The company on Tuesday unveiled its Capital One Cash card, which features a total of 1.5 percent cash back on all purchases, but without the hoops to jump through. Here's how it works.
Capital One Cash cardholders get 1 percent cash back on all their purchases, or a penny for every dollar spent. On the anniversary date of signing up, the cardholder gets half of the cash back earned for the previous year.
So if I open an account today and spend $50,000 in the first year, I get $500 cash back throughout the year and then another $250 on Aug. 24, 2012. It's that simple.
Capital One's aim was to design a cash-back rewards card without any gotchas. Many cash-back rewards cards offer a higher cash-back percentage, but there are stipulations. Often, it's on the cardholder to sign up for these programs or they will miss out.
"Here's an example," says Celia Edwards, vice president of U.S. card at Capital One. "Some cards offer 5 percent cash back on gas. But that's only for three months that you can earn that. And you have to sign up online and there's a cap on it. It's really confusing for consumers."
The Capital One Cash card features no rewards expirations, no caps on cash earned, no redemption tiers, no spending minimums, no mandatory enrollment in programs to earn rewards and no changing cash-back categories.
The anniversary idea came directly from consumers, Edwards says. Not only did consumers like the idea of looking forward to a bonus, but they also liked being rewarded for loyalty.
"Consumers feel like they should be appreciated by companies they are giving business to," Edwards says. "And that resonated with us."
And speaking of bonuses, cardholders get a one-time reward of $100 when they spend $500 in the first three months.
Like other cards offered by Capital One, there are no foreign transaction fees.
There's no annual fee for the card. The annual percentage rate is zero for purchases and transfers until August of next year. After that, the variable rate is between 12.9 percent and 20.9 percent for purchases and transfers.
Do you prefer simpler cash-back rewards cards?
Follow me on Twitter: @JannaHerron