Citi DC redemption strategy.

[MissCredit9]

I'm not sure if anyone has posted about this already but something recently occurred to me regarding the citi DC card. If 1% of the 2% is gained at time of purchase and the other 1% is gained at the time pf payment then it would be best to redeem rewards in the form of a check vs a statement credit correct? A statement credit would essentially cut into the repayment portion of the 2%. Therefore the only way to acheive the full 2% would be through a check.

[Anonymous]

Yes, redeeming for statement credits will only net you 1.99% on your purchases.

[MissCredit9]

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@Anonymous wrote:

Yes, redeeming for statement credits will only net you 1.99% on your purchases.

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can you explain the math on that? For some reason it seems like it would be less.

[Anonymous]

When you make a purchase, you get 1%.  When you pay you get 1%.  By redeeming as a statement credit, you're paying off 1% of the charges and losing rewards on it, thus losing 1% on the 1%.

0.01 * 0.01 = 0.0001 = 0.01%

2%-0.01% = 1.99%

Essentially, you'd be losing a dollar for every $10,000 you spend.  While this seems insignificant, and probably is, it'd still bother me enough to PIF using my bank and reap the full 2% reward.

[Anonymous]

You gain 1% regardless. When you take a statement credit, you lose the 1% you would have taken on the statement credit. People interpret this as losing 1% of the 1%, since it is only on the pay-off part. However, I think that you are correct in asserting that you would lose up to 2% of the 1%, which still leaves you with 1.98% back. Remember that the statement credit cannot exceed the cash back (up to 2%) that you've already received. 

[Anonymous]

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@Anonymous wrote:

You gain 1% regardless. When you take a statement credit, you lose the 1% you would have taken on the statement credit. People interpret this as losing 1% of the 1%, since it is only on the pay-off part. However, I think that you are correct in asserting that you would lose up to 2% of the 1%, which still leaves you with 1.98% back. Remember that the statement credit cannot exceed the cash back (up to 2%) that you've already received. 

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Sorry, but your math is off.  If you consistently cash out via statement credit, the highest you stand to lose is 0.01%.  Hypothetically, if you let your cash back build up over a number of statements and are able to PIF using statement credits, you would only earn 1% for that statement, but over the life of the account the value would still be >= 1.99%

[SouthJamaica]

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@MissCredit9 wrote:

I'm not sure if anyone has posted about this already but something recently occurred to me regarding the citi DC card. If 1% of the 2% is gained at time of purchase and the other 1% is gained at the time pf payment then it would be best to redeem rewards in the form of a check vs a statement credit correct? A statement credit would essentially cut into the repayment portion of the 2%. Therefore the only way to acheive the full 2% would be through a check.

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That's a very good point, and you're right. But depending on how much you use the card, it might or might not be worthwhile to worry about it.

Example: Each month I make $1000 in purchases and $1000 in payments.

                  My statement at end of month says I'm issued $20 in rewards.

                  If I redeem by statement credit instead of check, my payments for month 2 are $980 instead of $1000, so that my rewards for month 2 will be $19.80 instead of $20, so I will lose 20 cents.

Example 2: Each month I make $10,000 in purchases and $10,000 in payments.

                     My statement at end of month says I'm issued $200 in rewards.

                     If I redeem by statement credit instead of by check, my payments for month 2 are $9800 instead of 10,000, so that my rewards for month 2 will be $198 instead of $200, so I will lose $2.

It's possible that for $2 I might opt for the check, instead of the statement credit. But it wouldn't be worth my time to waste time with a check deposit for 20 cents.

[Anonymous]

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@Anonymous wrote:

When you make a purchase, you get 1%.  When you pay you get 1%.  By redeeming as a statement credit, you're paying off 1% of the charges and losing rewards on it, thus losing 1% on the 1%.

0.01 * 0.01 = 0.0001 = 0.01%

2%-0.01% = 1.99%

Essentially, you'd be losing a dollar for every $10,000 you spend.  While this seems insignificant, and probably is, it'd still bother me enough to PIF using my bank and reap the full 2% reward.

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Did you work up this math right before you used the wrong rewards card to pay at the bar LOL. I couldn't resist. It sounds good to me.

[SouthJamaica]

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@MissCredit9 wrote:

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@Anonymous wrote:

Yes, redeeming for statement credits will only net you 1.99% on your purchases.

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can you explain the math on that? For some reason it seems like it would be less.

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I think it's 1.98%

[Anonymous]

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@Vulcan1600 wrote:

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@Anonymous wrote:

When you make a purchase, you get 1%.  When you pay you get 1%.  By redeeming as a statement credit, you're paying off 1% of the charges and losing rewards on it, thus losing 1% on the 1%.

0.01 * 0.01 = 0.0001 = 0.01%

2%-0.01% = 1.99%

Essentially, you'd be losing a dollar for every $10,000 you spend.  While this seems insignificant, and probably is, it'd still bother me enough to PIF using my bank and reap the full 2% reward.

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Did you work up this math right before you used the wrong rewards card to pay at the bar LOL. I couldn't resist. It sounds good to me.

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My bonuses are far more complicated :-(