Editorial Policy

New Citi card doubles down on cash back

Tina Orem

October 2, 2014

In blackjack, where the objective is to collect playing cards that add up to 21, one of the best ways to win money is to double down. When you double down, you double your bet after receiving your first two cards. If the next card gets you closer than the dealer to 21, you'd win, say, $1,000 instead of $500 (or for more timid gamblers, $10 instead of $5).

Doubling down is exactly what Citi is doing with its new Citi Double Cash card, which offers 2 percent cash back rather than the far more common 1 percent back.

Here's the deal: Make a purchase with the card, and you'll earn 1 percent cash back at the time of each purchase. For every dollar in credit card payments you make, you'll earn another 1 percent cash back. There is no annual fee.

But here's the bet. One thing about this card that — in Vegas terms — doesn't “favor the house” is how customers earn cash back. Some cash-back cards offer far more than 2 percent back on purchases, but often those cards only offer those higher percentages for a certain period of time, or they have limits on which purchases count.Click to email me

Therein lies the gamble. In blackjack, the reason doubling down is so favorable is that you're doubling your bet only when you have the best opportunity to beat the dealer. The same principle holds here. If you use your credit card mostly for groceries and gas, cards that reward for those purchases might be better bets. But if you use your credit card more for restaurants, subscriptions, online shopping, big-ticket items and other non-grocery/non-gas items, you'll probably earn more cash back with the Citi card. There's also no cap on the amount of cash back you can earn, either.

Remember, of course, that half of the cash-back earnings come from purchases and half come from making payments on your card. You have to make at least the minimum payment due each month in order to get the deal, so no slacking. Making larger payments sooner means cash back sooner, anyway. Also, you don't earn cash back on balance transfers, cash advances, account fees, interest or returned items.

The Citi card has a 0 percent APR for the first 15 months; after that you'll pay at least 12.99 percent. That's not so bad, considering that you'll be hard-pressed to find a credit card that doesn't carry an interest rate in the double digits. But you'll only get that rate if you have stellar credit. Some people might pay 17.99 percent or even 22.99 percent, according to their creditworthiness.

If that 0 percent rate is tempting you to transfer a balance over from another card, know that it applies to balance transfers for 15 months after the first transfer, but you have to make them within four months of opening the account. And there's a fee for balance transfers — $5 or 3 percent, whichever is higher. That means moving $1,000 from another credit card will cost you $30.

The card comes with a “late fee pass,” which allows customers to get away with one late payment before getting walloped with a $35 fee. After that, your rate will skyrocket to 29.99 percent and it'll stay there indefinitely, according to the terms and conditions.

Once you've accumulated at least $25 in cash rewards (you'd need $1,250 of purchases and payments to get that, by the way), you can request a check, have Citi apply it to your balance or redeem it for a gift card. Beware: They expire if you haven't earned any cash back from purchases or payments for 12 months.

So, as they say in blackjack, if the size of your bet when you double down makes you sweat, then you're playing at table stakes higher than you should be.