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Updated on Wednesday, March 23, 2016
Getting inundated with credit card offers is overwhelming. Points versus cash back, signup bonuses versus dollar-for-dollar matches, how do you know if you’re making the right choice for your reward credit card? What features makes one card more valuable than another?
We’ll get into the details of how to evaluate reward cards with a head-to-head match of two heavyweight credit card competitors: the Citi PremierSM Card and Discover it® Cash Back.
Citi PremierSM Card
Citi provides three different options for its ThankYou® cards, but the one providing the most rewards for your spending is the Citi PremierSM Card. You earn points each and every time you spend, but will be rewarded more generously for certain purchases: Earn 3X Points on Travel, Including Gas Stations, Earn 2X Points on Dining Out & Entertainment, Earn 1X Points on All Other Purchases.
Unfortunately, opting to redeem your points for cash back only nets you .5 cents per point, making your cash back percentage between 0.5%-1.5%.
Points hold more value when you choose to redeem them for travel. Typically, your points are worth 1 cent each in this category, but when you have a Citi PremierSM Card, their value is bumped up to 1.25 cents each. You can also transfer your points to a partner airline miles program to redeem them at a 1:1 ratio. You can get the same 1:1 redemption ratio if you cash in for certain gift cards or call Citi to use the cash back for a mortgage or student loan payment. Some redemption options, however, don’t hold much value such as cash back and statement credit. Both of which are redeemed at 0.5 cents per point.
The Citi PremierSM Card has an annual fee of $95.
Discover it® Cash Back
While point-earning power is fixed with Citi PremierSM Card, Discover rotates the categories and is one of the best options for 5% cash back. Earn 5% cash back on everyday purchases at different places each quarter like grocery stores, restaurants, gas stations, select rideshares and online shopping, up to the quarterly maximum when you activate. The 5% is limited to $1500 spending per quarter, 1% after that. Activation is required.
- January – March 2020 – Grocery Stores
- April – June 2020 – New! The Home Depot (June), Gas stations, Uber, Lyft and Wholesale Clubs
- July – September 2020 – Restaurants and PayPal
- October – December 2020 – Amazon.com, Target, and Walmart.com
All other purchases get unlimited 1% cash back automatically. With Discover it® Cash Back, your cash back holds the same value regardless of whether you choose to redeem it via a statement balance, deposit into an outside account, or gift cards.
As of publication, Discover has a special introductory offer for new customers. Discover will match ALL the cash back you’ve earned at the end of your first year, automatically. There’s no signing up. And no limit to how much is matched.
Pros & Cons
There are positives and negatives to each program, depending on your primary goal when opening an account.
Citi PremierSM Card
Pro: Earn 60,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening. Points are redeemable for $750 in airfare on any airline, anytime with no blackout dates when booked through the ThankYou® Travel Center, or $600 in gift cards when redeemed at thankyou.com.
Con: Points aren’t worth very much. If you opt to get cash back in the form of a check, you’ll only get .5%-1.5% back on all of your purchases. Spending on travel will earn you the most, and when you redeem points for travel you’ll be getting the best redemption value.
Pro: Categories don’t rotate. Earning points with Citi PremierSM Card doesn’t require a calendar or alarm. Because you don’t have to register for higher-grossing categories, you can spend how you normally would without having to think a lot about strategy.
Con: More expensive. Citi’s card comes with a steep annual fee of $95.
Discover it® Cash Back
Pro: The new cardmember offer is worth waiting for. You have to wait until the end of your first year to receive it. However, a dollar-for-dollar match of all the cash back you have earned during the year is worth the wait.
Con: Have to register to earn 5% cash back. In order to get 5% cash back in the rotating bonus categories, you’ll have to remember to register at the beginning of each quarter. If you’re not organized enough to remember, you could blow the biggest earning opportunities with this card.
Pro: Rewards are more valuable. 1 reward point with Citi ThankYou® is only worth 0.5 cents. Even if you spend completely outside of bonus categories, you’d be earning 1 cent for every dollar spent with Discover it® Cash Back.
Other Cash Back Card Options
There are other cash back card options on the market that are more competitive with Discover it® Cash Back. One is the Chase Freedom®card. Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases. Earn a $200 Bonus after spending $500 on purchases in your first 3 months from account opening.
Fidelity® Rewards Visa Signature® Cardpresents a different type of advantage. You earn unlimited 2% cash back on everyday purchases. This eliminates the need to strategize when to buy the things you need, and figure out point conversions.
Just keep in mind, all of these cash back options are only valuable if you pay off your card on time and in full each month. Once you start paying interest it voids the return of earning cash back.
Cash Back Winner
In this head-to-head battle, Discover it® Cash Back dominates when it comes to cash back. The only time Citi ThankYou® points are worth more is when you are spending on travel, and in some cases when you redeem for travel through their Travel Center. For almost all other purchases, Discover it® Cash Back is the better deal.
The information related to Citi PremierSM Card and Chase Freedom® has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.