Everyone reading this probably knows that the Citi Double Cash earns 1% on all purchases and an additional 1% when you pay for the purchases (as long as you pay the minimum due). The question of whether the Citi Double Cash is truly 2% cash back rests with one little quirk: if you redeem your cash back as a statement credit, that redemption does not count as paying for the purchase and does not give you an additional 1% cash back. Ergo, you do not get a full 2%.
Another question then arises: if redeeming cash back for a statement credit on the Citi Double Cash does not earn the full 2%, is there a redemption option that does give the full 2%? Yes, indeed!
There are four ways to redeem cash back:
- Request a check for at least $25, up to the total cash rewards balance at the time you redeem;
- Redeem for a statement credit to your card for at least $25, up to the total cash rewards balance at the time you redeem;
- Redeem for a gift card in set denominations;
- Redeem for a credit to your linked Citi savings or checking account, or to a checking account from which you have paid a Citi credit card bill at least two times.
Methods #1, #3, and #4 do not affect the amount you pay on the Double Cash and so give you the full 2%. Obviously, you probably don’t want to redeem for gift cards and having a check mailed is rather annoying, so the best option is #4.
Realistically, though, there’s no disadvantage to using method #2. Even though you don’t get a full 2% in cash back, the difference is less than $20 per $100,000 spent and that’s a level at which it isn’t worth optimizing—choose the option that’s easiest for you!
If you’re thinking of applying for the Citi Double Cash, you’ll probably want to read out post “Things Everybody Should Know About Citi Credit Cards” first. (and note that Citi allows you to product change a card from a different product family to the Citi Double Cash, so you don’t necessarily need to apply to get the card.)
Questions, comments, etc. can be dropped below!
h/t forgotten commenter who asked me to cover this months ago.
drop a line below and I’ll credit you!
I noticed since I have been doing more bank account CC funding I find myself desiring to pay off most of the balance before it’s even been billed as due. Back in the olden days, I used my 25 day grace period for all it was worth, but typically I wasn’t spending more than a few hundred a month unless a big expense hit. I just worry that having a giant jump in debt might look bad to a bank for my latest bonus chase, so I opt to kill most of the debt before it posts to my credit report. I guess I could be wrong and right for doing so.
DoC,
William Charles 
sirtheta
So… all the debating aside about this 2% card being 1.99% or 1.98%… if I pay off the balance before being billed, am I denying myself from earning about 1% of the cash back earned? Not .01%, but one full percentage point, because I spent and paid off in the same cycle. Thanks!
LOL. Stop stalking me. Seriously though, I am new to the Citi double cash. Pretty sure we are just getting screwed out of a very small portion of the 2%, equivalent to taking the cash back statement credit.
I guess I am/was under the impression the purchase tracker resets every month. Maybe it doesnt. Ill back off until i see the current months statement. Here is last.
https://drive.google.com/file/d/1gzwhAb1K3xW6C_GO-jhL7X_Dcn49luM_/view?usp=sharing
I think how it works is that purchased total is a rolling number and gets reduced by the payments made. It really doesn’t matter when you pay it. A lot of people don’t pay off their credit cards every month… As long as you don’t pay in more than you purchased I think we still get the 2%. But math is not my strong suit.
I am sure there’s some non Noobs around that can explain this so we can understand.
Assuming your not making early payments, there is probably a bigger impact from the interest you could receive on the cashback in a high-yield account between when the cashback is issued and your next payment is due.
Such articles get posted when you don’t have anything worth
We all write articles that we find interesting/useful. I actually liked this article from Sirtheta, not every article is going to be amazing for every reader.
I have no problem having a check mailed to me since I like to mix in a few smaller random amount checks when I am depositing MOs. Probably has no effect but I like to think that doing that reduces the risk of scrutiny of depositing MOs.
I know the general approach that is acceptable to the IRS for tax laws about credit card rebates. However, I was very clearly told this by Citibank customer service. You can try it and see what happens if you want to test this concept.
That’s mentioned as method #4 🙂
If you redeem $600 or more in a calendar year (or if you redeem credit card rewards and receive any Citibank fee waivers that add up to $600 in a calendar year ), Citibank will report this income to the IRS and will send to you a 1099 reporting income for tax purposes. So, hold off redeeming when you approach $600 and save that redemption for the following year.
