Normally, I use my points and miles on travel to take some really amazing trips, such as this $53,000 two-week trip to Japan. But these days, I’m sitting on about 1.5 million points and miles with no immediate travel plans due to COVID-19. Maybe it’s time to earn some cash back instead! In today’s post, I answer the question: What’s a good credit card cash back strategy?
ANSWER: Combine a strong cash back card with another credit card that offers flexible travel benefits.
By pairing a cash back card with a travel card, you can earn significant cash back now, and you have the ability to change your mind in the future. Some cards allow you to consume your rewards in cash – OR to transfer them to travel. So without further ado, let’s talk about a good credit card cash back strategy!
In This Article...
Pair a strong cash back card with a Citi ThankYou Points-earning card
A good credit card cash back strategy is to pair a cash back card with another card that allows you to earn “transferable points.” These are points that can be redeemed at multiple different travel companies. You’ve probably heard of Chase Ultimate Rewards. Citi ThankYou Points is another transferable point “currency,” if you will. And Citi itself offers two of the strongest cash back credit cards on the market:
(1) Citi® Double Cash Card
The Citi® Double Cash Card is, IMHO, the single strongest pure-cash-back card on the market right now. It earns 1% cash back on every purchase, plus another 1% cash back when you pay off the card. This is effectively 2% cash back, as long as you don’t run up a balance (and you never should!).
Some key details:
- Earning rates: 2% cash back on ALL categories if you pay in full
- Annual fee: $0
- Signup bonus: None
- How to redeem points: Redeem in $25 minimums (via check or statement credit), or transfer to Citi ThankYou Points if you have a Citi Premier or Citi Prestige card
A big plus: This card has a $0 annual fee!
Be aware that you don’t get a signup bonus, and the card does charge 3% foreign transaction fees. On the plus side, you get a free ShopRunner membership for free two-day shipping and returns at select stores.
2% cash back on all purchases in a no-annual-fee card is a pretty strong offering. However, the biggest reason this should be part of your credit card cash back strategy is because, with either a Citi Premier Card or a Citi Prestige Card, you can convert your cash back to Citi ThankYou Points. (This is ONLY possible if you also have a Citi Premier Card or a Citi Prestige Card. See below for more details!)
(2) Citi Rewards+® Card
The Citi Rewards+® Card is another strong card that can be paired with the Citi Premier or Citi Prestige to convert to transferable ThankYou Points. Note, this isn’t really a “cash back” card. Instead of cash, you’re earning ThankYou Points with this card, at a rate of 1 point = 1 penny. And although you’re earning ThankYou Points, they’re only redeemable for gift cards, rather than transferable to travel partners.
- Earning rates: 2% ThankYou Points on supermarkets and gas stations (up to $6K per year); 1% on everything else; AND every purchase rounds up to 10 points.
- Example: Your $2 purchase at 7-11 earns 10 points (equivalent to a 5% rate on a $2 purchase)
- Example: Your $11 soup-and-sandwich purchase earns 20 points (equivalent to almost 2%)
- Annual fee: $0
- Signup bonus: 15K points after $1,000 spend in 3 months
- How to redeem points: Redeem for gift cards at thankyou.com. Or, transfer your points to your Citi Premier or Citi Prestige account to make them usable with travel partners.
The reason I like this card is because, although the overall earn rate is lower than Citi® DoubleCash Card, every purchase rounds up to the nearest 10 points. So if you tend to make lots of small purchases, this is a good card for you. However, bear in mind that while the Citi® Double Cash Card earns actual CASH back, the Citi Rewards+® Card earns ThankYou Points redeemable for gift cards. You get 10% points back for the first 100K ThankYou Points you redeem each year too.
As with the Citi® Double Cash Card, the Citi Rewards+® Card has a $0 annual fee. But a major positive is that they provide you a 15,000 signup bonus, just for spending $1,000 in the first three months!
What cards should I pair with a cash back card?
If you choose to get the Citi® Double Cash Card or the Citi Rewards+® Card, I recommend you “pair” it with a card that earns Citi ThankYou Points that are transferable to travel partners.
You can only transfer your earnings from the Citi® Double Cash Card or the Citi Rewards+® Card to Citi ThankYou Points if you ALSO have a Citi Premier Card or a Citi Prestige Card. This is called credit card “pairing” and is a good credit card cash back strategy. I recommend the Citi Premier Card because you’ll get a 60,000-point signup bonus for $4K in purchases over 3 months, for only a $95 annual fee. As an added perk, beginning in August 2020 you’ll get $100 savings on a $500+ hotel stay once per year, if you book through ThankYou.com. (You likely won’t get elite benefits and may not get the best price through that site, so double-check first before booking.)
