Cash-back credit cards fall into two basic categories: cards that pay the same rewards rate on all your purchases, and cards that pay higher rewards on certain types of purchases.
The Citi®Double Cash Card is an example from the first category. The Discover it® Cashback Match™ falls in the second. A comparison can help you decide which type of cash-back card is right for you.
» MORE: How to pick the best credit card for you
Rotating bonus categories: Discover it® Cashback Match™
Some of the highest credit card rewards available come from cards that offer 5% back on purchases in specific categories. These bonus categories change every three months. Among such cards: Discover it® Cashback Match™.
This year’s bonus categories are:
| Q1 (Jan. 1 – March 31) | Gas and ground transportation |
| Q2 (April 1 – June 30) | Restaurants and movies |
| Q3 (July 1 – Sept. 30) | Home improvement and Amazon.com |
| Q4 (Oct. 1 – Dec. 31) | Amazon.com and more |
The trick with these cards is to find one that offers bonus rewards in categories where you spend a lot of money, and then direct as much of your spending as you can to the card while the quarterly bonus is in effect. For example, if you have a $1,000 bathroom makeover in mind, you might wait until “home improvement” is a bonus category before heading to Home Depot.
The caveat is that you must remember to opt into, or “activate,” the bonus category each quarter — and you’ll only receive the bonus on the first $1,500 you spend in the designated category. After that, your rewards will revert to the flat 1% you’ll receive on all purchases. That’s still a pretty good rewards rate, but doesn’t match the Citi®Double Cash Card.
If you like the idea of a card with rotating bonus categories, the Discover it® Cashback Match™ is a great option. It has an annual fee of $0, and gives cardholders access to their FICO score and to the extra-high rewards available through the Discover Deals online bonus mall.
» MORE: Full review of the Discover it® Cashback Match™
A flat cash back rate: The Citi®Double Cash Card
If you don’t want the hassle of tracking and opting into bonus categories every quarter — or your spending habits don’t dovetail with the categories on offer — you might be better off with a cash-back credit card that pays a flat rate on all your spending.
For this type of card, the Nerds are partial to the Citi®Double Cash Card. The card rewards you with 1% cash back on all your purchases, and an additional 1% when you pay them off.
The Citi®Double Cash Card rewards structure is great for people who habitually pay their credit card balance in full every month, or people who need a little extra motivation to pay it off.
The card has an annual fee of $0, and offers an introductory APR of 0% for 18 months on balance transfers, and then the ongoing APR of 13.24% - 23.24% Variable .
» MORE: Full review of the Citi®Double Cash Card
Why choose just one?
If you’re really looking to optimize your credit card rewards, getting both a flat-rate cash-back card and one that offers rotating bonus categories is a tried-and-true strategy. The pair we’ve examined above complement each other nicely. You could do a whole lot worse than using this Discover card up to the spending limit on bonus categories and the Citi®Double Cash Card for everything else.
Virginia C. McGuire is a staff writer at NerdWallet, a personal finance website. Email: virginia@nerdwallet.com. Twitter: @vcmcguire.
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