I’ve had my double CB card since 2014 when I accepted their targeted sign up bonus of $200. I have never gotten a 1099 for all the CBs I earned even if I redeemed it the day after my statement closes.
You’re confused. It’s a loss of 1% of 1% or 0.01%.
Not quite. Let’s say you charge $10,000, yielding $100 in cash back. Redeeming that leaves a balance of $9,900 and paying that off yield $99 in cash back. With this first pass, the loss is indeed 1% of 1%, which is 0.01% and yields a % cash back of 1.99%.
However, presumably you will redeem in the future as well, no? So when you charge another $10,000, you will earn another $100 cash back in addition to the $99 you already have. If you redeem that $199, you have $9,801 to pay off yielding another $98.01 cash back. In this case, the loss is 0.5% of 1% plus 0.5% of 1% [= 1% of 1%] plus an additional 0.5% of 0.99% [0.5% instead of 1% because the original 0.99% was on an amount that doubled]. So the loss has increased to 0.01495% and yields a % cash back of 1.98505%.
So the figure can differ quite a bit, and that’s really what the companion post is about, at https://www.doctorofcredit.com/citi-double-cash-2-00-1-98-mathematical-analysis/
But, as I mention in the post there’s really no reason to worry about it.
You’re confusing yourself here. The new cash back in that scenario is $100. When you redeem that as a statement credit, you will be earning another $99 on the remaining payout. Again 0.99%.
Likewise when you redeem that $99 as a statement credit, you will receive 0.99% on that once again. It’s always 1% or 0.99% on the payment side.
By your argument if you only charged $99 on the second cycle and redeemed your $99 as a statement credit for that $99, you’d have earned 0% cash back making it a 1% card.
That’s just silly logic.
You can do the math yourself—the difference in our scenarios is that you are neglecting to include the $99 in cash back from the statement credit in the second go-round, which changes the % by a bit. You can only always earn 1.99% on average if you don’t use the pay-off cash back as a statement credit in the future.
If you start at $10,000, redeem $100, and pay the remaining $9,900, you will have $99 in cash back left. If you then charged $99 you would earn $0.99. Redeeming $99 in cash back to wipe that would give you a total cash back of $100 + $99 + $0.99 = $199.99, against charges of $10,099. The % cash back in this scenario is 1.980295%.
Locally, yes, you have only earned 1% on that $99. But locally is misleading, when taken as a whole, you’ve clearly earned more than 1%—which is how my comment proceeded.
(In my previous comment, I neglected to total everything up and show that the percentages are the same—it’s $100 + $99 + $100 + $98.01 = $397.01, against charges of $20,000. The % cash back is indeed 1.98505%).
This is getting pointless. You earn 1% when you make purchases and 1% when you make payments. You earn 0% when you redeem statement credits. So you lose 1% of 1% potential cash back when you redeem a statement credit.
If you redeem multiple statement credits you drop to 0.99% of 0.99%.
Well, yes. 1% of 1% assumes you are redeeming cash back solely from the 1% cash back for charging a purchase. My argument is, as you say, that the number changes if you are redeeming from other sources or multiple times. So 1.99% (or a loss of 1% of 1%) is an upper bound, not the average % cash back.
Forgot the plug:
https://www.doctorofcredit.com/12-things-everybody-should-know-about-citi-credit-cards/
good catch — thanks!
After the statement cycle closes (and the cashback posts) I login to Citi and either do statement credit or request a check if I need to boost activity on a checking account and I can deposit it via the mobile app.
Requesting a check seems like the worst option because then you run the risk of the check getting lost in the mail and you forgetting that you had a check cut.
Personally I try to keep my life simple and the less thing I need to worry about, the better.
What can I say, I like to MS dangerously, I even mail MOs out. J/k on the danger part, I do set myself reminders for each MO and check redeemed. I’ve yet to have a problem, and even if I do it isn’t without recourse, but at that time I’ll definitely reconsider.
I tend to consider real life possibilities with such things, as opposed to merely theoretically speaking.