Today, Capital One is introducing a new cash-back credit card that ultimately yields 1.5 percent in refunds on each purchase, as long as you’re patient.

The Capital One Cash MasterCard works like so: You get 1 percent of your purchases back in the form of a cash refund. Then, on the anniversary of the date that you first activated your card, you get a 50 percent bonus on whatever you’ve already earned during the past year.

For example, if you activate a new card on Oct. 1, 2011, and use it for $30,000 in purchases between then and Oct. 1, 2012, you’ll earn $300 during that year. Then, on Oct. 1, 2012, you’ll get another $150 added to your refund. You continue receiving the annual bonus on each anniversary.

So where’s the fine print here?

To be honest, I’m having trouble finding any other than the wait for that extra anniversary money. You can request the cash back whenever you like, even if you’ve earned only $1. You can get it in the form of a credit on your monthly bill or as a check. And you can ask the company to issue the refunds automatically, which eliminates the possibility that you will forget to request the money.

There is no limit on how much you can earn. The rewards never expire. And there is no annual fee.

Per usual, it’s a bad idea to run up debt on this or any credit card, since the value of the rewards is a tiny fraction of what you’ll pay in interest. Using reward cards drives up costs for merchants, who pass them along in the form of higher prices. Then again, if you sit out of the rewards game on principle, you’ll still pay those higher prices but not get any rewards.

As always when a good deal like this comes around, you have to wonder whether the company will be able to sustain it. Charles Schwab introduced a 2 percent cash-back card a few years back, insisted that it knew what it was doing and then got out of the card business when it became clear that its projections were way off. Time will tell whether Capital One has it right.

My primary credit card is still the Starwood Preferred Guest American Express, since I’m able to redeem the Starwood points I earn (one point per dollar spent) for Starwood hotel stays that yield a value per point of about 3 cents. That’s twice as much as the 1.5 pennies that Capital One customers will get for every dollar they spend on this new card.

Still, I do carry a Capital One No Hassle Rewards cash-back Visa card for two reasons. First, I need a backup card for merchants that do not accept American Express. Plus, Capital One cards do not hit users with the outrageous fees that most other card companies do when a transaction originates outside of the United States.

My No Hassle card yields just 1.25 percent cash back, so I plan to try to upgrade my current card to the new one. According to a Capital One spokeswoman, Sukhi Sahni, people like me can call the phone number on the back of our cards to make the request.

How do you think this new card stacks up to the Visa and MasterCard cash-back competition?

Article source: http://feeds.nytimes.com/click.phdo?i=ae388da34ed5e8b7891c2d0cfde259ae