As long as you manage them well, cash back credit cards can be a great way to get rewarded for purchases you already make. But knowing which cash back credit card to use can be tough.
Blue Cash Preferred® Card from American Express and Citi Double Cash are two popular cash back credit cards that make it easy to earn anywhere from 1% to 6% on every purchase you make. Depending on your purchasing habits, one of them may be a good fit for you.
For personal finance ninjas, you may even want both cards to maximize the cash back you earn. Here’s a breakdown on how they work, how they compare, and which may be better for your purchasing needs.
Blue Cash Preferred and Citi Double Cash Rewards
These two popular cash back rewards cards offer different types of rewards programs that may be more or less exciting depending on your spending habits. Blue Cash Preferred offers bonuses of 3% to 6% on popular categories and 1% everywhere else. Citi Double Cash gives you an effective flat 2% back (1% when you purchase and 1% when you pay your bill) on all purchases.
When using Blue Cash Preferred, you’ll earn 6% at U.S. supermarkets ($6,000 annual purchase limit, then earn 1%), 6% at select U.S. streaming subscription services (like Netflix), 3% back on transit (including rideshare, taxi, parking, train, buses, and more), and 3% at U.S. gas stations. If you spend heavily in any of those categories, the Blue Cash Preferred card is probably best.
However, the 1% back on all other purchases isn’t that great, and it’s half of what you get using Citi Double Cash. If you spend less in the above bonus categories, you may be better off with the Citi Double Cash card, particularly once you take annual fees into account.
Costs and Fees of Blue Cash Preferred and Citi Double Cash
With credit cards, you never pay any interest if you pay off the card in full every month before the due date. Clark and the team firmly believe that you should only use credit cards if you can afford to pay them off completely each month and never miss a due date. If you can do that, the only regular cost you should encounter is an annual fee.
Double Cash has no annual fee. Blue Cash Preferred from American Express charges $95 annually, which is waived in the first year (see rates and fees). That makes Citi Double Cash better for people who are averse to annual fees. It also means you have to make at least $95 per year in cash back with the Amex card just to break even on the annual fee. However, if you do a little math you can see how easy it is to do.
Which Card Makes the Most Sense for You?
According to the U.S. Bureau of Labor Statistics, the average U.S. food budget for food at home is $4,363 per year. If you spend that, you’ll bring home $261.78 in cash back from that category alone. If you spend the typical $1,968 per year on gas, you’ll earn $59 in rewards. Depending on how much you spend on streaming, Uber or Lyft rides, and public transit, you could end up earning far more with Blue Cash Preferred even after the $95 annual fee.
It is important to understand your budget no matter how you spend. That means knowing where your hard earned dollars go each month. If you spend what the average household does on things like groceries, gas, streaming, and transit, you’ll be better off with the Blue Cash Preferred card. If you don’t spend much in those categories, or just really don’t want a card with an annual fee, Citi Double Cash is better for you.
|Welcome bonus||Earn $300 statement credit after you spend $3,000 in purchases on your new Card in your first six months.|
Earn 6% at U.S. supermarkets ($6,000 annual purchase limit, then earn 1%), 6% at select U.S. streaming subscription services (like Netflix), 3% back on transit (including rideshare, taxi, parking, train, buses, and more), and 3% at U.S. gas stations.
|Annual fee||$95, waived in the first year|
Learn More: Blue Cash Preferred From American Express
|Rewards||1% cash back at the time of purchase and another 1% when you pay, for up to 2% total|
Learn More: Citi Double Cash Review
Why Some People May Want Both
One downside of the Blue Cash Preferred card is its low 1% cash back rate on purchases outside of the bonus categories. If you want to maximize your rewards, you may want to consider using both cards. Of course, this means managing two monthly payments. But if you manage them well, that can help your credit score and you still won’t have to pay interest.
Combining the two cards, you can earn the 3% to 6% cash back rates on bonus categories covered by the American Express card and use the Citi Double Cash card everywhere else for the 2% earning rate. This type of strategy works well for expert credit card users. Just be sure you can handle it before diving in with multiple cards at once.
Getting Rewarded for Every Single Purchase
You’ll earn the most rewards if you use a credit card for every purchase. Just make sure those purchases are within your budget so you can afford the monthly payments. Know yourself and your habits to ensure you make the right call when it comes to your payment choices.
If you make regular purchases at U.S. supermarkets, U.S. streaming services, transit, or gas, Blue Cash Preferred is the better of the two cards for your needs. But if you don’t like annual fees or your purchases are spread out elsewhere, Double Cash is an excellent choice.
To see the rates and fees for the American Express cards featured, please visit the following links: Blue Cash Preferred® Card from American Express: See Rates and Fees