The best rewards cards for credit card deadbeats

The credit card industry refers to people who use their credit cards frequently, but then pay the balance in full every month as “deadbeats” or “freeloaders.” Why such a negative term for people who are diligently and responsibly taking care of their finances? Because the card companies can’t charge them any interest. (Don’t feel bad for them, though, they still make money on transaction fees charged to the seller every time the card is used to make a purchase.)

Bankrate recently ran a column featuring responses from readers as to what cards were their favorite “freeloader” cards. Of course, if you’re a freeloader, you don’t care what the interest rates are, or the late fees; you’re just looking for cash back or other rewards programs. The top choices: Discover, the Chase PerfectCard, and the Citi Dividends Platinum Card.

Here are the responses from readers:

Discover was very popular for its cash-back feature. And Lloyd W. wrote about the special offers that Discover runs during the year, which I was unfamiliar with:

Our regular Discover card gives 1% back, but gives more on certain promotions during the year that last for about 90 days. One special they had last year was for dental work — 5% — just when I needed a root canal & other work. Never saw that offer again. (Hope I never need another root canal again either.)

The other big fave is the Chase PerfectCard, which a handful of readers told me about. In explaining why he likes this card, Frank F. wrote that the Chase PerfectCard:

* Gives a full 1%/3% rebate, no sliding scale (such as Discover, where you have to spend tens of thousands to get the full 2% back),
* Has no limit on how much you can earn in rebates (most cards cap the max in a year at $300),
* The rebates are automatically applied to your next month’s balance, which is super convenient (most cards send you a check and then only when you reach a certain amount (like $50) or you have to request it).

Cortni M. sang its praises, too:

My husband and I currently have every bill we can (in addition to groceries and gas) charged to a Chase PerfectCard. We earn 3% back on all our gas purchases and 1% on everything else. They just credit each month’s balance with last month’s credit amount. We usually get anywhere from $20-$40 back each month. And it’s great when we buy a large purchase. Even when we have the cash to pay for a large item, we’ll still charge it and pay it the next month as well as earn 1% back on the purchase!

Another popular card is the Citi Dividends Platinum Card, but a few readers told me that recent changes to the card have caused them to start looking for another favorite:

Erika H. writes that she has left her Citi Dividends card behind for this reason:

They offered me bonus cash back for signing up my Internet service to be paid automatically with my card, and I did it, and subsequently they did not give me the bonus, because of some technicality that I still don’t understand! So, now I use the Chase Freedom Visa and I get 3% cash back on whatever my top 3 spending categories are per month. Plus, I get 1% back on everything else.

Chris B. is also dumping Citi Dividend because of changes to the card:

My favorite card is the Citi Dividends Platinum card. Up until next month, I have been getting 5% back on grocery, gas, and drug store purchases, and 1% back on everything else.

However, I recently got a letter stating that they will be revising the offer to 2% on gas, grocery, and drug store purchases, are adding a 2% reward for utilities, and still 1% for all other purchases. And I don’t have a choice in the matter.

I’d add that I currently get 1% back on purchases from my American Express card - I don’t get cash back, rather, gift cards, but I can get them from a variety of major retailers, including Home Depot, Macys, Banana Republic and the Gap. Discover Card doesn’t really seem worth it to me — it starts out at only .25% on the first $1,500 in total annual purchases, then goes up to .50% on your second $1,500 in total annual purchases, until finally you get to 1% on purchases in excess of $3,000 in annual purchases. That’s all in annual purchases which means that the whole cycle resets itself every year, putting you back at .25%. They do have some promotions that offer 5% on certain featured types of purchases (currently gas and hotels, next month it’ll be restaurants and movies). However, not everyone accepts Discover card, which makes it harder to rack up the required amount of purchases to get the big cash back…

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