credit cards

So, if you've ever wondered which credit card is the best rewards card, this is the blog entry for you.

The candidates:

• Citi Dividend Rewards MasterCard
• Discover Card
• American Express Blue Cash Card

Citi Dividend Rewards MasterCard
This has long been my card of choice. It's a MasterCard, which means that it's accepted anywhere, plus it used to have by far the best rewards program. Until recently, it offered 5% rewards for everything from supermarkets, gas stations, and drugstores. Pretty awesome. It was such a great deal they had to stop doing it. Here's what they offer now:

• 2% back on gas stations, supermarkets, drugstores, convenience stores, and utilities (sans telephone)
• 1% back on everything else
• $300 annual limit
• Can redeem after $50
  

Discover Card
This was my card of choice up till I discovered the Citi Rewards Card. Main drawback is that it isn't accepted at Chipotle (seriously). On the other hand, it's the only card accepted at Sam's Club.

• 0.25% back on the first $1,500
• 0.50% back on the second $1,500
• 1.00% back on everything after $3,000
• 5.00% back on random stuff that's different every 3 months. Now it's travel stuff. Before it was restaurants (which was actually useful).
  
• Exception: 0.25% on warehouse clubs and discount stores
• Can usually get an extra 25% by redeeming gift certificates instead of cash. So $20 becomes $25.
  
• No annual limit
• Can redeem after $20
  

American Express Blue Cash Card
My newest card. One of the reasons I needed to do this analysis. Oh yeah... it's the only card accepted at CostCo.

• 1.0% back at gas stations, supermarkets, and drugstores for the first $6,000 in total purchases
  
• 0.5% back everywhere else for the first $6,000 in total purchases
• 5.0% back at gas stations, supermarkets, and drugstores after the first $6,000 in total purchases
  
• 1.5% back everywhere else after the first $6,000 in total purchases
• No annual limit
• Redeemed annually

The Verdict
Your optimal card use depends on how much you spend for general purchases, meaning purchased made outside of gas stations, supermarkets, drugstores, convenience stores, and utilities (sans telephone). For these purchases, it will make more sense to always use the Citi MasterCard since it pays 2% back, at least until you have spent over $6,000 on the AMEX card.

The following recommendations are ideal for me, since I don't buy much gas, never shop at supermarkets, and rarely buy from drug stores or convenience stores. If you do make a ton of these purchases, then the thresholds will shift. I haven't bothered to calculate that out since it's a ton more work.

• Less than $12,000 annually in general purchases
  Use the Citi Dividend Rewards Card. It offers the flat 1% back, which is better than the graduated reward offered by Discover and the 0.5% offered by AMEX.
  
• More than $12,000 annually in general purchases
  Use the American Express Blue Cash Card. At the $12,000, the advantage of the 1.5% reward kicks in, making it a better choice than the Citi MasterCard which only offers 1% back.

So what about the Discover Card? It's still good for Sam's Club. Plus if they have a 5% reward deal that is useful, then it's the one to use.