Comparing the best reward credit cards is easy. You review the percentage-back rewards on each category, compare it to your own spending, and decide based on which one will give you the greatest rewards. It’s a little harder to find out if the rewards you get are worth it, as fewer cards offer cash.

Over the next few days I’ll take a look at some of the catalogs of the most popular credit card companies. I’ll give you the lowdown on their products, where you can get the maximum value out of your points, and a closer look at how each system works so that you can decide on which card to use.

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A few years ago, cash back credit cards were everywhere. Today, the offers are harder to find as company hunker down and deal with the financial crisis we’re facing. Despite the economic climate, cash back credits are still out there and you can still get a little cash back on your purchases.

How do cash back credit cards work? Each credit card company does it differently but the basic idea is the same. Every time you make a purchase with the credit card, your cash back or rewards account goes up in value. When you reach a certain threshold, you can cash out your cash back. Some companies will write you a check (Citi), while others will directly credit your account balance (Discover).

Is cash back worth the hassle? The answer is it depends. Some cards offer high cash back percentages on certain purchases and you can optimize your cash back by using several cards. I don’t recommend using more than two or three cards because the return on your time will decrease as you get more cards (you may find it helps to write down the cash back categories on the card itself).

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If a recent Your Take post on credit card credit limits is any indication, there’s no secret to getting a higher credit limit on your card. I thought I was high with a near $70,000 credit limit but plenty of people had total unsecured credit limits in the $60,000 – $100,000 range. While it wasn’t a scientific survey, I wouldn’t surprised to read that, in general, unsecured credit limits are much higher than people expect.

That being said, I think a good way for a consumer to protect themselves from the somewhat unpredictable credit score system is by increase their credit limits as much as possible without increasing how many credit cards they have.

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During a recession, the flow of credit tends to tighten up as banks and lenders take fewer “risks.” The result of this is that people who are credit-worthy but have no credit history, such as students, are caught in the middle. Without a credit history, they can’t get credit cards and loans. With credit cards and loans, they can’t establish a credit history.

An old standby practice, piggybacking, was recently eliminated as the new FICO score rules changed how it treated authorized users. In the past, someone with poor or no credit could “piggyback” as an authorized user on an account of someone with good credit. Many parents put their children on their credit card accounts to help them establish credit, the parents were “co-signing” their child’s debts, so it was perfectly acceptable. Unfortunately, people started abusing this and selling “authorized user positions” on their accounts, some for as much as $500 or $1,000 a piece, so FICO had to respond.

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Well well, it looks like we finally have the return of a long lost cash back favorite from a year or two ago… the coveted 5% cashback on supermarkets, drug stores and gas stations credit card in the form of the Citi Diamond Preferred Rewards card. (if that’s not your thing, here’s my list of the best cash back credit cards)

A few years ago, there were a dozen of these types of cards. In the last year, that number dropped to zero. Those that did exist only offered it on gasoline and imposed ridiculously low limits such as the Discover Open Road card (gives 5% on gasoline but only up to $5 a month!). Back in the heyday, each were vying for “share of wallet,” the industry term for how much of your spending gets put on their card. They often earn a couple percentage points per transaction so the hope is that you use the card for more than the 5% categories, which is a loss leader for them (this ignores the finance charges, fees, and other charges they impose for a variety of reasons).

Looks like they’re making a come back with the Citi Diamond Preferred Rewards card is leading the way.

Any catches? Yes, there are a few. Like all Citi cards, the cashback now comes in the form of ThankYou Network points rather than straight up cash. Those with student loans can convert the points into “cash,” making it a truly 5% cashback card. If you don’t have student loans, you’ll have to take it in the form of gift cards to get a full percentage value. You can always sell the gift cards and still get close to 5% cashback in the worst case.

Another catch is that the 5% promotion is for the first 12 months. I normally don’t like promotional offers (with the exception of when the Citi CashReturns had 5% cashback on everything) but right now this is the only card that offers 5% on the “everyday shopping” category (which includes supermarket, drug stores and gas stations). There are a couple alternatives if you’re looking for a gas cashback credit card, but none exist (to my knowledge) for supermarkets.