The Citi Prestige Card is another card that allows you to redeem transferable Citi ThankYou Points. It gives you more benefits than the Citi Premier Card, but the annual fee of $495 is $400 higher. The signup bonus is 50,000 points for spending $4K within 3 months, or 10,000 less than the Citi Premier Card. Main benefits include a $250 travel credit, Global Entry credit, Priority Pass Select, and a 4th Night Free credit on hotel stays. However, recently the Citi Prestige has pared down this last benefit, limiting it to twice per calendar year and requiring you to book through ThankYou.com, which may charge a higher rate and avoids elite status benefits. For these reasons, I find the Citi Premier Card to be a better value.
How can I redeem Citi ThankYou Points?
The great thing about pairing a Citi® Double Cash Card or a Citi Rewards+® Card with a Citi Premier (or Prestige) Card is that you have lots of options. You can even change your mind about how to redeem your points, as long as you haven’t transferred them anywhere yet!
For example: Let’s say you’re thinking about taking a fantastic trip somewhere – ideas below! – using transferable points. You can get the Citi Premier Card and its signup bonus, and then focus the rest of your earning strategy on either the Citi® Double Cash Card or Citi Rewards+® Card. Then when you’ve got enough points, you can either go forward with your transferable-point-travel plan, or change your mind and get cash back or gift cards instead. This is why having a “pairing” strategy works so well during COVID-19. Things are constantly changing!
Check out the section below for some of those aspirational travel options. Also keep these rules of thumb in mind:
If you know you won’t want gift cards, but only cash back, you should get the Citi® Double Cash Card. This is the only card (discussed here) that will give you actual cash in the form of a check or statement credit. The Citi Rewards+® Card will only allow you to redeem for gift cards.
If you want the option to take some fantastic, aspirational trips, pair either the Citi® Double Cash Card or the Citi Rewards+® Card with the Citi Premier Card. Convert your points from either the Citi® Double Cash Card or the Citi Rewards+® Card over to the Citi Premier Card so that they’re all combined. Then, transfer the combined stash of points over to a travel partner, to redeem those points for maximum travel value. You can change your mind until you transfer those points to the travel partner. Just remember, once you’ve transferred your Citi TYP out of Citi and into a travel provider, you can’t bring them back.
What are the best travel redemptions for Citi ThankYou Points?
Citi ThankYou Points can be transferred to 16 airlines if you have a Citi Prestige or a Citi Premier card. But if you want to get the most bang for your buck (err, point), I think these are the best redemptions:
- Round-trip first class to Japan for 110K-120K points. Transfer 110K-120K points to Virgin Atlantic Flying Club, to fly via Al Nippon Airways, in first class. This was a major part of my $53K, luxury two-week trip to Japan, where I include booking instructions. It was every bit as amazing as it looked.
- Delta award flights. Delta and Virgin Atlantic are partners, and sometimes Virgin Atlantic’s awards are cheaper than Delta’s, for the exact same flight. (See #1 for the most extreme example.) Whether you’re considering a domestic economy trip, business-class to Europe, or anything else, check both Delta and Virgin’s award pricing. Transfer your Citi TYPs to Virgin Atlantic if it costs fewer points.
- Economy flights to Hawaii for 15K points (round-trip). Transfer 15K Citi ThankYou Points to Turkish Airlines, enough to get a round-trip economy flight on United Airlines. This is because Turkish and United are partners and you can transfer Citi TYPs to Turkish. Theoretically, you can get a round-trip business-class flight to Hawaii for only 25K points using the same strategy, which is an even better deal. However, finding this award space is incredibly difficult, which is why I don’t recommend counting on it.
Bottom line
I believe that the best credit card cash back strategy is to pair a card like the Citi® Double Cash Card or the Citi Rewards+® Card with the Citi Premier card. That way, you can earn cash or gift cards, or change your mind and transfer your points for maximum value if/when you’re ready to take a fabulous trip. I hope you enjoyed learning about some of these options! As always, please email me if you have any questions.
Hey there,
Thanks for the interesting post. It certainly makes us want to look more into this travel hacking thing!
Cheers, Dan & Beck | Travel Made Me Do It
Thanks for checking it out! I love travel hacking because it lets me stay in crazy-nice hotels that I’d never pay $500+ per night for. It’s great for other priorities too though, whatever fits your style. Hopefully 2021 will be a better year for travel for all of us!