very competitively, and i really hope a lot of other people do the same, if this gets enough attention this could lead 2% to be the new standard. Chase has recently announced rollbacks in various rewards programs. I really hope Citi gets a lot of attention for this card, and that they stick to the program.

    Sure, it’s just half a percent more and just pennies in a jar… but go try to find a Canadian credit card that comes close to any of the the cards I mentioned. Keep our banks competing for our swipes.

    peace out.

  • Pk

    It is $660 and not $66 as you pointed out . A profit of $571.

  • nycee

    Try again. They started saying yes on 9/7.

  • Jesse

    Just got a bonus offer for this card. My new Citi Aadvantige Platinum Select World Mastercard arrived today, as did a separate envelope from Citi inviting me to apply for the Double Cash card with $200 cash back bonus after spending $1000 in the first 3 months. I’m inclined to go for this as I spend a lot in non-bonus categories.

  • hkg

    Yes… I got my dividend converted to double cash today….

  • nycee

    Nice. I swapped out my old TYP.

  • SA

    Same here. I also got a pre-approved $200 bonus offer with $1000 spending in first 3 months of account opening.

  • joe

    received it. so far I think I like it. escept it may need me to pull rewards out as checks to have full 2%, World Mastercard + citi features, so it’s pretty good.

  • Fred

    Please share the invitation number!

  • pK?

    You’re missing that it’s only the extra .22% that costs the $89. Don’t use the whole 2.22% to offset the fee when you could get the base 2% for free with the above card. Sharp did the math correct sir.

    $40,455 is the annual spending required for the extra .22% to offset the $89 annual fee excluding any other differences in benefits/bonuses.

  • frankrizzo123

    Using Amex checking to pay for Day Care? I’m interesting angle. Mind walking through you process to filling up the account? Any reason why Amex (Bluebird?)?

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