Several years ago, the Citi Dividend Platinum Select MasterCard was a great credit card to use for the spending you would have done anyway. At that time, you could earn 5% cash back on all your purchases. For a time, I was able to charge my rent payments to the credit card. That’s a dangerous proposition for some people, but if you pay the bill in full every month, all you see are benefits.
After some time earning some of the best cash back rewards available, Citi began converting many of the Dividend Platinum Select MasterCards to Dividend World MasterCards. “World” may mean nothing more that the cards have “PayPass” enabled. PayPass is a technology that includes an embedded radio transmitter (RFID) inside the plastic, so rather than scanning the strip — or even using a manual scanner to imprint the raised card number on a slip through carbon paper — users can magically wave their card in front of a reader that activates the chip and receives the card information through an encrypted radio signal.
From MasterCard’s point of view, they can charge merchants a higher interchange fee for accepting these cards. Citi, on the other hand, was paying out too much money in cash back rewards, so they eventually reduced the benefit from 5% cash back to 2% on select purchases and 1% on all other purchases.
The Great Rebate Shrink hasn’t ended. While cardholders of the Dividend World MasterCard like myself will continue to earn 1% on all purchases, 2% cash back or more will be earned from different categories every three months and will require enrollment every time the categories change.
Though you can currently request your rebate check at any time when you have accumulated at least $50 in cash back, starting July 1, 2010, checks will only be sent in increments of $50, increasing the chances you will eventually leave some cash unclaimed.
For the World MasterCard, the first categories earning extra cash back will earn 5%, undoubtedly higher than usual to encourage people to be excited about the program at first. The qualifying categories for this extra cash back are restaurants, car rentals, and hotels.
It may be worthwhile to use this card specifically for the varying categories earning the higher rate each quarter, but when the novelty wears off it may be easy to forget to enroll.
I received this bit of bad news in the mail today, but I also received some possible good news. I’ll share that notification tomorrow.
Updated May 7, 2011 and originally published June 1, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.