In a previous post, I mentioned that a good credit card will earn you cash back. The two most important things to me in a cash back card are a simple and flexible rewards and no annual fee. If a credit card adds hassle to your life, it’s not worth it. And although cards with fees sometimes have better perks, very rarely are those perks worth the fee. Only after these conditions are met do I start looking at rewards percentages.
In the name of flexibility and simplicity, I immediately rule out all cards that don’t give me straight cash back. Airline miles, hotel points and gift card rewards all limit use of your credit card rewards to specific categories. Sometimes they even limit your usage within those categories by using blackout dates and exclusions. Cash, on the other hand, works on anything.
In the name of flexibility and simplicity I also rule out any cards with rotating 5% categories. Sure, the 5% sounds great, but to get it, you have to log in to your account every 3 months and activate the 5% categories. Even worse, the 5% sometimes entices people to spend more on those categories. A 5% discount isn’t a deal if you didn’t need the purchase in the first place.
My favorite two cards are the American Express Blue Cash Everyday and the Citi Double Cash Card. Both come with no annual fee and straight cash back with no rotating categories. The American Express card gives you 3% back on groceries, 2% on gas, and 1% on everything else. The Citi Card gives you 2% cash back on everything. If you wanted to maximize your rewards, you could use the American Express card just for groceries, and the Citi card for everything else. However, if you’d rather just have one card, Citi Card is your best bet. You’d probably earn a little more in rewards, and American Express is less widely accepted.
Because the Citi Double Cash Card is relatively new, I have not personally signed up for it. Constantly closing and opening credit cards has a negative effect on your score. When I signed up for my credit card, the 1.5% cash back Capital One card (now Quicksilver) was the best straight cash back card. Although it doesn’t earn quite as much as the Citi Card, 1.5% is still pretty good, and I’ve had nothing but a positive experience with it. One neat feature that Capital One offers is automatic rewards redemption. You can set it up so that every time your rewards balance reaches a certain amount, your rewards are automatically applied as a statement credit. This feature may be available on the Citi card, but I don’t know. I can find no mention of it on their website.
Remember though, if you do sign up for a credit card, use it responsibly! Those rewards will not be worth it if you start accumulating interest on the credit card, or if the credit card causes you to spend more than you’ve budgeted. Also, to avoid late fees, make use of the automatic payment feature. Almost all credit cards allow you to autopay your balance in full.
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- While I do strive to only write accurate information and dispense valuable advice, I am not a licensed financial adviser. All information is based solely on my personal experience and personal research and should be treated as such. Find out more.