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Discover’s 5% vs. Citi’s Double Cash: Which Is Better for You?

May 25, 2016
Cash Back Credit Cards, Credit Cards
Discover vs Double Cash
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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 – 18 month BT offer is an example from the first category. The Discover it® Cash Back falls into 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® Cash Back

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® Cash Back.

This year’s bonus categories are:

Discover bonus categories for 2018
Q1 2018 (Jan. 1 – March 31)Gas stations and wholesale clubs
Q2 2018 (April 1 – June 30)Grocery stores
Q3 2018 (July 1 – Sept. 30)Restaurants
Q4 2018 (Oct. 1 – Dec. 31) and wholesale clubs

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 in to, or “activate,” the bonus category each quarter — and you’ll receive the bonus only 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 it doesn’t match the Citi® Double Cash Card – 18 month BT offer.

If you like the idea of a card with rotating bonus categories, the Discover it® Cash Back is a great option. It has an annual fee of $0, and it gives cardholders access to their FICO score. It also has a promotion for new cardholders: 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.

» MORE: Full review of the Discover it® Cash Back

A flat cash back rate: The Citi® Double Cash Card – 18 month BT offer

If you don’t want the hassle of tracking and opting in to bonus categories every quarter or if 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 – 18 month BT offer. 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 – 18 month BT offer rewards structure is great for people who habitually pay their credit card balance in full every month and for 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% on Balance Transfers for 18 months, and then the ongoing APR of 15.49% - 25.49% Variable APR.

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 – 18 month BT offer for everything else.

Virginia C. McGuire is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @vcmcguire.