Just in time for holiday shopping season, Citi's unwrapping a new cash back credit card that could change the way that you think about earning rewards. Like other popular cards in the category, the Citi® Double Cash Card offers 1 percent cash rebate on purchases. However, in an industry first, the card also gives you another 1 percent cash rebate on your purchases as you pay down your balance.
Here's how it works, based on an illustration provided on Citi's website. If you spend $100 at your favorite clothing store with the Citi Double Cash card, you'll immediately see a dollar added to your rewards balance. Once your statement arrives, you decide to pay down your balance by $50. That puts another 50 cents into your rewards balance. The following month, you pay the remaining balance in full, earning yet another 50 cents. Purchases do not include items returned for credit, balance transfers, cash advances, interest and account fees. (Rebates don't apply to fees or finance charges, just to the amount of each eligible purchase.)
Although you can't redeem your rewards balance until it reaches at least $25, Citi says it won't cap rebate limits or impose category restrictions. Citi's also making the Double Cash card attractive to frequent shoppers by launching it with an embedded EMV chip for chip-and-signature security in the United States, as well as comprehensive fraud protection, damage protection, and warranty extension programs.
The innovative rewards structure reflects a shift in how Americans spend money, and how banks make money from credit cards. By rewarding customers for paying down balances on this no-annual-fee card, Citi can lure shoppers away from debit cards and capture a larger share of transaction fees. Driving the point home, Citi's offering a low introductory rate: zero percent APR for up to 15 months on purchases and balance transfers (keep in mind that there is a balance transfer fee of either $5 or 3 percent of the amount of each transfer, whichever is greater). After the introductory APR ends, the variable APR will be 12.99-22.99 percent, based on creditworthiness.
Although the Discover it® and Chase Freedom® cards both feature select department stores in their 5 percent cash-back rotation during the holiday season, both of those cards cap promotional rewards (5 percent back on up to $1,500 for Discover and for Chase 5 percent back on up to $1,500 in combined purchases each quarter) and restrict other rebates to 1 percent. If you're looking for a cash-back credit card with a consistent, 2 percent rebate that doesn't require special memberships or connections with other bank accounts, the Citi Double Cash card deserves your attention.