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This Is the Best Rewards Credit Card for the Average American

By John Maxfield - May 1, 2016 at 2:15PM

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The best rewards credit card for the average American also happens to be the simplest.

Image source: iStock/Thinkstock.

Picking a rewards credit card can be a challenge, given the large number of options available. But for the average American, the best rewards card also happens to be the simplest: the Citi Double Cash Card issued by Citigroup (C -0.23%).

The Citi Double Cash Card at first doesn't seem to be anything to write home about. Users earn 1% cash back on all purchases, and a second 1% cash back when you pay your bill. This means that if you pay your bill in full every month, you'll earn 2% cash back on all your purchases.

That's great, but it pales in comparison with the top tiers of other rewards programs. Citigroup's co-branded card with Costco (COST 0.26%) serves as a case in point. When it's released later this year, its users will earn 4% back on gas, 3% back on restaurants and eligible travel, 2% back on Costco purchases, and 1% back on everything else.

Image source: Citibank.

The Blue Cash Preferred Card issued by American Express (AXP -1.91%) offers another example. Its users earn 6% cash back on purchases at U.S. supermarkets, 3% back on gas and purchases at select department stores, and 1% back on everything else.

Based on these percentages, then, you would be excused for concluding that Citigroup's upcoming co-branded card with Costco and the American Express Blue Cash Preferred Card are superior to the Citi Double Cash Card. But this just proves that appearances can be deceiving.

There's no question that the average American could benefit from earning 4% cash back on gas (as is the case with the soon-to-be-released Costco card) and 6% back on purchases at supermarkets (via the American Express Blue Cash Preferred Card). For the average American, however, the single largest category of expenditures is "all other" or "everything else."

You can get a sense for this by looking at the average American's budget, which is broken down in the following table:


A Typical American's Expenditures

Percent of Total Expenditures










Personal insurance and pensions









All other



Cash contributions



Apparel and services






*Transportation includes gas ($2,094), vehicle purchases ($3,723), and other ($3,498).
**Most people spend half their food budget at restaurants and half at grocery stores.
***Includes health insurance costs of $2,972.
Source: Bureau of Labor Statistics, Consumer Expenditures Midyear 2015 Update.

All told, the average American last year spent an estimated $20,998 on credit card eligible expenditures -- this excludes housing, health insurance, cash contributions, education, personal insurance, and vehicle purchases. Within that were gas purchases of $2,094, restaurant and grocery purchases of approximately $3,443 each, and travel expenditures of somewhere around $3,000.

With these figures in mind, the average American could get an estimated maximum of $420 in cash back by using the Citi Double Cash Card, $347 from Citigroup's co-branded card with Costco (after subtracting the annual fee, which doubles as a Costco membership), and $349 back with the American Express Blue Cash Preferred Card (after the $75 annual fee). These are all in the same ballpark, but there's nevertheless a clear winner.

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Stocks Mentioned

Citigroup Inc. Stock Quote
Citigroup Inc.
$47.10 (-0.23%) $0.11
American Express Company Stock Quote
American Express Company
$138.95 (-1.91%) $-2.71
Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
$469.84 (0.26%) $1.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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