Finally, the only limit on cashback is an annual limit of 75,000 ThankYou points – it’s unlikely you will reach that limit ($15,000 in spending in the 5% categories!).

Some other features that may be of interest: 12 month 0% APY balance transfer, no annual fee, 1% cash back on everything else. The 12 month 0% APY balance transfer is nice but it has a balance transfer fee of 3% with no limit, I’d pass on that. The no annual fee is standard and the 1% cashback on everything else is also pretty standard.

Overall, I think this card is a good option if you’re looking for a way to shave 5% off your supermarket and gas bills.

Update: Other 5% Cashback Cards

Since writing the post, I’ve received numerous emails about two other credit cards that offer cash back in this category: Blue Cash from American Express and the Chase Freedom card.

Blue Cash from American Express. The Blue Cash from American Express offers 5% cashback at supermarkets, drugstores and gas stations with no limit whatsoever. The card also offers a 0% balance transfer for 12 months with a 3% transfer fee capped at $99.

Chase Freedom. The Chase Freedom card is a slightly different type of cashback card in that it gives you 3% cashback in your top three spending categories (which can change based on your spending each month). It’s not a 5% card, despite what some people claim, but I mention it because it’s better than 1% and they offer $50 cashback after your first purchase.

This morning I did a little credit card cleanup, reducing the number of Citi credit cards I had from four down to two. I had these open credit card accounts as a result of my balance transfer arbitrage days but they’ve since lay dormant. (In fact, Citi Professional, one of the cards I closed, even has a $100 gift card with first purchase promotion that made the balance transfer arbitrage deal even sweeter)

Why Consolidate?

Having open credit card accounts that you have no prospect of using them is really dangerous for a variety of reasons. First, if you aren’t using it then you probably aren’t carrying it. If you still are carrying it but never use it and you lose your wallet or purse, that’s one more headache you have to deal with. If you leave it at home, you’re likely to lose track of it (I hid all my unused credit cards, now I can’t find them!) so the best option is to get rid of that line of credit. The bottom line is that you don’t want to keep any credit cards you aren’t actively using, so now the decision is how to get rid of them.

To get rid of it you have two options, cancel the card or consolidate that line of credit into another card (thereby canceling it). Canceling a card may damage your credit score because it reduces your amount of total credit and increases your credit utilization. Credit utilization is a calculation of how much of your credit you are currently actively using. If you have $10,000 and you’re using $5,000 of it, your utilization is an even 50%. The lower the utilization, the better. Consolidating retains your total credit utilization, reduces your number of open lines, and is overall a better decision.

Consolidation with Citi

Citi was great to work with. Since I didn’t have the cards (yep, I “lost” them somewhere in our house), I called up their number (1-800-347-4934), told them what I wanted to do, answered some security questions and just rattled off some four digit numbers. They can track all your lines of credit by your social security number alone so the four digits easily identified which cards were being consolidated and to where. The whole transaction took less then ten minutes and now I’m two cards lighter.

Why Not Down To One?

In theory I could’ve but the two cards left at the Citi mtvU card, which is a card I actively use, and a Citi MasterCard that is carrying a 0% balance transfer that is set to expire in a few months.

Remove Cards From Your Account Online

Once the card the removed it should say “Account Alert: This account has been converted to a new number or was closed at your request. If you have any questions regarding your account, please contact our Customer Care Center.”

• If you are signed up for All-Electronic, cancel that first (if not, skip to the next step). Switch to your card, then to to Manage My Account, Paperless Statements, then Cancel. You will have to Cancel your All-Electronic before you can remove the card from your account.
• Next, go back to Manage My Account in the navigation bar, drill down into Update Personal Profile, and select Remove an Account. Select the card from the list and click submit. Confirm that you wish to remove the account and you’re done.

Winter credit cleaning at its best!

Credit card companies are just like every other business. There are essentially three concepts to understand when dealing with a business, especially credit cards:

• They exist to make as much money as possible,
• They have relatively well documented rules and operating procedures,
• They’re willing to break #2 in pursuit of #1.

