Last week, Citigroup announced that it was launching a new cash-back credit card called CashReturns Card that offers cardholders unlimited cash-back. The big improvement over ordinary cash-back programs is that they will automatically write a check for the cash-back over $50 without the cardholder having to request it. This is in lieu of the $300 maximum cash-back most cards allow members to earn each year. The interesting twist to this card is that they have reduced the % back on each purchase to 1% in order to offer unlimited cash-back. By reducing the percentage from 2% to 1% and eliminating the 5% on gas and convenience purchases, Citi has basically made it impossible for an average spender to exceed the traditional $300 cash-back limit they removed. But in the process of reducing the cash-back percentage, they are able to create one rule for people instead of various tiers. The gurus at Citi must have seen the Capital One commercials and taken notice. The main implication of this announcement is that consumers want simplicity and they want cash. By combining both in one rewards card, Citi may have created a product that will compete effectively against the tons of other cards on the market.
