[Update: Some offers mentioned below have expired. For current terms and conditions, please see card agreements. Disclosure: Cards from our partners are mentioned below.]
The Capital One Cash card launched a few weeks ago. I did a review of the card and there’s a lot to like about it. You get 1 percent rewards on everything, plus an annual 50 percent bonus on the rewards you earned during the year.
The Capital One Cash credit card replaces the Capital One No Hassle Cash Rewards Credit Card for excellent credit. There’s also a Capital One No Hassle Cash Rewards Credit Card for consumers with fair credit (FICO score between 650 and 699), and that card is still available. I’m glad because there aren’t a lot of decent rewards credit cards that are targeted to consumers with fair credit.
Anyway, I contacted Capital One and asked what this means for consumers who have the No Hassle Rewards Credit Card for excellent credit. A spokeswoman for Capital One told me that No Hassle cardholders can either keep their cards or switch to the Capital One Cash card. You have to apply for the new card, but it won’t impact your credit score. Just call the number on the back of your card (1-800-955-7070) and let the service rep know what you want to do.
I’ll bet I know what you’re thinking: Which card is better? The answer depends on how much you spend per year on gas and groceries. It also depends on how important certain types of benefits are to you.
[Featured Product: Looking for credit cards for fair credit?]
Let’s look at an ultra simple example and compare them:
You spend $3,000 a month on qualifying purchases and $1,200 of that is spent on groceries and gas.
Capital One No Hassle Rewards Credit Card: 2 percent cash back on grocery and gas purchases and 1 percent on all other purchases.
Cash back per month: $42 (Gas and groceries: $24 (1200 x .02=24); everything else: $18 (1800 x .01=18)
Cash back per year: $504 (42 x 12=504)
Capital One Cash: 1 percent cash back on everything. Every year, a 50 percent bonus on the cash back you earned during the year. (Note: New cardholders get a $100 bonus if they spend $500 within the first three months. Unfortunately, if you’re a No Hassle cardholder who switches to the Cash card, you won’t qualify for the $100 sign-up bonus since you’re not technically a new cardholder.)
Cash back per month: $30 (3000 x .01=30)
Year-end bonus: $180 (30 x 12=360 x .50=180)
Cash back per year: $540
So the new Cash card wins unless you spend an excessive amount on gas and groceries. If you’re thinking about making a balance transfer, be aware that the Cash card has a 3 percent balance transfer fee whereas the No Hassle card doesn’t have one. Another major difference is that you’re getting a third of your rewards at year-end, as opposed to getting the cash throughout the year. If you’re okay with that, it might be a nice way to force yourself to save a few bucks.
But here’s one more thing to consider besides the numbers: This is a World MasterCard so it comes with extra perks, including what’s called a “no pre-set spending limit” and exceptional travel offers.
[Related article: 4 Credit Cards to Help You Save on Gas]
Featured Image: Molly DG, via Flickr.com