So, to that end, here are 7 unwritten and often forgotten credit card tricks or “secrets” (I hate the term “secrets” because how much of a secret can they be if I know it?) that may save you a few bucks someday. If you don’t learn a single secret or you have a secret of your own, please let me know! Secrets are better when you tell everyone!

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Do you have a Capital One credit card in your wallet? If you said yes, you’re probably in the minority (at least of the people that I know personally). I don’t have a Capital One credit card and those commercials with the barbarians aren’t really convincing me that I really want one of those credit cards in my pocket. Their flagship card, the Capital One No Hassle Rewards, really isn’t much to write home about!

What you get with that card is 1% cashback followed by a 25% annual cashback bonus. Don’t let the 25% number fool you, 25% added onto 1% is exactly a whopping 0.25%. There are no earn caps, the rewards don’t expire, and there is no-hassle. Whooopeee!

That’s awesome, except my current credit card system leaves Capital One in the dust. When I eat out or go to the movies, the Citi mtvU card gets me 5% cashback. When I buy gas, Discover Open Road gives me 5% cashback. When I make travel purchases, my Costco American Express TrueEarnings card gets me 3% and 1% on everything – no caps. Where does that leave a 1.25% cashback card? No where, I’m not slipping a fourth card into my wallet so I can get an extra 0.25% – even if it never expires.

The only advantage that I see with a Capital One card is the fact that Capital One does not charge foreign exchange fees (for when you use your card overseas) and they actually eat the 2% fee that Visa/MasterCard charges them, which is a nice gesture.

Capital One – Give better rewards if you want to be what’s in my wallet.

There are five finance related accounts in the personal finance world that I think every single person must have and they should get it as soon as possible. They run the gamut of the obvious, an accessible checking account, to the not so obvious, a high yield savings account (as surprising as it sounds, this is not obvious to most people because they are amazed when I tell them you can get 5% from a regular savings account). So, please enjoy this list of five accounts you absolutely must have and three that you absolutely must avoid.

These Five Accounts You Absolutely Must Have

1. High Yield Online Savings Account

Number one definite must have account is a high yield savings account getting you at least 4%, at the very very least. If you assume inflation at around 3%, anything less and you’re losing money. Take your pick of ING Direct, FNBO Direct, Emigrant Direct, Citi, and you’ll get over 4%. My recommendation is that if you have a Citi or an HSBC bank account, go with one of them because your transfers will be instant between accounts. If you don’t, I use FNBO Direct but both they and HSBC offer 5.05% APY.

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Every year around this time, I don’t re-evaluate my reward credit cards but since a whole bunch of other bloggers do, I figured I might as well do the same. My basic strategy is that I don’t really want to use more than three or four credit cards and each one of the cards has to serve a distinct purpose in order to make it into my wallet. Here are the three that currently make the cut and why:

1. Citi mtvU Platinum Select – For Movies & Restaurants
Usually a points credit card is a deal breaker for me, I prefer cash all the way, but I can convert Thank You Reward Points into payments towards my student loan debt so for the benefits I let this one slide. I chose the Citi mtvU card because it offered 5% cash back on bookstores (Amazon.com included), restaurants, and movies. The mtvU card also has the added benefit of giving me points for good grades and paying my bill on time.

2. Discover Gas Card – For Gasoline
I wish the Citi Platinum Select MasterCard still offered 5% on gasoline and supermarket purchases but they don’t so we’ve resorted to using the Discover Gas Card in order to earn the 5%. At least the card looks cool, the card faces are this dark gray and the sides are a bright orange… giving it this slick new glow. Also another added bonus is that at some malls you can get a $20 gift card for ever $200 in receipts (where you paid with a Discover card) you turn in.

3. Citi Platinum Select MasterCard – For Supermarkets
Speaking of the Platinum Select card, I keep this in my wallet because it still offers 2% on supermarkets and drugstores (better than nothing I suppose) and because there really is no reason to cancel the card.

4. American Express TrueEarnings Costco Card – For Everything Else
I shop at Costco when I can and the only cards they accept are debit cards and their own American Express. This card doesn’t have an annual fee if you’re a Costco member (I don’t see a reason why you’d get it if you weren’t) and it gives you 1% on everything payable annually. It’s really just my catch-all card when I don’t get bonuses on anything else.