Capital One Cash Rewards For New Comers - Average Credit

Summary - Capital One is one of the rare credit card issuers that has different cards of the same genre for people with different credit histories and credit scores. For example, they have (at present) three cash back cards targeted at different credit spectrum. Each of these cards are slightly different but essentially basic cash back cards. For those with average credit history (or new comers as Capital One calls it), this card may be your ticket to getting a mainstream unsecured credit card.

How Is This Different From Other Capital One Cash Back Cards? - Before we answer this, let's look at how this reward cards works. For regular purchases, you earn the standard 1% cash rebates. But you get to earn 2% cash back for travel expenses (the old formula paid 1% for everything and gave you a 25% bonus at year end, making it a 1.25% card). You can earn unlimited rewards and like all Cap One cards, there are no foreign transaction fees. This card also has no annual fee.

Another feature that is now common among most Cap One cards is that they have an online shopping portal called Perk Central (similar to ShopDiscover and Citi Bonus Cash Center) where they have over 300+ online merchant partners where you can earn "up to 15%" cash rebates when you shop through your Cap One account.

Capital One has two other cash back cards. One is for those with excellent credit and the other one is for those with "average credit". They have the same formula. Both allow you to earn 1% cash back on everything and you get a 50% bonus at the end of the year. That effectively makes it a 1.5% cash back card. The only thing that stands out is that for the card targeted at those with average credit, they stick a $39 annual fee to it!

How Does This Card Compare with Other Cash Back Cards - One of the very interesting feature of this card is that it pays 2% rebates for travel expenses. Not many cards have this feature. The other card that I can think of is the Amex Costco Card also pays 2% on travel. But they also pay 3% on gasoline. So if you are a Costco member, their card looks like a better bet. But Costco is known as one of the more "difficult" Amex cards to get whereas this card is specifically targeted to those with new credit history. So in a sense, we are comparing apples to oranges.

There are two other types of cash back cards in the market today that is worth comparing with this card. Firstly, there are cards that are like this one in that they pay you 1%, but more on certain categories. For example, the Blue Cash Everyday from Amex pays 3% on groceries, 2% on gasoline and department stores. The Bank of America Cash Rewards pays 3% on gasoline and 2% on groceries. So I guess we can say that other similar cards have more than one category where you can earn more than 1% rebates, though none have travel as that category.

The other type of cash rewards card is the rotating category cards where each quarter, there are a few categories where you can earn 5% rebates with spending in those categories. They also all have online shopping portals like Perk Central. Cards in this category would include the Discover It, Chase Freedom Card.

So Should You Get This Card - Firstly, let's just say that there are slightly better cash back cards out there (as seen from the comparisons). But at the end of the day, this card is targeted at those with new credit history and it explicitly says so (unlike other issuers). Therefore, if you have just graduated from college and do not have a long credit history, we would not hesitate recommending this card.