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The big buzz is all about those glitzy travel-rewards credit cards, with their eye-popping sign-up bonuses and luxe travel perks (Not to mention annual fees that can set you back as much as $550). And sure, for certain types of travelers and consumers, they're just what the doctor ordered....
An economist, however, might take issue with those doctors, on several grounds. Certainly, as rewards go, travel has proved itself to have a lock on consumers' imaginations out of all proportion to its real value. As Adam Smith might say: Sexy, but overrated. There's also the fact that earning frequent-flyer miles is like investing in a stock whose value is in long-term decline. You're buying when you should be selling.
So, what might a steely-eyed economist be expected to carry in his wallet? The priority would be value, return-on-investment. That's what makes an economist an economist (when he isn't secretly chasing frequent-flyer points).
Cash Is King
Economic value is to be found in cash returned for every dollar spent. That's right, a simple cash rebate, delivered day in and day out, for every purchase. And the bigger the rebate, the better.
It just so happens that there is one cash-back credit card that delivers an industry-leading rebate for all categories of spend, every day. Big advertised rebates are of little value if they're unusable. Get 5.3 percent back on refrigerator purchases every third Saturday of alternating months? Good luck with that.
Here's a value proposition that will bring a smile to a miser's mug:
- Earn cash back twice on every purchase, every day
- No limit on earnings
- No annual fee
The card in question is the Citi Double Cash Card, introduced in 2014 to compete with another cash-back card, the Fidelity Rewards Visa Signature card. (Disclosure: Citi is an Airfarewatchdog advertiser.)
The Citi Double Cash Card rebates you cash back twice: 1 percent when you buy, the second 1 percent when you pay your credit-card bill. Unlike the Fidelity card, the rebate isn’t restricted to a deposit in a Fidelity account. It can be issued as a check, or redeemed as a statement credit or for a gift card. So the Citi Double Cash Card matches the Fidelity card on solid payout and no fees, and surpasses the Fidelity card on ease of redemption.
Stripped of marketing hype, this cash back twice deal may seem like a modest rebate. But don't be fooled: It's among the very highest offered across categories by any credit card. And cash will always trump loyalty points with the same nominal value, since cash can be spent on anything, not just travel.
So, if you're a consumer looking for solid value from a credit card, don't succumb to the siren song of loyalty points that come bundled with travel-rewards cards. Instead, set your sights on the solid, consistent cash back on offer with the Citi Double Cash Card. Your uncle the economist would approve.
If you are a traveler, the Citi Double Cash Card has one notable negative: Foreign transaction fees are charged at a hefty 3 percent. But this is not a card for slapping down in Paris bistros or Hong Kong dim sum parlors. For that, there are, you know, travel-rewards credit cards.
Editor's Note: This content is not provided by any bank, credit card issuer, airline, or hotel chain. Any opinions, analyses, reviews or recommendations expressed here are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by the aforementioned entities.