Good news: the most cash back. Bad news: the dumbest way of doing it.
When you open up a savings account, the first thing that you look at is the rate of return. Same with a CD, an IRA, and a reward credit card.
Except with a reward card, you need to calculate how much value you’ll receive for each dollar spent — and if there’s an annual fee. Citi offers its new Double Cash card that offers the best rate of cash-back rewards with no annual fee.
- 2 percent cash back on all purchases. You get 1 percent when you make the purchase, with another 1 percent when you pay the statement.
- No categories or caps to worry about. Other popular cash-back cards feature rotating categories of spending that offer bonuses and caps on the amount of purchases that qualify. This card has none of those restrictions.
- Promotional financing. New applicants receive 15 months of interest-free financing on their purchases and balance transfers, with a 3-percent balance transfer fee.
- One late fee pass. Citi automatically waives cardholder’s first late payment fee — but so will most card issuers if you take the time to ask.
- EMV chip-enabled. This card comes equipped with an EMV smart chip on day one, so it’ll be compatible with the new, more secure card terminals already being deployed around the world and soon in the United States.
- Citi Price Rewind. This service automatically issues refunds to cardholders when their purchases experience a price drop within 60 days.
- No sign-up bonus. Many reward cards offer hundreds of dollars in points, miles, or cash back. This card offers none.
- Overly complicated rewards program. I’m not sure why they couldn’t just offer 2 percent cash back, either at the time of purchase or upon payment. Instead, there’s this confusing 1-and-1 system.
- Foreign transaction fees. You pay an additional 3 percent for each charge processed outside the United States, while many other cards no longer have this obnoxious fee.
- Higher interest rate than non-reward cards. Cardholders who will be incurring interest by carrying a balance — after the 15 month introductory financing expires — are better off looking for the lowest possible interest rate in a non-rewards card.
Regardless of how they do it, 2 percent is the leading rate of return for a cash-back card with no annual fee. While the Citi Double Cash doesn’t make sense for the majority of Americans who pay interest on their credit cards, it’s a great choice for those who pay their balances in full and want the most cash back, with the fewest hassles.